I've been feeling a bit removed from the aid world of late. I read a few blogs by aid workers regularly, and their intelligent and insightful critiques of various issues has left me feeling a bit out of the loop. The fault is my own of course, but I also feel like this current job has moved me out of the emergency game, and a lot of the debate that surrounds it; I don't have to grapple with complex issues (whether they're realistic or idealistic) at work anymore.
Anyway, Alanna Shaikh, who I follow on Twitter, and who writes a fantastic blog posted a link to this article on the Grameen Bank. I'll be the first to admit that some of the financial data (I'm not much of a numbers or graph person) went over my head, but it did lead me to remember some of the issues I faced when investigating the successes and challenges the NGO I worked for in Bangladesh had in microcredit.
In this case, every single village that benefitted from the program I was working on established at least one savings group (gender segregated). The members would deposit between 5-20 taka (US$1=70 taka) on a weekly basis. This is such a tiny amount, and seems so inconsequential to many of us. But sure enough, over time, the fund grows and members are able to take loans to support their income generation activities. Some members were able to purchase CNGs (auto-rickshaws) or sewing machines or increase the capital in their grocery stalls.
One of the key things we found was that these savings groups were a means of effectively improving their "credit rating". These people had applied for Grameen Bank loans in the past, and been denied. Basically, they had to prove that they could repay a loan, which they would do in the savings groups we established. Then they might have to take a loan from another organisation to bring the credit rating up further. Perhaps after they had repaid a couple of loans, and had a functioning income system, they might be accepted by Grameen.
So while the Grameen bank has achieved incredible things over the past 34 years, it is not necessarily the 'bank for the poor' that it has claimed to be. The experiences that were communicated to us indicated that the interest rates on Grameen loans were often prohibitively high, that flexibility in repayments was limited, and that Grameen often required the provision of collateral, which was impossible for the extremely poor people we were working with, who lived without any real formal assets.
What was great about these savings groups was the ownership by the group. There were a set of guidelines that had to be followed in the establishment of a group, but groups were free to decide on any other rules (for example, if loans provided in times of personal emergency would be repaid with interest or not). The groups had a management committee, with specific roles outlined, including a person for complaints or disputes.
Of course, a small village savings program can not really be compared to the goliath that Grameen has become. But it does show how influential the idea of microcredit has become, and that communities can improve their own resilience to economic shocks.
Just my thoughts....