In order to create spaces that provide for a local culture of inventive thriving, in order to have that built-in civil society that gives people the feeling that they are at home in the world and have a nested structure of ongoing potential around them, we need to let resources flow to those who want to build those spaces and who have the right ideas. The notion that one must be part of a large institution, or connected to one, or have the backing of officialdom, undermines the process of spontaneous upheaval around which public spaces, towns and culture grow.
The revolutionary work done by Mohammed Yunus and the Grameen Bank, which he founded, in Bangladesh, and for which he won the Nobel Peace Price, not only lifted millions of people out of poverty, but has shown that small, targeted loans, which rely almost entirely on interpersonal trust and respect for ethical obligations, can be the funding mechanisms with the highest rate of repayment. $5 or $10 lent at the right moment, can make or break a microbusiness in a small village or that struggles through the crush of a big, crowded metropolis.
Lending is not an easy thing. It requires that the lender take on risk. It requires that the risk be both (partly) justified and (partly) not justifiable. It requires that the thing in question, the operation of an enterprise, or a microenterprise, not be guaranteed to work.
In cases where big international banks borrow money from governments’ central banks, then lend to businesses with a “proven track record” or to home-buyers with income more than adequate to repayment, repayment can languish somewhere between 80% and 90%.
But in cases where the borrower has no proven track record, and there is virtually no guarantee of repayment, and the loan is a true microloan—just a few dollars at a time, to be repaid with zero or minimal interest, over a short period of time—repayment rates can run as high as 99% or higher. The reason? These microloans fund microbusiness ventures that fill an obvious void in a community in need, and they require very little revenue to achieve both repayment and short-term profit.
The history of the Grameen Bank’s microlending programs, across the world, has shown that in most societies, especially in those where more traditional gender role conventions still predominate, women are far more likely to repay these loans. There are reasons for this that in some cases have been shown to be true and in others are treated as controversial, but mainly, it seems that women devote the resources more readily to family and men to vice.
Of course, there are exceptions, and everything depends on circumstances and individuals.
The point, however, is that we can see from the experience of existing, proven and pioneering projects, that microlending helps to build civil society, forge a terra firma on which to build sustained economic improvement, and can be a way to give leadership roles to women, open rigid political structures, and reduce the likelihood of conflict and violent crime.
Microlending creates spaces in which civil society can develop organically. This is an invaluable way to make progress in building a world that is safe for historically oppressed groups, of which women and girls constitute the largest constituency. Microlending, further, allows for women and other marginal groups, depending on their access to the microlending circuitry, to build value in their communities, and rise to positions of natural leadership.
In the absence of this kind of spreading of risk and opportunity, significant cultural and political reforms are left to 1) public opinion, often dominated by conventional biases, and 2) command-and-control policies, which can spark intensified opposition to much needed progress. Both of these, however, harmonize more readily with social justice goals, when women have already moved into positions of responsibility and leadership.
Today’s NOW Labz CSW Hangout will focus on Lending, and its impact on the status of women and girls. We will take as our premise, in part, this argument: that lending that empowers women and girls, at all levels, in all societies, builds civil society and liberates all of us—men, women, children and elders—to live in a more democratic, more resilient fabric of interests.
Read the transcript of the NOW Labz CSW Lending talk here.