Creating Economic Self-Sufficiency through Village Model Micro-Lending

Creating Economic Self-Sufficiency through Village Model Micro-Lending
(U.S. & India)
GiGi Colson
Executive Director Institute for Poverty Awareness and Education, Inc.
Presented at “Women Working to Make a Difference,” IWPR’s Seventh International
Women’s Policy Research Conference, June 2003

Abstract
Effective response must come from those who are oppressed. When the women of
Matigara in West Bengal said they did not want charity but could put loans to good use,
this was and is an effective response. I experienced the same effective response when the
women in Woonsocket, Rhode Island said they were without the financial tools to create
livable economic self sufficiency plans.
The implications of the village model of micro-lending around the world are
significant. Micro-lending goes to the root of poverty where lack of entitlement results in
women being in unsafe, unhealthy environments affected by insufficient livelihoods,
discrimination, and alienation. Policy which extends itself to the creative solutions
available within micro-credit lending is key to the true and sustained removal of poverty.
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Micro-credit Lending – U.S. and India
What happens when night falls and Mamoni is too sick to go to school the next day
because she has TB and Saapan, her father, knows he has no money for the medicine that
might make her well. What happens to her mother who cannot be around to take care of
her sick child because she is working all day for little return at the local hospital and
must still pay every week the one who got her the job even though it has been three years
since he found her employment. What happens when night falls and Raj’s stomach is not
quite full enough and Sonum is crying because her ears ache and there is nothing and no
one to bring her relief. What happens when night falls?
The basis for the success of the micro-credit lending program lies in the ownership of
it in the hands of the women who take part in it. Both in the U.S. and in India, women
who are traditionally and historically most affected by poverty take back the reigns of
decision making, empowered by their own ability to create economic self-sufficiency
through the restoration of their human right to credit.
Returning to his native Bangladesh from school in the United States equipped with
economic theories, Muhammad Yunus did not know how to deal with the reality of a
woman he met in Jobra village who made 14 cents per day. Nothing in his learning on
the way to becoming an economist had prepared him for such reality. He was convinced
the very economics system in place would ensure the woman’s poverty over her lifetime
rather than creating any change. Yunus talked with many people in Jobra village and
with his students at Chittagong University who had to walk through Jobra to get to
school.
With $27.00 in his pocket, Yunus lent the money to forty-two people in the village.
That $27.00 would become the seed that would grow the idea for a bank run by and for
and with the rural poor. Despite knowing nothing about banking, Yunus moved forward
with his pilot project in l977 with government bankers trying to undermine the project
almost every step of the way. The government banks said the tiny loans were not worth
the paperwork, that the poor would not be able to cope with it and that the people would
not repay the loans. Yunus persisted and the Grameen (village) Bank was born.
Realizing that poor people in the villages could not gain access to credit because one
cannot put up poverty as collateral, Yunus set about creating a village bank that would
restore the human right to credit and the chance to move beyond poverty. Today there
are more than 2 ½ million borrowers in well over 40,000 villages in Bangladesh.
“Oko, kormo, singkola,” the members say at the end of their meetings, “unity, work
and discipline.” This is more than a simple loan process; it is a life changing process.
“We changed our life, you will change after this,” said Momotas Begum, a borrower
from the Shojunkati Landless Women’s Center. “Aie amadar pot chola,” the women
chanted after the meeting, “this is our way.” They are committed to stay on as members
of the Grameen until their lives are changed. These women have made considerable
changes in the lives of their families. They have tried a path unknown to them and
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succeeded at great odds. Because of these women, generations to come will not suffer as
they have.
At the Showrah Landless Women’s Center under a tiny open bamboo structure the
women built themselves, 30 women borrowers gathered for a meeting. Nassrima took
her first loan here 12 years ago when she was living in her father’s house. Her first loan
was for 2,500 taka (about U.S. $46.00), which she paid back successfully. Nassrima now
lives in a house of her own, owns cows and chickens and is paying back a 10,000 taka
loan that she used to buy the land that she lives on. Through the power of Grameen,
slowly the laws are changing in Bangladesh about women being able to purchase land in
her own name. “If the women are given money (through loans), they can do something;
her work can change her life,” said Nassrima.
After nearly twenty years of working in relief settings, IPAE (Institute for Poverty
Awareness and Education) was founded three years ago. Its mission was influenced by
Bangladeshi refugee women living in abject poverty in India. These women of Matigara
in upper West Bengal live and work along the Balason River crushing rocks by hand with
a piece of iron from sunup until sundown for little return. The women of Matigara were
adamant they did not want charity but could use loans such as they had witnessed through
the Grameen in their native Bangladesh.
With the help of Nityabrata Das, a Bengali interested in the eradication of poverty,
IPAE teamed with Swaraj, a poverty focused organization founded by Das. The previous
two years, IPAE had dedicated its energies assessing micro-lending projects with another
Indian organization in five rural districts of West Bengal. Partnering with Swaraj would
afford IPAE the opportunity to have a more hands-on capacity while walking with
struggling women to provide the tools to create economic self-sufficiency. It is not good
enough to provide training and jobs to women with inadequate income when the training
and jobs keep these women entrapped by too small income and faced with unaffordable
housing and health risk.
When we first met in 1999, Maloti Ray rose at 4:00 a.m. every day and straight away
went to the river to work. She lives on the river embankment in a small and inadequate
bamboo hut. Her elderly mother-in-law does the cooking and watches the smaller
children. At 8:00 a.m., Maloti would come back up the embankment to eat. After
eating, she would return to the river until noon. Sometimes when there is much work and
the contractors need an especially large load of stone, the children brought food to Maloti
at the river. She might have stopped for an hour or so when the sun was high in the sky
as it is unbearably hot to work but her breaks were not long. Staying at the riverside until
6:00 or 7:00 p.m., Maloti would often skip her evening meal (sometimes because there
was none) and work overtime until 11:00 p.m. (It is an eerie sound to hear the breaking of
stone by human hands and no machinery as one stands high above on the Balason Bridge
in the dark of night.)
“Daily laborers have endless misery,” Maloti said in 1999. She is acutely aware of the
different classes of people and cannot understand how anyone outside of those who do
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work by the river could possibly understand or listen to their stories. “If you share our
sorrow with people like us,” said Maloti, “they will feel empathy…if you share with
higher, they will simply laugh at us.”
Today because of her involvement with micro-lending, Maloti’s life is beginning to
change. “I have regained my voice,” she said recently, “that is the greatest thing.” Maloti
has been able to start a small business with a micro-loan. She sells ready-made clothing
from a stall within the village in the afternoons. She presently still breaks stones but soon
she will be in a position to leave her life of rock breaking behind. She has become a
member of IPAE’s international board of directors along with Sefali Ray, representing
the women rock breakers of Matigara. Change is indeed possible. Change must go to the
root of poverty and must not create new dependence.
Walking with women who struggle in India and in the U.S. has taught me the
importance of naming our own worlds, that is, through reflection and action the present
situation can be changed by the very people whose lives are so affected by the
deprivation. If change does not come from those who struggle, even if entitlements are
restored, ownership both material and psychological will not be theirs.
We must become agents of change together. Women the world over who are
struggling are looking for the tools in order to create economic self sufficiency.
Illiteracy both in the written word and in finances must be acknowledged. All too often
those who are working in “relief” do not affect the roots of how and why poverty grows
like a wild weed. Paulo Friere who was “asked to leave” his country because of his
revolutionary work with poor peoples in Brazil said that the education of liberation must
come from those who are oppressed; effective response must be learned from the very
people who struggle, from walking together as “us” and not “them.” Liberation (from
poverty) cannot happen if the oppressed are left out of the very discussion that is meant to
create change. This “walking with” is an extremely important aspect in the “how” of an
effective micro-lending program.
Women who are robbed of their dignity and the ability to make decisions for themselves
and their families have a right to thrive and not just survive. “I can’t afford to keep a roof
over my kids’ head,” said Diane in Woonsocket, Rhode Island, “the more you work the
more the state takes away from you.”
Diane is right. The state system keeps people poor. Public assistance recipients are
penalized if they save too much, work too much or make too much money thus never
giving them the opportunity to gradually work off their benefits. Because her ex-husband
had a one-time holiday bonus in his pay and it was reflected in her child support, FIP
(Family Independence Program) cut Diane’s monthly payments from $500 to $300 to
$100 per month in a short period of time. “I cannot get ahead,” Diane reflected on the
cuts.
Planning ahead, Diane sought out the housing authority and applied for public housing
because she knew once winter arrived again, the bills would only mount. Essentially,
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Diane fell through the cracks in the system. Eventually the housing authority revealed to
Diane that she was being denied housing on the basis of poor credit.
Last May, Thrive was started in Woonsocket for people like Diane. Much like its
counterpart in India, Thrive seeks to put into the hands of women who have inadequate
income the tools to create freedom from debt and the ability to thrive. Thrive is about
more than just surviving. This financial services program including micro-credit lending
began with its first group in May 2002. Four groups have since been established.
Components include financial literacy training, budgeting, business planning and creating
a final product of a self business plan which the women create themselves outlining in
detail how they will execute their plan for economic self sufficiency in their lives.
Six months ago, Anna came to IPAE’s Thrive program in debt. Following the
removal of one lung due to cancer, this single mother lost her paralegal job and due to her
new disability, could not see a way out of mounting debt. Anna and her daughter were
forced to move into public housing. Today, Anna is starting over. She is beginning to
rebuild her life and with the assistance of a loan has started a jewelry group-business with
the other women in her Thrive group. This has enabled Anna to work with her disability
and begin the road back to economic self-sufficiency.
For Mary, the road to economic recovery came through the beginning of a cleaning
business. Through the Thrive program, Mary was able to create a budget in such a way
that she did not need to take a loan to start her business. Her business is beginning to
grow and to thrive. Mary now lives on her own and is completely self-sufficient. Not
dreaming she could ever begin a new business, Mary is now seeking help from Thrive
collaborators with regards to hiring employees!
Though the lives of the women in India and in the U.S. seem worlds apart, both are
working to make a difference in their lives through financial services designed
specifically for them including micro-credit lending. The success of the women
mentioned here and that of countless women the world over inspires other women who
are struggling to regain their ability to make healthy financial decisions through creating
economic self sufficiency. “Before Thrive, I couldn’t let myself dream of owning a home
daycare. Now I believe that it’s not only possible but only a matter of time before my
dreams come true. The support, knowledge and guidance I have found at Thrive have
had a huge impact on my life…,” said Cheryl O., Thrive member
Poverty is not normal. We must work toward educating people about the great
disservice we do to our people when we normalize poverty. We need to keep sounding
the alarm.
So many people struggling to turn the wheel of the rickshaw one more time, to pull
great weight for little return, to hawk goods, to sift through garbage. Yesterday it struck
me as I watched a man pulling a cycle rickshaw with a small flat bed. It was weighted
with a beautifully crafted wooden table and heavy matching chairs piled high on the
small surface…it made me think of how the lifestyle of the rich is sustained on the backs
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of the poor. Some would say this gives jobs to the poor and is therefore development.
But who will gain the end? The poor laborer or the one who is sitting at that now
delivered table filling their belly until it is content? In the village with our micro-lending
program, it seems different - the purpose for the loans and for what they are utilized go
directly to the poor. They labor more for themselves than for another. They are more in
control of the socio-economic conditions. Their lives, while still difficult, seem to me to
present a truer picture of development.