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

More documents

Recommendations

Info

Public Policy BreakthroughIn the U.S. microlending began in the early 1970s. ACCIONInternational, which has run micro-enterprise programs inLatin America since 1973, set up shop here in 1991 after recognizingthe widening gap between haves and have-notsin the United States. By 1994, microlending vaulted to newlevels, when leaders at the World Bank realized that afternearly 50 years of trying to spur economic development inless developed nations, the rich were still getting richerwhile the poor languished. The bank's top honchos had anepiphany: put tiny amounts of capital into the hands of entrepreneursand you build countries. Joined by 23 other developmentbanks, the World Bank pledged $27 million ofthe $200 million total to microlenders through the ConsultativeGroup to Assist the Poorest (CGAP), expecting toreach 7.5 million women and their 38 million family membersin ten years.Piqued by the World Bank initiative and the success ofinternational microloan programs, U.S. Treasury SecretaryRobert Rubin successfully lobbied Congress and PresidentClinton, and in 1994 helped create the Community DevelopmentFinancial Institutions Fund (CDFI) to expand theavailability of credit, investment capital, financial and developmentservices in poor urban and rural communities.He then appointed Kirsten Moy, an expert in mortgagelending in poor areas, as CDFI's first executive director. Toimplement the CDFI politicians, following in the footstepsof international microlenders, deferred to private agenciesexperienced in micro-enterprise. CGAP would leverage the$200 million in funds allocated—enough to reach nearly 40million borrowers.The need is there. In 1995, CDFI received 268 applicationsrequesting more than $300 million in financial assistancewhich is a 10-1 subscription above the $31 millionavailable.Janie Barrera, Executive Director of ACCION-San Antonioand a daughter of micro-entrepreneurs, has demonstratedthe correctness of those decisions. Barrera's parentsscrimped and saved to open a Mexican restaurant in CorpusChristi, where she waited tables. After a stint in the AirForce, her entrepreneurial instincts and her desire to returnto her community to "make a difference," led her toBoston-based ACCION International. With ACCION seedcapital she set up an office, then went banging on doorsuntil she got four banks to extend $150,000 worth of interestfree credit. She cadged an additional $150,000 fromPartners for the Common Good Loan Funding, a religiousEqual parts banker, social worker,cheerleader, den mother, andMafld bagman, successful microlenders dothings that few traditional financiers do.organization dedicated to socially conscious lending.Crisscrossing the sprawling city, she now ferrets out theconventional banker's nightmare clients—women, mostlyLatinas, with bad or no credit. Often she finds them as foodvendors at street fiestas that move from neighborhood toneighborhood. Some work from store fronts; perhaps a curtainand drape retailer who could land a major contractwith the school district, if only she had credit to purchasematerial.Barrera and her staff find these entrepreneurial womenthrough word-of-mouth, public service announcements(PSAs), newspaper ads, socials, and tenant meetings. Withloans averaging $2691, ACCION-San Antonio has disperseda total of $1.5 million in loans; they had one defaultthis year. ("If only she had come to us for help," moans Barrera).Barrera's goal for ACCION-San Antonio and herclients is economic self-sufficiency. She has funds to make350 loans a year but expects to come up short. It's not easyto find borrowers among those alienated by the bankingsystem, and convincing them one-on-one that they deserveaccess to credit and capital. Since the lender goes out on alimb (Barrera once accepted a day care center's couch ascollateral), she must have monthly payments on the loan'sdue date. Poor judgment about a client's credit worthinessand lax repayment collection would quickly doom a microlender.Barrera recalls a husband-wife team who sold icecream from a truck for 15 years, saving every penny to buya dilapidated grocery store. A small loan transformed it intoa thriving taqueria; two subsequent loans enabled them tobuild a drive-through window. Rapid growth sometimescreated cash flow problems. Barrera feared that they wouldstart skipping loan payments. Her fears seemed real on thelast day for an on-time payment, until the borrower arrivedat ACCION's office, soaking wet after taking buses througha rainstorm to deliver her loan payment.An Antidote to Welfare?Connie Evans, executive director of the Women's Self-EmpowermentProject in Chicago, tries to strike a balance betweenmicrolending and support services for her agency'sclients, 35% of whom are on welfare, 80% whom are black,all with family incomes below $15,000. Having visitedGrameen Bank in Bangladesh, Evans has modified microfinanceto work in an inner city. She's flexible about solidaritygroups, forming them only when a simpatico group coalesces.She also spends time helping women negotiatesocial services, puts five percent of loan proceeds into ansavings account for clients' emergencies, and offers somebusiness and technical support: "This is not Bangladeshwhere you can buy a cow and sell the milk. A woman fromthe South Side might be sewing garments from home, butshe's competing with Wal-Mart and J.C. Penney. We've gotto step up with technical assistance and increasedloan size."Other municipal programs contract with privateagencies with close ties to their needyclients. Ithaca Urban Renewal Agency of Ithaca,N. Y, for example, chose Angela Noble Presidentof the Noble Economic DevelopmentGroup to design and deliver local microenterpriseprograms. Noble's typical clients are poor women ofcolor, such as a landscaper who came to the loan-reviewcommittee with two-foot long garden shears in hand. "Wedidn't turn her down," notes Noble.Flexibility and fine-tuning are the keys to successful mi-Spring 1997
croloan programs. Chicago's Connie Evans tinkered withthe Grameen model so that it could work for welfare mothers.Angela Noble would like to raise her programs' loancap from $5,000 to $10,000, and struggles with an 8 percentinterest rate for borrowers—higher than the human-servicetypes wanted, but lower than the bankers' comfortlevel.New Mexico's Melinda Kenefic lobbied hersenator, Peter Domenici, to increase microloanfunding as she stood behind him on the take-outline for Chinese food. ACCION-New York'sDelma Soto wants passionately to have thelargest microloan program, (at the very least, tobe the largest microlender to Latinas), and tokeep her default track record at $26,000 on a $3million portfolio.The Answer to Poverty?Is there a downside to microloans? Touting microloans asthe antidote to American poverty is asking more from a financingmechanism than it can deliver. Even though eagleeyedmicrolenders do everything to ensure success—providingbasic business training, one-on-one attention, andpeer pressure—they can't make everyone an entrepreneur.Although rugged individualism and the entrepreneurshipit spawns symbolize America, small companies havealways played a more important role overseas. A 1996study in Inc. magazine found that micro-enterprises (businesseswith fewer than 10 employees) were more prevalentin Europe than the U.S., 93.3 percent versus 78.2 percentTaiwan and Korea became economic superpowers from outof nowhere, thanks to their entrepreneurs. In China, sincesupreme leader Deng Xiao Ping declared in 1979 that "toget rich is glorious," small enterprise jumped from 1.4 millionto 20.8 million, contributing 31 percent of that country'sproductive capacity.Best estimates indicate only 10 to 15 percent of Americansare cut out for self-employment. However, the SmallBusiness Administration estimates that nearly all of the 2.6million new jobs in America in 1995 were created by smallbusinesses. So as micro-enterprises grow, they have job-creationpotential that can benefit more people in poor neighborhoods.A real threat to the continued success of micro-finance isconventional or SBA programs masquerading as microlendingprograms. The Illinois Development Finance Authority,for instance, made 22 loans totaling $410,000. The IDFA'saverage loan, however, were higher than the usual loan of$10,000-$20,000. Default rates soared to between 25 and 30percent. IDFA's Executive director Bobby Wilkerson said:"The default rate raised some concern among some of ourboard members in terms of how we're handling creditanalysis." If the IDFA scenario plays out around the country,with community development types handing out heftyloans without proper checks on credit and collateral, genuinemicroloan programs will be killed as well.When it comes to increasing poor people's access to creditand capital, good intentions aren't enough. GreenpointBank of Flushing, Queens' "low documentation/no documentation"home mortgage loans shows that bad thingscan happen to nice bankers. With the same impetus as microlending,GreenPoint eased credit terms for immigrants,people with poor credit histories, and low-income borrowers.In less than two years the default rate hit 12 percent, resultingin 2,100 home losses, destroying the dreams of"A woman from Chicago's South Sidemight be sewing garments from home, butshe's competing with Wal-Mart andJ.C. Penney. We've got to step up withtechnical assistance and increased loan size."homeowners, their families and tenants. Without a microbankerwho leads with her gut, but follows her portfoliolike a bird dog chasing prey, just lowering the barriers tocredit and capital access can be disastrous.Assuming that microloan programs continue their upwardtrajectory, will banks have a microloan window inevery branch? No, because conventional banks are notstructured to profitably provide small loans. That hasn'tprecluded program heads such as Barrera, Soto, and Evansfrom devising ways for big banks to participate by extendinglines of credit to their nonprofit agency and treating theaggregate microloans as one loan. The agency, in turn, disbursesthe funds and takes responsibility for collecting thepayments from each borrower.Banks are also helping with philanthropic programs suchas the Citicorp Foundation's "Banking on Enterprise",which will disburse $10 million over five years (1995-2000)to microloan agencies last year. Brandee Galvin of the CiticorpFoundation explains: "It makes perfect sense for us topartner with microlenders. These programs are effective,have a positive impact on people's lives, and build appropriatechannels for accessing the capital markets." Citicorpis also sponsoring a microloan summit this month, expect-^^^^^^^^^^^^^^^ ed to attract 4,000For information onmicro-loan programs in yourarea, contact:Association for Enterprise Opportunity70 East Lake StreetChicago, Illinois 60601(312)357-0177The Aspen InstituteSELP-Ste 1070333 New Hampshire Avenue, NWWashington, DC 20036(202) 833-7434Office of Public AffairsDepartment of Treasury1500 Pennsylvania Avenue, NWWashington, DC 20220(202) 622-2960global participants.Despite the foreignnessof microloanprograms tomost Americans,they represent atremendous boostfor the economicallydisenfranchised. Becausesmall amountsof money can be lentover and over again,the relatively smallinvestment of $200million can reachover 40 million entrepreneurs,creatinga cycle of independenceand opportunitythat can changewomen's lives. •S p r i n g 1997 • O N T H E ISSUES39
Page 1: FEMINIST CULTURE • POLITICS • R
Page 11: thors suggest are naively "grateful
Page 14 and 15: One Flew Over the Coup:The Sculptur
Page 16 and 17: Desperate Measures:A mother battles
Page 18 and 19: BUSINESS REPLY MAILFIRST-CLASS PERM
Page 20 and 21: ON THE ISSUESS p r i ng 19 97theonl
Page 22 and 23: ported their effort to keep the chu
Page 24 and 25: were not permitted to speak. They m
Page 26: the most drowsy intelligence, I tho
Page 29 and 30: MARGUERITE, Cambridge, Massachusett
Page 31 and 32: W I JxJ_J A, Sunny Valley, OregonWh
Page 33 and 34: Experts expect it will be2000 befor
Page 35 and 36: IN THE MEANTIME, SHE IS HELPINGto c
Page 37 and 38: Touring Bosnia with Swanee Huntand
Page 39 and 40: After her husband's attack, Margare
Page 41: feminomicsCOLLECTIVEENTREPRENEURSHI
Page 45 and 46: BY RUBY R O H R L I C H1I OW COULD
Page 47 and 48: At the end of World War II, Rita re
Page 49 and 50: and we are working to make life bet
Page 51 and 52: My 1st gift to:AddressCityMy 2nd gi
Page 53 and 54: ooks& filmsThe battle between femin
Page 55 and 56: Roiphe's descriptions of her own fa
Page 57 and 58: IEImary caretaker and the wish to n
Page 59 and 60: CHKSLKR (continuedfrom page 7)my es
Page 61 and 62: ain't never done nothing for him? I
Page 63 and 64: said the deputy director of an Amer
Page 65 and 66: SWANEE HUNT (from page 33)amassing
Page 67 and 68: Looking for Another Great Feminist

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

Create successful ePaper yourself

Delete template?

Save as template?