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Microfinance is not as a suite of social products, it’s a platform for social development through business, according to Alex Counts, president of the Grameen Foundation. “Grameen plus 22 other not-for-profit and for-profit companies it built up are tackling different parts of poverty and development in a businesslike way, leveraging the infrastructure of Grameen Bank wherever possible. That’s the way forward,” Counts said during a fireside chat with dean Edward Snyder at the Hyde Park Center on April 4.
“To the extent that microfinance institutions around the world do not necessarily think of themselves as maverick banks but as platforms for development, then I think we will have the biggest impact on poverty,” Counts added. “We will not have intellectually boxed ourselves in to a narrower role.”
Grameen measures its success by being able to break the generational cycle of poverty today for a massive number of families, Counts said. “We’re talking about breaking the cycle in a way far beyond what would naturally occur,” he said. “For some number of them it would happen anyway, but poverty is part of everyone’s ancestry. If you look far enough, somewhere in our family it was broken. The goal is to use microfinance as a catalyst to allow hundreds of thousands of families to break it in this generation, given the tools to do so. Capital is so important, because we live in a capitalist world.”
Grameen’s initial plan was to reinvent banking and eliminate its image as anti-poor, anti-women, and anti-illiterate, Counts said. The goal was to make 50 percent of its loans to women, but today almost all new borrowers are women because they almost naturally follow the company’s business model, he said.
“When women started earning profits from their business, they deployed and invested those profits very, very differently than men,” Counts said. “Basically they put their money into these long-term investments—health, education, and the nutrition of children —that accelerated the best chance for breaking the generational cycle of poverty.”
For microfinance companies to achieve rapid and sustained growth in a country, Counts said the country must have at least some regulatory support and a large market of self-employed people. Other conditions that help include low barriers to entering into business (particularly those with which the poor are familiar) and access to capital, Counts said. To grow, the companies must have access to predictable streams of capital, he said.
The student-led groups Chicago Global Citizens, Net Impact, and the Emerging Markets Group approached Grameen because found Muhammad Yunus won the 2006 Nobel Peace Prize, said second-year student Kendra Krolik, co-chair of Net Impact. “It’s increasingly important for business leaders to understand that there is a greater responsibility to contribute to the world beyond the private sector,” Krolik said. “There are a lot of people who aren’t benefiting from the economy in the way that we are. To the extent that we can raise the awareness of students in seeing this larger social responsibility, that is a worthy endeavor.”
—Phil Rockrohr
