I Am Beautiful: A Celebration of Women in Their Own Words

feminomicsCOLLECTIVEENTREPRENEURSHIPWhat developing nations are teaching American women about businessBY MARLENE C. PITURROC C ~¥~ KNEW I NEEDED MORE MONEY TO HELP MY BUSINESSI survive," says Ana Pena. "But the bank wouldn't-Llend to me and I was afraid to borrow more on mycredit cards because the interest rate is so high." In her 30s,with dark hair and a bright smile, Pena and her large familyimmigrated 20 years ago from the Dominican Republic.Pena had long been a self-employed beautician, but withoutcapital she couldn't stock up on the supplies she neededor upgrade the appearance of her two-chair beautysalon in the Williamsburg section of Brooklyn.Then she heard about ACCION New York, a bankingprogram that offers "microloans" to customers that ordinarybanks don't view as creditworthy. (Once offeringloans as small as $100, ACCION New York now providesmicroloans ranging from $500 to $25,000.) Pena joinedforces with two other women to create what Accion calls a"solidarity group." The group applied for a $4,500 loan,with the funds to be divided equally among them. Together,they were responsible for repaying the entire loan. If onemember defaulted, the other two would have to make upthe difference or no one in the group be eligible for anotherloan. Today, with the original loans successfully repaid, thegroup has borrowed a larger amount on what Pena calls"comfortable" terms. She has expanded her business, employstwo beauticians and can now pay her mother and sisterto help out during busy times.Cross-Cultural OriginsThe concept of microloans has its roots in the work of developingnations to secure its citizens' economic future.One of the first bankers to go micro was Dr. MuhammadYunus, president of Bangladesh's Grameen Bank. He intuit-MARLENE C. PITURRO is a freelance journalist and aformer banker from Hastings-on-Hudson, New York. Piturro'slast story for ON THE ISSUES was a profile of Hong Kong's AnsonChan, "First Chinese, First Woman," summer 1995.ed that lending women entrepreneurs small amounts ofmoney—whether to buy two laying hens or a sewing machine—woulddo more to end poverty than governmenthandouts or dependence on a husband.How to lend to women with no credit or collateral?Yunus solved that problem by having women form groupsof four to six entrepreneurs to cross-guarantee loans. Eachwoman received a small loan, which all had to repay beforereceiving subsequent higher loans to grow their businesses.A laggard's loan would be covered by the other groupmembers before they could move forward. Yunus' ideaworked. Grameen Bank has made over two million microloans,nearly all to women, with a repayment rate of97 percent, versus less than 60 percent for wealthyBangladeshi borrowers. "Capital does not need to be thehandmaiden of the rich," Yunus says.India's Ela Bhatt started the Self-Employed Women's Association,a trade union and its bank in 1974, to help its4,000 members earn a living. The association lendsamounts as little as 50 rupees ($1.40) to buy seed corn orfabric to women who couldn't even sign their names.Bhatt's bank has maintained a loan portfolio of $3.6 millionand reached 85,000 customers. The group has a loan repaymentrate exceeding 95 percent.It might come as a shock to many Americans that conditionsfor 40 million poor people in the United Stateshave become so appalling that international relief agenciessuch as Oxfam, ACCION International and Save theChildren support the establishment of similar relief programsfor America's inner cities. But the fact is that suchprograms, imported from Bolivia and Bangladesh, areworking just as well among the American poor. Theseeconomic innovations have come not a moment too soon;the bipartisan 1996 welfare reform bill, with its sink-orswimapproach to poverty, makes inner city and rural entrepreneursvital to stopping the further economic deteriorationof their communities.Spring 1997 • ON THE ISSUES 37