Micro Credit Gone Global
An ASIP Panel Discussion

New York, May 2, 2000

Welcome by Ambassador Wisner

I have today the pleasure of presiding over this wonderful gathering. Let me first of all extend on behalf of the President of the Asia Society, Mr. Platt, best wishes to all of you. We extend his regrets that he cannot be here today due to obligations the Asia Society has in China.

I'm particularly pleased today to be able to welcome a very distinguished panel of speakers. I suspect that all of them are well known to each of you. I would welcome, as well, your taking a moment to look at the biographies that have been contained in the documents you were given when you arrived today.

I would also like to welcome the Permanent Representative of Bangladesh who is with us today-Ambassador Chowdhury. It's so very good to have you here, knowing that you've just come back from a vitally important mission, heading the Security Council Team to Kosovo. Mr. Ambassador, welcome.

Ladies and gentlemen, it is a pleasure for me in particular, someone who admires the work that Muhammad Yunus has done and have admired it for years, and a believer in the world of microcredit, to be able to welcome in particular Muhammad Yunus today. He is the founder of Bangladesh's Grameen Bank. You know the Grameen Bank, certainly as well as I do-the mode of credit that leads to microenterprise. Those small businesses of from one to ten employees have become a system for generating jobs and economic growth for the poor throughout Asia. This has been done increasingly over the rest of the world, including here in the United States. Grameen has made many unique contributions to the world of microcredit. I point specifically and particularly to the concept of collateral in which Grameen has led the way in figuring out the system in which applicants pool their resources to qualify for loans, collectively. They then support one another in making repayments. This redefines the traditional requirements for creditworthiness and has allowed Grameen to expand credit and to shatter barriers that often keep minorities, rural populations, women and other groups away from the market of credit access. Muhammad Yunus' work is watched closely around the world. It's an export of Bangladesh. It's a paying proposition for many investors and NGO's and others who've sought a way to make poverty elimination congruent with the expansion of free markets.

The subject has caught attention. I've found myself engaged in discussions with Egyptians, North Africans, and even today in Brooklyn itself. So Muhammad Yunus, on behalf of Americans as well as many others, to you and to the other speakers, our thanks go for the innovation and dedication that you've given this subject.

The panel's discussion this afternoon is part of the Asia Society's new and exciting initiative. It is called the "Asian Social Issues Program." This has been put together with a view of looking at individuals and communities in the poorest countries of Asia and among the most disadvantaged groups in the region, to be able to respond to poverty, environmental degradation, migration flows and violations of human rights. It's through this series of creative public education programs that the Asia Society will be able to bring together Asian leaders and non-governmental organizations and businesses with American representatives to share the experiences that Asia is having today. This would link the United States with concern about poverty elimination in the world of a growing free market. Ladies and gentlemen, with those remarks, let me invite Nancy Barry to come up and take my place.

Panel discussion: Moderated by Nancy Barry, Women's World Banking

Nancy Barry: Good afternoon. It gives me great pleasure to follow Ambassador Wisner. We knew when we met this afternoon that I, like he, had spent a lot of time in South Asia. When we greeted, I found myself going, "Atcha."

India is actually a place where women's role in banking is very active. The leaders of India have shamed themselves into looking to their brothers in Bangladesh, in order to get their act together. It gives me great pride to introduce the three speakers today, and to congratulate the Asia Society. I think it prides itself on being on top of cultural, economic and social movements in the Asia Region. Microfinance, as I think all of you know, really is a cultural revolution. Culture, after all, is about the way we see each other. Thanks to the leadership of the people at this table and leaders of microfinance around the world, we now see poor women as the world's best borrowers. We now recognize that while microfinance is not a panacea, if you had to do one thing that really tackled poverty, you should do microfinance. Microfinance is microcredit, micro-savings, and micro-insurance. What we have seen 20 million times now in the microfinance industry and movement, is that when poor women entrepreneurs get a responsive market-based loan, they not only repay the loan on time, but they use the proceeds to build their business and they use the increased income to make sure that their daughters go to school. Their family is fed and they have access to health services. In fact, microfinance has demonstrated itself to be a real lever in tackling poverty.

All of you know, Muhammad Yunus, and all of us owe a great debt to Grameen Bank. Grameen, with other institutions operating unbeknownst to each other, in the mid and late 70's, recognized that microcredit was a very important instrument, and that it was now time to stop treating poor women as passive beneficiaries of social services, or as victims. They saw that they needed to be recognized as informal sector industrialists, agriculturalists, and traders.

Grameen also, along with BRI of Indonesia, was the first to demonstrate that this could be done on a massive scale. Bangladesh is the only country in which even if you plant trees, you're ashamed to say if you planted less than a million trees. This group is comprised of Grameen, ASA and BRAC. All of them have over a million clients, demonstrating to the rest of us in the world (whether operating in Latin America with tens or hundreds of thousands of clients, or in Africa with hundreds or five-hundred thousands of clients, or in the United States where many microfinance institutions are struggling to make a hundred or a thousand loans) that this can be massified. It can be done on a sustainable basis.

Thirdly, we all owe Yunus a great set of honors, in that he has made microfinance known not only to policy-makers and bankers, but also to the general public. This is important, because it hopefully will change the way leaders use money and power and their leadership. I also think it's very important because I never met a Bangladeshi taxi driver now, where they don't sort of sit up with pride when you say, "Where are you from?" Both of these gentlemen are what I would call "nation builders." This is not about making baby loans in a small way. This is about recognizing that poor women are the base and backbone of economies, and that microfinance is the base and backbone of the financial system.

I'm sure every person in this audience has heard of Grameen. Every person in this audience may not have heard of ASA. We call ASA, in the microfinance industry and movement, "The New Kid On The Block". ASA only has a million clients. They began microfinance in 1991, and are generally today recognized as the leading microfinance institution on earth, in terms of demonstrating not only that loans could be repaid, but also that it is possible to radically innovate on everything. They dramatically reduced the high costs of making very small loans. So we have in front of us two nation-builders. They use very different approaches, methodologies, and institutional cultures. But in some ways, you might say that their differences are to the outside world like how many different colors of snow there are to the Eskimos. What are together are nation-builders who have really filled the gaps that government was not able to fill. If you went to Bangladesh 20 years ago and went back today, the countryside is unrecognizable. So whether or not it shows up on the GDP, it definitely shows up in the way people live and work and the assets that they have built.

Finally, it gives me great pleasure to introduce Fabiola Santos, who I assumed was from Latin America. Like many people of Philippine birth and origin, she sounds like she should speak Spanish, by her name. Fabiola is not precisely a poor woman entrepreneur, but she brings home to all of us that these 20 million poor women entrepreneurs who are holding up economies and financial systems with access to finance and 500 million poor women who do not have access to sustainable and responsive financial services. These are the leaders. These are the change agents. It is really just that we as leaders in the microfinance movement were smart enough to see that any good banker will back the winners. It just happens that the commercial banks are only now figuring out that the worlds' best customers are, in fact, poor women.

So without further ado, I would like to introduce (although it is not necessary) Muhammad Yunus. He will be followed immediately by Shafiqual Haque Choudhury. Then we will hear from our entrepreneur, and I will make a few closing remarks, including introducing you to Women's World Banking.
Thank you very much.

Muhammad Yunus, Grameen
Thank you, Nancy, Ambassador Chowdhury, Frank, ladies and gentlemen.
The issue that I want to bring out today is slightly different than probably what you were expecting. I'll draw your attention to something that is getting me very involved, in trying to bring up this subject again and again to draw people's attention. It's about information technology. I'm reminding people that it's an unprecedented opportunity for the whole world to undo things that we think have been done wrong, with information technology in place. While the dot-com fever is on here, I think that fever is more concentrated on financial and also business aspects of it. The technology is moving at a very, very high speed, in helping those things to happen. It keeps the economy moving faster and faster, expanding the size of the economy of each country.

It's creating a new kind of economy, wherever the technology is really exploding. It does this by eliminating middlemen in the value chain between the producer and the consumer. This is being done in a way in which the world has never seen before. We should be congratulating and welcoming information technology for doing that.

What I feel is missing is that the same information technology is impacting on society, not just the economy. It's also eliminating in the process (or has great potential of eliminating in the process) the middleman in the value chain. If you look at the source of the knowledge and the user of the knowledge, there are cities of interpreters in between, who carry information from one place to the other. Information technology all of a sudden is making those people irrelevant. Anybody can go to the source of information and interpret for himself or herself.

That opens up a tremendous possibility of creating not only on the economic side what we are calling, "The New Economy," but creating a new society. When I say "New Society," I have a very clear idea of what that "Society" is all about. It's a society where nobody will go through the indignity of being a poor person. This information technology provides a tremendous opportunity to make it happen. Information technology for one is a distance-less thing. For another, it's a borderless thing. It's almost a costless thing. All of these aspects make it a wonderful thing to come to the poor people. It has the potential of becoming a most empowering tool in the hands of poor people. This brings us close to each other. Microcredit, as Nancy was explaining, is the most empowering thing you can ever imagine that could come to us; to the poor people, in particularly. It puts the destiny in each person's own hand to create their own life. If you add the empowering tool of information technology, these two become mutually reinforcing. That's where I think we should be paying a lot of attention, so that we start thinking about the social aspect of the possibility of using the information technology in changing the world the way we would like to have. The way we would like to desire having it.

We in our own way try to bring some pieces of information technology, in our own words. We created a company called Grameen Phone. It's a mobile telephone company. People ridiculed us when we proposed that we would be creating this company. They thought it was crazy. What do mobile telephones with such beautiful handsets from Nokia and Ericsson and Motorola and whomever have to do with poor people? We are saying, "Look. We want to bring these telephones into the hands of poor women in the villages of Bangladesh." Everybody said, "You are crazy. What are they going to do with the telephones? They don't know what to do with them. They'll throw them away." I said, "I still believe, and it's been demonstrated that people are much, much smarter than that."

We did that. We created a company and started giving out telephones in the villages to the poor women. We financed this through Grameen Bank. This was an opportunity that a financing system provides. That's the mixture that makes it so much more powerful. Today, we have more than 1400 villagers. More than 1400 telephone ladies who sell the service of the mobile telephone, and make an enormous amount of money. The make much more money than any other work they would have. They wish everybody had the mobile telephone service. You would be amazed how many mobile telephone calls come from New York City.
It's people who are working here, who are Bangladeshis. So there are all kinds of professionals. I was just meeting the IT professionals, Bangladeshi IT professionals in the United States. So this is a tremendous opportunity. People say, "Well, you know, what about IT? You say in Bangladesh, computers in the villages? It will never get there. So why talk about IT?" I said, "Computers will get there. Internet will get there. You create the institution to make it happen."
Would you ever think that mobile telephones would get there to a woman who never saw a telephone in her life, or to a woman who never saw electricity in her life? Today, she has a solar panel. She has her handset. She makes world connections everywhere. She knows country codes and area codes. She knows everything. She knows the convenient times and what the time is where. It's amazing. I'm making the story short. It is a real change, what people can do.
People say, "What about Internet?" I say, "The answer is very simple. Even the handsets are coming with Internet connections. So you don't have to think about Internet in some different way." So what if the devices are for the Internet and IT or what appliances are designed for a society like the United States or Europe.

But if you put our mind into this, probably there will be designed different kinds of devices, which will be much less expensive, probably. They may be ten-dollar and twenty-dollar pieces of Internet devices. These could be calculators, and so on. They would do all kinds of things.

What it does is brings the whole world into the palm of the hand of that poor woman who can access anywhere in the world for businesses, for information, for medical services and so on. This is one. Then we have another company that we created. By the way, I should mention that this mobile telephone company is very much a free market enterprise. It's a joint-venture enterprise with Telenor of Norway, Marubeni of Japan, and Commune Telecom of Bangladesh and Econophone of New York City. So these are four companies together, creating this company called Grameen Phone. It's a US$150,000,000 company. It's the largest mobile telephone company in the country, having nearly 100,000 subscribers, already. It's in its third year running. We have created another company called Grameen Seven Net. This is another commercial company that's the largest Internet Service Provider in the country. But we want to bring Internet Services to the villages. So what we have done in the village is create Cyber Kiosk, or Internet Kiosk. People pay to get e-mails. Many of the e-mails come from Bangladesh to New York City or wherever, are coming from one of those kiosks, probably. The amazing thing is that not only can they send these e-mails, but that the reply is received right away. That is amazing, because the mails they used to send would take months to get here. Replies, if replies would come, took another round of time. But now, it's immediate.

Then we are negotiating with Hewlett-Packard to set up an e-Health Care System. Grameen Phone owns the fiber optic network of the whole country. That was designed for the railway signal system, but we took it over from the government. So the entire network is at the disposal of Grameen Phone. We are using that fiber optic network to bring health services to the villages, with beautiful resolution and so on. Hewlett-Packard has a joint venture with us to set it up. First, it will be an experimental device to see how much money it generates. Whatever we do, we want to do it in a way that is self-supporting. It's not something if it cannot sustain itself. So this is something you'll hopefully be seeing right away. Hopefully, by the end of the year, it will be operational and we'll have finalized all the details of working it out.

Another deal we are making is with Nippon Electric Company (NEC) of Japan. This is to bring education through the Internet. You can bring education in the way you want. We are calling it Knowledge on Demand. So people decide what they want to know and how much they want to know in an entertaining way. I always felt that education should be very entertaining. This would allow people to go there to have fun, taking exams and tests and stakes. Whatever the immediate need of education, it would be that we have. This would allow children and mothers and fathers to compete with each other to have more access to it. This is what we are building up, so that we can create that education. We have now a memorandum that we find with the Media Level of MIT. This will bring Speech Technology in Bangla. This will allow a person to speak in Bangla, and the computer will put up the text right away, from the voice. Then the text can be interpreted into voice and read in voice by the computer.

We are trying to develop this not for the fun of it, but because we see a tremendous potential in that, in addressing the illiteracy issue. If you have that developed with technology, what you can do is develop a module for illiterate persons to talk to the computer and start learning how to read and write and everything. Now, you can talk to each other. So if I can design all of those things, I would design a computer that's very cheap. It may cost 10-20 dollars. It would become a friend of the poor person or the poor woman for whenever she needs something. If she is down or depressed she can talk to the computer and the computer will talk back to her. It can tell her bedtime stories and tell news of life and so on. She tells others what's going on, and she visits the doctor by talking to the computer about what health care systems are and what health care advice she heeds. She gets connected with it. It's a friend, philosopher and guide. It's a business consultant, because most of the businesses transact with that thing.

Then, the whole world; people are afraid of globalization. I'm excited about globalization. That gives big opportunity to the poor people. Poor people now have a bigger opportunity and bigger options if the technology is there. If you don't have that technology, then they are in trouble. They cannot connect themselves to the outside world. So the outside world would come and push us right away.

So this is what I think is a tremendous thing. I'm suggesting the creating of an international center for information technology to end global poverty. I can see now the way the world is changing that in ten years' time, the world will be changed tremendously. If we don't keep this in mind, we may not be moving toward the new great society, but moving in the reverse direction. That would not be good news. Thank you very much.

Nancy Barry: Increasingly, all of us recognize that this is not just about access to finance, but equally important access to markets and access to information.
We will turn to what we call the McDonald's of microfinance. ASA, like McDonald's, may look standardized, systematized and has achieved the lowest cost globally in the microfinance industry. But it's really by continuously innovating on absolutely everything.

Md. Shafiqual Haque Choudhury, Association for Social Advancement
Thank you very much. I was a non-believer of microcredit until 1990. Not only was I a non-believer, but I spoke against microcredit for ten years. I was against the news and against the World Bank. I spoke against ADB. I was not listening to the World Bank. But I listened to the poor borrowers. Poor borrowers asked us a question, "You are making us aware about our legal human rights. This way you are making us aware, do you get any income from the job?" I replied, "Yes." They then said, "If you get some money for talking only, why will you not get it for listening?"

They speak honestly. In my entire university life, I read Marx and Mao's books because I was a believer of Socialism. After hearing the rural poor in the villages, now they are to me Marx and Lenin and Mao. That is why, in microcredit, whenever I have a problem, I don't go to Harvard. I don't go to New York. I go to the rural people. Tell me where the problem is. What is the problem? How did the problem originate? If you listen carefully, of course you will reach a solution.
I never attended any training in Harvard or New York or anywhere. My only training is with the rural women. Even now, if I'm struggling with a management problem, I don't go to a management consultant. I go to the people. I go to the branches. I ask them about the origins of this problem.

From the problem, I get the clue. That is the solution. I don't look upward, I look downward. People often go to meet the big, big people. I don't go to meet the big people. I want to meet the small people. Big people of the world, according to me, cannot solve the smaller problems. They can solve the big problem. They can bomb Kosovo. They can destroy another country. But they cannot survive in the rural areas. That needs smaller people.

Anyhow, from non-believer, I have become now a strong believer in microfinance. If anybody asked me what is the panacea, I say, "Yes. I think microcredit is income generating. If it is income generating, what other things do you need in this world?" Nothing. Only income. By income, you can solve your housing problem. You can solve your nutrition problem. You can solve your information technology. You can buy telephones. You can buy computers. You can do whatever you like. That is why I am a strong believer, from 1990, that microcredit can really change you. People consider microcredit as disaster credit and a loan to the people. I see it as income generation. If you see it like that, everything can be done by microcredit. The whole of our life depends on increased income, or income. If I don't have an income, I have no help, no nutrition and nothing will help. Only income will help. Income can be generated in two ways: by job creation or by microcredit. Job creation is very difficult. Big companies and big farms can do this. But for self-employment creation, this is the only way out is by microcredit.

Then we include in this microcredit and microfinance. We find that poor people have the ability to save in a small, small, small way. They can't save in a lump sum, but they can save 2, 5, 3, 7, 8, 9. Then we include this micro-savings in this program and they buy micro-insurance. People also need that. These two, combined, make up microfinance.

The microfinance movement started in Bangladesh. Yunus started, in one way, and we followed some of his things. Not visiting Grameen Bank, but seeing the activities. We have a good advantage, because we started from a non-banking concern. We had revolution after revolution and never attended to hear anybody's good speech. All revolutionaries deviate from the main state. But we started informally, not like a bank. You see our advantage was that people would be playing cards, maybe. Four people would be sitting at one table, maybe and counting money. In Bangladesh, and not only in Bangladesh, I don't find five people sitting at one table. In ASA, in one of our branches, five people sit at one table. This is one way of reducing costs. One table means one fan. One table means you don't need any messengers to transfer your documents from one table to another. They are all yours.

Other things I found were redundant in microcredit-the post of accountant for example. When people do their work, they can do it by themselves; they don't need an accountant. I designed an accounting system in such a way so that a lemon can do it. I was a lemon. I was never an accountant, never an economist, never in banking. But if I knew all these things, I would not have dared to touch this accounting. It was because I did not know anything, that people did not blame me if I abused this accounting subject. In 800 branches in ASA, you will find no accountant and no cashier. But they are doing sophisticated work. I consider now that these are like ATM's. When you go to the ATM to draw money, you will find no cashier and no accountant. In ASA, you'll find no accountant and no cashier. But we had to face a lot of problems from the establishment. Nobody believed that. "Oh, really? They are doing accounts? Or are they just playing with the money?" This just proves that no, we are not playing with the money, for we are a profitable organization.

I came here after getting an invitation from Asia Society, and so will touch on the American context, whether microcredit is applicable for poor women or not. From the Asian context, microcredit is very, very suitable for the women and suitable for the men, also. I am not saying that microcredit is gender-biased. Initially, it was gender-biased. Now, we started working with the men and we find that it's working. Not so well as it is with the women, but still with the men also, it works nicely. That is why now I consider microcredit to be not gender-biased. It works for men and women.

It works with men and women, and it works among the poor. So why would it not be workable in the United States with men and women and the blacks or with non-religious men or religious men? People think that with microcredit here in the States, banks are not coming forward to help this group of people. They feel it is risky. They need a camel. Camel means credit rating statistics. Credit rating. What will credit rating do for the poor? I don't believe in credit rating.
Microcredit is for risky people. There is no need for credit rating. If we help the poor in a sustainable way, it will be repaid. If you don't serve them in a sustainable way, they will not repay. They are not stupid. You come and give them $1000, and they will vanish. Why should they repay? They should not. That is why the whole concept in microfinance is sustainability. If you provide them a sustainable living, they will provide a return.

Once I talked to a Bangladeshi, here. "Here is your credit card." I know the character of Bangladeshi people in Bangladesh. Here, they are so good. In Bangladesh, they cheat others. Here I told them, "What do you do with your credit card? You don't buy $50,000 worth of goods and leave the country? Why don't you do that, here? Most of the people in Bangladesh would, why are you not?"

They say, "No, no, no. We will not do that here. Because living here is sustainable. We will be able to earn $2,000 or $1,000 for the next fifty years. If I do something with the credit card, this is once for all." Then I realize yes, this is why microcredit works, if it is sustainable. If I know tomorrow that I will die, what would I do? Do you think I would attend the Asia Society Meeting? Of course not!

I will be lying on my bed and praying to the God that when I will die, my sons and daughters will all come and see when he is going. That is why you need a sustainable microfinance if you are willing to help the poor.

In microcredit, there is no credit worthiness. If it's a woman or a man, if it's some log floating on the bay, if he's alive only and sitting in a wheelchair, you can lend the money to him. We can give a guarantee. Not only I, but my professor will give a guarantee if they don't repay. We may not repay, but we can give you a guarantee that they will repay.

The second thing is known as collateral loan in credit. Why do we need collateral? The whole world is after collateral. In Bangladesh, we find that collateral did not help. Collateral means that only the documents are with you. If the bank goes to take the collateral, it takes twenty or thirty years. This is because there are several layers of courts; if you go through one, then there is another higher and higher. Thirty years is the life of a bank. That is why collateral is nothing but a psychological thing. So we avoid that.

I don't know about other countries, but credit worthiness works like that. Those who are serious about microcredit don't need to see whether the borrowers are creditworthy or not. You will see only whether they're willing to take credit or not. Whether they know the business or not, you should not see, also. Whether they're willing to utilize their money-then you will find that yes, they are good borrowers.

Another method we have used in Bangladesh is individual liability. Both systems work; group guarantee and individual liability. We find in some contexts, especially when working in other countries, many people are not willing to give guarantees for another person's loan. That is why we started individual guarantees by the family members. Wife borrows, husband gives guarantee. Husband borrows, wife gives guarantee. But if they fail, then there are some other mechanisms to collect the money.

I think in America and in Canada these people are very much individualistic. Not like Bangladesh or India; we are not so individualistic. We know at least our neighbors and we have people who would give group guarantees. Here in this part, they don't know themselves, sometimes. They forget who they are. That is why I would recommend that you apply individual guarantees here or in Canada.
As our microfinance is low-cost, even if people are separated or divided themselves, it could work. If you did costly things, then you need a group of people to come together for this. This is an innovative way of doing without accountants, with a small office, all of these things. The cost is so much less when one can be covered from Manhattan, another from Queens, another from this. You can cover like that. The Asian experiences of microfinance can be replicated not only here; it can work even on the moon, if there are people living there.

Thank you very much.

Nancy Barry: Thank you. I think two things are very clear from the first two presenters. One is that Bangladesh is likely to remain the hotbed of innovation in microfinance for the coming decades. Second, to be a leader in microfinance, you have to combine incredible vision, the capacity for results, with great story-telling.

As we all know Bengalis have this down pat. The only person that we could allow to follow such great storytellers and leaders is someone who (although an entrepreneur today) actually has background in the media. So Fabiola Santos is our next speaker. She is an entrepreneur. I said, "You're not really a poor entrepreneur." She said, "I am since I started my own business."

She, having this great background in the media, is a very important symbol of poor women. All of us are working not just to be the voice of poor women, but to give poor women a voice in their own institutions, and informing the policies of their countries.

Fabiola Santos-Gaerlan, Honeydew Drop Childcare
Thank you, Nancy. I'm amazed that I'm sitting at the same table with such esteemed panelists. When Shyama Venkateswar, program officer at the Asia Society, called me to speak, I said, "What do you mean? I change diapers and take care of kids all day. What have I got to say?" She said, "Well, just tell your story." So this is my story.

My husband, Dave Gaerlan and I co-own Honeydew Drop Childcare. It's a group family day care in Park Slope, Brooklyn. It's in our house. We live in a three-story house. The day-care is on the first floor. Before we started our business two years ago, I was in television for 15 years. I produced all kinds of programming, including children's programming. I was working for one of the biggest cable networks for ten years, and one of its highest-paid producers since I was there for ten years. Much to my shock, I was laid off.

I thought that working faithfully for one company, you would be rewarded. But, no. A college graduate willing to make half my salary was a better financial decision for that corporation. So I began to work freelance for other TV companies. I started to look at my life and realized that working in the corporate world was kind of scary. They could decide to just pull the plug. So we thought, and we concluded the true financial independence and maybe possible wealth (we will see) would come from owning our own business. To start something that no one can take away from us.

So I began to look back at my career. I saw that the happiest times of my life were actually producing children's programming, and taking care of my two children. I realized that that's where a lot of my creative ideas came from was children. So we started looking into opening a day-care. I visited a lot of day-cares; dozens of them. I began to see what was missing. I saw that they were not really servicing the new breed of parents who are working from home a lot. When I was working in television, I was trying to work from home in one corner, changing diapers in the next, picking up the kid and it's like the daycares really weren't flexible enough to help families who were having a free-lance career, independent contractor business, and all that stuff. So we said, "Well, this is it. This is the target area that we want to hit."

Park Slope where we live is full of professional couples who have young families. They've taken their time in having children-they established their careers and were financially well off before they started having children and so they were raising their children in a very smart and intentional way and we had to make sure that we presented ourselves that way. We spent our life's savings and we started building the day-care. We made the environment very creative and very wonderful for the children; very colorful. Thank God for friends who have a lot of talent. They were willing to donate their help and talent to us. We had a friend painting a mural. We had another friend building a jungle gym. My friend, who has her own small business of a publicity firm, helped us launch. We didn't know how to publicize ourselves. She helped us launch the business. It has been really great. We've been open six months.

After spending the initial finance to open the business, we then had to look for a loan to tide us over for the first year of business. We know that it was going to be rough for families to enroll. So we were attending a lot of Small Business Administration seminars. Those are seminars that are given free to the public to educate small business startups and give us information. I realized that I didn't have to be a McDonald's franchise. I didn't have to be a chain store to get financing. We could actually have a little loan to tide us over for the year. It didn't have to be a million-dollar project.

So we started speaking to a lot of people and my Community Board in Park Slope referred us to a Church Avenue Merchant's Block Association. They are a community organization that gives a lot of help to all kinds of phases in the community. I came to them and said, "Listen. I have a business plan. It's a really good business plan. We know what we want to do, but I don't know the first thing to ask for a loan. I don't have the financial forecast. I just know how much I need to buy the diapers, how much I'm going to charge tuition, and how do I put it together?" They were really great. They sat down and helped us, and we started looking for lending organizations in the community.

I realized that we didn't have to go to a bank. That was my big fear, was having to go to a bank. I won't have to say, "My credit report isn't great. What do I do?" So they helped us do that, and we finally connected with Brooklyn Economic Development Corporation. They're present here today, too. We went through their mini-loan program, REDAC. That's Regional Economic Development Assistance Corporation. They came through with a $30,000 loan. That allowed us to breathe a little, publicize ourselves and finish the supplies, and have a lot of safety things. That was the first thing. When we opened, the place had to be very safe for children. Some of those things we really couldn't purchase yet, so that really helped us. Now we also have a little cushion for rough times ahead.
My loan officer, Eric Steele, spent a lot of time providing us with technical support. Now, our day-care is very successful. We've been open six months, and we started showing profit by the fourth month. We've employed two full-time and three part-time assistants, so we create jobs. We currently have a waiting list of parents for our September school year. We've also gotten a lot of press. It's really great. The press is paying attention to mom-and-pop stories like this.

They go, "Oh, hey, you started in your home, and you didn't know anything about business? Oh, this is interesting." So they write articles about parents who work from home. We were also recommended by the Entrepreneur Assistance Program, which is an excellent group of organizations that help small businesses. They are key in New York small business.

So it's a bright and scary future. The next thing on the agenda for us is to open more branches. So we're looking for investors.

We hope to have a lot of Honeydew Drop Daycares all over New York. Maybe your children will go to one of them.

Nancy Barry, Women's World Banking
I just wish to place this both in a global context and in particular, in the context of Women's World Banking. We, like Grameen, started out in this business of microfinance before it was called microfinance or microcredit, in the mid-1970's. Today we are very proud to say that Women's World Banking affiliates such as women-led organizations, serving poor women entrepreneurs, or associates such as ASA, which are not necessarily led by women, but serve predominantly poor women, are committed to increasing the role of women at all levels in their organizations. Also, the Women's World Banking led and catalyzed learn-and-change networks, to include an Africa microfinance network. That involved 14 countries, 300 institutions, involving over 1 million clients. The International Coalition of Women in Credit is really committed as a global network of microfinance networks and retailers. It gives poor women a direct voice in the decisions of their institutions and countries. Finally, there is the Global Network for Bank Innovation in Microfinance. This involves over 50 regulated financial institutions that now see microfinance in these 500 million potential clients as bankable. I'm very proud to see Steve Rockefeller, for example, of Deutsche Bank (Formerly Bankers Trust). That institution, along with Citibank and others, have really been leaders in creating new instruments that enable capital from the global capital markets to begin getting to microfinance institutions. They are being very creative at new combinations of technology and touch. We find in the Global Network for Innovation that microfinance institutions such as our affiliates and organizations that are represented here are 'way ahead of the banks in demonstrating how to do efficient cost-effective, responsive financial services for the poor. But the banks are way ahead in terms of having products and new combinations of technology and touch. So there is a real win-win in sharing knowledge in a generous way. Fortunately, people are more generous when talking about what they do for the poor than sharing their trade secrets of investment banking. This is yielding microfinance as a major movement. So I am very proud that these various leaders are showing that microfinance, unlike traditional capital markets, is depicted by the leadership coming from the south.

So we have heard from these giants from Bangladesh. We have another giant in Indonesia, which has over six million borrowers and 26 million savers. That's BRI. We have tremendous leadership coming out of Latin America. Some of the largest institutions in the world in microfinance are credit unions of West Africa. So this is something where we, as North Americans, can be a little modest. The principles underlying Grameen, ASA and the myriad of individual and group lending methodologies that are being used successfully around the world can be picked up here. It's got to be simple, it's got to be quick, and you've got to in some way go to the customer. But even though Shafiqual used the word, "replication," I think we are really talking about replicating the principles and being very clear that you're going to use a different methodology if you've got ATM machines on every corner, and credit cards in the hands of most poor people, than you would if there were no decent banking system operating in your country.

Finally, the most exciting thing to me about this movement is that with 20 million examples of successful, active clients, poor women getting loans today, we (meaning Yunus, Shafiqual and all of the other leaders in microfinance) are having some real success in changing the minds of policymakers. The Central Bank governor of India last year liberalized all interest rates for microfinance. That came out of a process of the 20 leading microfinance practitioners of India led by Ila Bat and the Chair of Women's World Banking saying, "What ails India? If Bangladesh can do it, what's wrong with us?" They went on to say, "Part of the problem is that we don't have the vision for scale, and we do not have the management and systems to achieve that scale. Only then did they start pointing the fingers at the banks and the policymakers." What happened when all of the actors got together is that they together built a new, more commercial vision for microfinance, instead of government patronage where the loans are around before the election and somehow evaporate; both the payments and the availability, after the elections. To really seeing the importance of the private sector not-for-profit and for-profit. And having the government recognize that it needed to build a microfinance-friendly policy and regulatory environment. It is by building financial systems that work for the poor majority, that we together will change the way the world works.

Thank you very much. With that, I'd like to take questions and comments for any of the speakers from the audience.

QUESTION & ANSWER SESSION

1. What effect is the microcredit movement having on the men?

M. Yunus: It is having a great effect. At first, the man didn't feel that the loan should go to his wife. That was humiliation and insult to him. At the same time, we realized later on that it's not only an insult. Actually, he doesn't have any trust in his wife's stability to handle money. He thought he was wasting money. This money would just be disappearing and it would never get there. So he will be responsible to pay back the bank. So he resisted. But the surprise came when she started taking the money and he thought now she would be asking for money from him to pay it back. She didn't do that. So that was a big surprise to him. Each step of the way, as it takes weeks within a year to pay back the loan, each surprise comes when the weekly installment time comes. She is not asking and now she's earning money. His image of the woman in his family completely changes. Inside, he starts admiring the person, but outside he doesn't show it, yet. That will be very insulting for him to recognize the ability of his wife.

But he starts feeling that he never knew about this ability of his wife. His wife never had the opportunity to show her ability, because she lived a very straightjacket life, looking after children or cooking the food for the family. So I would say that the impact is very positive. There is resistance, there are oppositions, but gradually, there are a lot of partnerships emerging from that. I've seen many families today that are income-earning families where women are the major income earners, starting from not being an income-earner at all. So that's a great realization. Thank you.

2. It looks like micro-lending is proving to be very successful in your experience. But still it remains at a limited extent. Do you think it will become global? From my understanding, ¾ of the globe is still needy of this type of economic change. Secondly, in what way do you think globalization will help micro-lending to become one of the tenets of World Bank, World Trade Organization of the Northern economic system of the next century, which is already here? Or do you see the interests of globalization coming into conflict with the interest of the rightful lending community and consequences that you represent?

M. Yunus: You should be asking this question to the policymakers. That's right. That's where our problem lies. If it is good, if it's appreciated, admired and recognized and researched, why shouldn't it be done globally and widely and so on? That was the intention of the Microcredit Summit in 1997 in Washington, DC. It was to raise this issue with all global policymakers. A goal was set by the Summit-Nancy was very active in organizing that Summit-the goal was to reach the 100 million poorest families with microcredit. It would preferably be through the women of those families, by the year 2005. So today, the year is 2000. We have to go very close to 100 million or beyond 100 million if you really wish to make a dent. But that's not how we see things happening, yet.

Still many countries are talking about things. We can say there are microcredit programs in every country of the world, yes. We can say that. But it's not even a drop, considering the need in that particular country. So what is the big waiting for that? So that is the question that we should be raising at all levels. What has been done with the financial institutions over the years? There has been negating, rejecting poor people and blaming them for not being creditworthy.

Today, if this had been shown that it's a complete lie and completely wrong, then why is it taking so much time to right a wrong, especially when it involves peoples' lives; particularly poor peoples' lives. They are struggling to make an honorable existence in this world.

The second point is about globalization, yes. If you think about globalization without microcredit, this would be disastrous for poor people because they have to participate. You cannot have a globalization denying all of the active participation of poor people. That means a one-sided murder: just to go and clean them up. One way to survive and participate would be for poor people to have that instrument in hand so they could play the game. Then they would be participants in that game. It's absolutely necessary. Globalization without universal microcredit invites a big, big social disaster.

Let me add one more point, here. We have for the last few years been visiting some other countries for exporting microcredit in other countries. The first problem I find is lack of courage. The leaders of the NGOs or microcredit sector come from informal sectors. They lack courage because they left an established job and joined in an informal job where tomorrow is uncertain. When Professor Yunus started from the university he had a government job. To choose an informal job was not known to me. This type of courage I find very much lacking in other parts. They count thousands. We in Bangladesh count millions. They ask me, and once I replied that I have six thousand staff in Grameen, maybe twenty thousand. "You have six thousand borrowers?" "No, no, no, we don't count borrowers by thousand. Borrowers are by millions." So number one, they lack the courage.

Secondly, they need technology, also. They don't know how to operate because they have one way of doing things. Government-oriented microcredit failed everywhere in Asia, Africa and Latin America. Then people realized, "No, no, no. If you give credit, it will not come back." In Pakistan and India and everywhere government-directed microcredit miserably failed. That is why now they are afraid of microcredit. It will take this ten years' time from the Microcredit Summit. It won't be able to solve or remove the fear of the people. Once you remove the fear, other things will come automatically. They will not need so much.

Regarding globalization, globalization without microcredit really all would be unemployed. All would be sitting in their houses without any jobs. They would only be blaming the leaders of globalization. They will not pray for them. It is better if they start microcredit in a massive way. Not only will they be scolded, but they will be also prayed to God for, for their salvation, those who lead the walk for globalization.

N. Barry: I'd just like to add one thing in terms of globalization with microfinance. I think it's a very important point to make, since we are in the global capital of capital markets here in New York. That is the example of Indonesia.

In Indonesia, with the financial sector crises a couple of years ago that hit many emerging markets of East Asia, BRI which is another giant in microfinance, had to write off 100% of its corporate portfolio, as did most of the banks in Indonesia. What happened to the six million borrowers? Their on-time repayment went down from 98.5% to 97.5%, and they picked up six million savers during the financial crisis. This is extremely important for those of you who have positions of leadership in financial institutions. We have got to make it clear why micro-enterprise is the base and backbone, and why microfinance is the base and backbone of economies and financial systems. It's not really that we are advocating that banks in New York make dollar-denominated loans in Bangladesh or Indonesia or Africa. This is really about first integrating these institutions into the domestic financial system.

ASA, after the flood, was in great shape. Their costs were so low that they were able to borrow from the commercial banks. They had built volunteer savings. Their clients clearly did not want to not repay their loans, because they wanted continued access. So all of us who have finesse and sophistication in financial instruments need to be very creative in terms of how to mobilize savings and how to dollarize savings, instead of dollarize lending. We can then in fact shift some of the ways that these trillions-of-dollar-a-day are flowing; to actually participate in what works and to enable the poor to share in global growth.

3. Would you speak a little bit about the effect of the microcredit movement on people doing human rights and social advocacy-if there is an impact or if there is a relationship between these two.

S.H.Choudhury: There is a lot of independent research going on, not only in Bangladesh, but in some other places. Everybody came to the conclusion that effective microcredit means you must provide them an appropriate amount. Some of the microfinance players, not only in Bangladesh and Africa, but in other countries, are not really giving effective microcredit. Just to show they are in the business, they provide 500 taka, 100 taka, 300 taka. Like that. If you give them an appropriate amount, you find that in three or four years' time-the first year they may not be able to solve their problems-but within four to six years' time, we find that even their housing conditions have improved. They first year they change their roofs, second year they change their doors and windows, third year they change their walls, etc, etc.

Even in the human situation you were speaking of, when people feel they are better off economically, then they can raise their voices in a much louder way than people who are less well off. Industrial workers raise their voices much more than agricultural workers. It is because industrial workers have a regular income. That is why they can raise their voices. So in this respect, you can see the positive effect of microcredit on human conditions. Most of the time I find that there is not enough research done. According to my experience, the most critical people of microcredit are the academician and researchers. If you are here, please don't mind. I was about to say that you are the enemy of microcredit. But I won't, because otherwise I will encourage more enmity with you.

Academics and researchers-they are critical. If someone says that I solve the problem of the poor, then they will say, "Oh, my God. You are not covering the hard-core poor." If you cover the hard-core poor, you will say, "You are not covering the women." If you cover the women, they will say, "You are not covering the men." When you cover the men, they will say, "You are not covering the children." Like that. It's never-ending that they will attack you. That's because they also have some vested interest. Most of these people are doing consultancy, right?

4. I'm from Central Africa, the Democratic Republic of the Congo. I was wondering why there are no such microcredit movements in Central Africa.

N. Barry: Actually, there's excellent experience in West, South, and East Africa. The West Africans are real leaders in the whole Credit Union Movement and member-based organizations. They are ahead of many other continents in terms of savings mobilization. South Africa has been highly innovative in building a series of private for-profit. The finance companies have gotten involved and used indigenous structures to reach groups. Some of the East African institutions including the affiliates of Women's World Bank have shown that you can build sustainable operations not necessarily needing a million clients. If you have 20 thousand clients, you can break even, in terms of building sustainable operations. I think in the center of Africa, things have just been so tough socially and politically that people and local leaders have not yet stepped up to the plate. That is why I love the Bangladesh example. Bangladesh, before microfinance, was viewed as a basket case. Nobody is talking about Bangladesh as a basket case anymore. So we have demonstrated in countries as difficult as Haiti and Bosnia and now Russia is moving on microfinance. There is not a context in which this will not work. Obviously, it's better if the policy environment is microfinance friendly, but as Shafiqual and Yunus have said, first and foremost, it is about connecting with poor women. Secondly, it's about the courage to find big solutions to big problems.

5. What is your percentage of non-performing loans, and how did you go about recovering them?

M. Yunus: Well, presently, it varies differently. After the last flood, the percentage increased tremendously. We are struggling to get it over. During the flood, what we did was to extend the period of repayment. The flood was ten weeks, continuously devastating the country. So we are now trying to extend that repayment period so they have a chance to recover. Usually, our period of repayment is one year. Since it is paid in weekly installments, some payments would be going over one year, we see basically that within two years, all of the repayments are made. Our bad debt has been less than one percent. That's what the final result is, if that's what you're leading up to. The bad debt issue, I think is on par with any financial institution. But during that period, we needed to adjust ourselves because of the fluctuation and the situation that people go through.

S.H.Choudhury: Our normal repayment rate is 99.50. Even after the flood, it was not affected much. Two years back, we started mobilizing more savings from the poor, so that they could withdraw during bad times. This helped tremendously during the flood. When the flood people came forward for their savings, and we allowed their withdrawals not only for that condition, but for fixing us. The recovery came from that site. This is one thing. But microcredit, our expenses are also like that. Before lending you may not be so sure if they are creditworthy or not. But if you have a mechanism of collection, you will be fine. We have come up with ten ways to collect your loan.

Number one: You will laugh when you hear this. We have developed a technology of sitting in front of the borrower's house. If the borrowers don't pay, our staff stays in front of the houses until midnight. They see if you are serious about repaying or not. If you are not repaying, then they will not leave your house. Even in the Philippines, we tried that. It worked nicely-our staff would come at eight in the evening and borrowers would feel ashamed. They would say, "No, I have some money and we are paying."

This is one way. The second way of mobilizing savings is that we have a small insurance program. It is for when people die. When they die, they have an insurance premium. From that, they can adjust. Like that, both economically and socially, you can cover the debt.

N. Barru: Thank you. Thanks to our panelists. Thanks to all of you. I would like to turn it over now to Ambassador Wisner.

Closing Remarks by Ambassador Wisner
Let me on behalf of everyone gathered today, extend a word of thanks to you, Nancy, to Mr. Choudhury, to Muhammad Yunus, to Ms. Fabiola Santos-Gaerlan for a really and extraordinarily lively and informative session.

I would like also to remind all of you who are here today that the next meeting in this series of discussions will take place on the 30th of May. The Asia Society will host Asma Jahangir, the United Nations Special Reporter on Extra judicial Summary or Arbitrary Executions, and the Co-Chairperson of the Human Rights Commission of Pakistan. She will be coming to speak to the Asia Society, and I would welcome all of you finding a way to attend that session, as well.

Again, ladies and gentlemen, if you'll join me in thanking Nancy and the panel.