Thursday, October 25, 2007

Making a difference

Following on from Tuesday's post...

Defeating Global Poverty reports: [edited]

On Tuesday, I participated in a dinner event sponsored by the Seattle International Foundation featuring Nobel Laureate Muhammad Yunus. His talk included these statistics:

- Grameen Bank in Bangladesh is now serving 7.5 million clients (avg. family size of 5 => 35M+ people)

- 27,000 staff

- 80% of poor in Bangladesh are offered microfinance (most poor countries have 5-10%)

- Bank is owned by borrowers

- All capital loaned out comes from savings of the poor (and bank staff)

- Each branch must drive their own savings for capital to loan out and require that each branch become profitable and capital self-sustaining within 1 year

- Microfinance is very empowering for women... often first time in their lives that they have anything of their own. Borrowers (women only) decide who will inherit their savings if they die. Interestingly, most women choose their youngest daughter as she has the least opportunity.

On other Grameen-spawned businesses:

- Grameen Phone is largest mobile operator in Bangladesh with 16M subscribers

- Grameen Energy is focused on bringing solar energy solutions to the poor... reached 100,000 households so far and now aiming for 1M.

On social businesses:

- Yunus continues to be a strong proponent for social businesses... that is, businesses which exist as commercial entities AND have a mission to have a strong positive social impact

On microfinance in China:

- China has very little supply for microfinance and, next to India, has the largest un-met demand for microfinance

Yunus recently met with senior people in China's central bank on their request to hear about his ideas on microfinance. Central bankers were initially quite defensive ... holding up their cooperative model as being quite effective in channeling financial services to the poor

Yunus said that that was quite interesting and that China must be doing something quite differently as in Bangladesh there was also a long-term cooperative system which was widely promoted by the government, but is completely ineffective due to corruption, bureaucracy and lack of relevance.

This caught the central bank leader off guard and she surprisingly agreed with his assessment and said that they would no longer rely on cooperative model as the cornerstone of China's financial services provision for the poor.