2. Background and Literature Review
2.2. The Grameen Bank – The Banker to the Poor
2.2.4. Replications of the Grameen Model
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2.2.4. Replications of the Grameen Model
As a result of the success of Grameen Bank, “many people and organizations begin to think in Grameen's way, and want to learn more about Grameen and follow Grameen's principles in their own sphere of work.”6 For this reason the Grameen Bank created the Grameen Trust in 1989. Powered by donations, the Grameen Trust creates The Grameen Bank Replication Program with the objective of turning the Grameen philosophy into reality in many different places worldwide by replicas under close supervision. The replications have been made by direct implementation or through partners. (See Tables 3 and 4)
The direct implementation projects are created with a view to set up sustainable microcredit programs in locations that are poverty stricken, devastated by natural calamities or badly affected by civil war. At present, Grameen Trust has ten ongoing direct implementation projects in nine different countries such as: China, Colombia, Guatemala, India, Kosovo, Mexico, Turkey, The United Kingdom and The Unites States of America. The data up to September, 2014 showed that the number of accumulated members was around 250,000 in 188 branches. Almost most of the borrowers are women reaching more than USD 125 millions in outstanding loans with an average repayment rate of 97 per cent. (See Table 3)
6 Retrieved From: http://www.grameen.com
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Table 3. Grameen Trust Direct Implementation Projects
Notes of Table 3:
1) Cumulative numbers as on 30th. September, 2014 2) Number of reporting organizations - 9 in 9 countries.
3) Total Number of Direct Implementation and Joint collaboration projects in Grameen Trust - 17 in 15 countries.
Source: Grameen Trust
The replicas implementation through partners consists in hand of the projects over a local organization or hosts.
There are more than forty countries that are participating in this model, including Ecuador.
Some of these countries are Afganistan, Bangladesh, Bolivia, Bosnia and Herzegovina, Cameroon, Egypt, Kenya, Korea, Kosovo, Kyrgyzstan, Lesotho, Malasya, Mauritania, Myanmar, Mexico, Nepal, Nigeria, Pakistan, Philippines, Samoa, Senegal, Tanzania, Uganda,
Country Year of
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supported organizations in 41 countries.There are more than 14.5 million accumulated members and almost USD 13 million cumulated amount disbursed. Nine per cent of the borrowers are women with a repayment rate of 94 percent.
(See Table 4).
Table 4. Grameen Trust Partner Organizations
Notes for Table 4:
1) Amount in US$
2) Monthly Statement : September 2014
No. Particulars Number/Amount
1 Total Number of GT Supported Organizations 151
2 Total Number of Countries 41
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Source: Grameen Trust
2.2.4.1 Replications in Developed Countries
The World Bank defines developed countries as industrially advanced countries with high income, in which most people have a high standard of living. According to the World Bank classification, these include all high-income economies except Hong Kong (China), Israel, Kuwait, Singapore, and the United Arab Emirates. Depending on who defines them, developed countries may also include middle-income countries with transition economies, because these countries are highly industrialized.7
Even though developed countries have good living conditions, poverty is everywhere. Yunus in his book says that the Grameen model can work wherever there is poverty, including wealthy countries, as we see in the replicas. He states a clear example about the United Stated of America, where the model has been applied to the development of the poor, the homeless and the unemployment people. Bill Clinton, who was the Governor of Arkansas in 1980, decided to set up a bank designed specifically for the poor. At the beginning the idea was ridiculous for Americans even the poor, but then they started small business such as buying nail-sculpting boxes, sewing machines, preparing tacos, or push-carts to sell food.
The name of the Grameen Fund in the US is The Good Faith Fund for making the administrative part easier. When Clinton ran for president he often used the Fund as an Arkansas example of a successful, innovative way to fight poverty. This experience was replicated in South Dakota, Oklahoma, Cherokee, the ghettos of Chicago, Tulsa, Dallas, Texas, Harlem in NYC, and others.
7 Retrieved from: http://www.worldbank.org/depweb/english/beyond/global/glossary.html
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In 1988 the Women´s Self-Employment Project (WSEP) and the Full Circle Fund (FCF) were established in Illinois in order to offer loans to women from USD 300 to USD 5000. They face a problem because the welfare laws in the US create disincentives for welfare recipients to work. Those who receive the welfare become virtual prisoners not only of poverty but of who would help them. They are not allowed to borrow from any institutional source, so these projects are not useful for them. After many negotiations the state approves a one-year waiver at it is renewed year by year. Some other skeptics think that women in the first world are naturally independent and a five-woman group idea would never work with them.
Similar histories are alive in Western or Eastern Europe or countries such as Canada or England and in all of them the greatest nemesis is the tenacity of the social welfare system.
Some borrowers try to take loans in secret, hoping the government will not find them out;
practically many of the first borrowers from Grameen type programs in Europe are technically lawbreakers. Unbelievably, when the law finally accepts them to take the loan, charity program operators will not allow them. The finance ministry of Poland examines two hundred different lending methodologies and tests nine pilot models. At the end they decide to adapt Grameen and now they have twenty branches lending to four thousand clients, with a repayment rate of 98.5 per cent and loans of USD 10 millions. The Norwegian ministry offers women credit for generate activities to help them keep on the islands and make their live less lonely and more meaningful. It shows that the purpose goes beyond money. Also Finland and the northern Russia have some kind of depopulation problem and this model creates activities such as making sweaters, paperweights, postcards, wooden troll statues, and painting of the local scenery, so these women’s lives get a new motivational meaning.
Additionally in Finland, they create a “green” credit union, which gives microloans to people
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who are willing to work only in ecological and social fields.
2.2.4.2 Replications in Developing Countries
The World Bank defines developing countries as countries with low or middle levels of GNP per capita as well as five high-income developing economies -Hong Kong (China), Israel, Kuwait, Singapore, and the United Arab Emirates.8 More than 80 per cent of the world's population lives in the more than 100 developing countries.
There are many developing countries that have adopted the Grameen model in different continents based on Yunus’s affirmation that this microcredit methodology could have near-universal applicability. During the early 90s Grameen made some pilot projects in Malaysia and the Philippines. When a teacher tried to implement in Malaysia he faced two main problems: building the Grameen from scratch and finding an appropriate legal framework to distance the program from governmental control without losing financial support. He found the support of the Asia and Pacific Development Center (APDC) that provided seed funding in the early stages of the Malaysia replication. After two years of the experimental phase, they announce ambitious plans to expand to even less developed regions of northern Malaysia. They form an association of Grameen replications programs called CASHPOR, reaching more than forty two thousands poor families living under the poverty line. The results are exceptional that their repayment rate is even higher than the Bangladesh´s.
In the Philippines, a teacher creates a replication called “Ahon Sa Hirop” that means rise
8 These five economies are classified as developing despite their high per capita income due to their economic structures or the official opinions of their governments.
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above poverty where the main activity is about rice, but many borrowers successfully raise pigs (very different from Bangladesh because of the religious concern of consuming pork).
This organization lives many difficult moments and troubles from the borrowers but even a higher difficulty managing the staff. All these problems change when they name manager a woman with a strong background in the private sector, excellent managerial skills, and a natural talent for working with poor women. Today this replica is one of the most successful programs. In addition in the Philippines, in the southern area, in the Negros Occidental the Governor created a replica of the Grameen called Dungganon, which means integrity. With the strong background in social work and heavy connections to international and national donor organizations, the director of the project builds up an excellent program serving several thousand extremely poor people.
The third program in the Philippines is called the Landless People´s Fund of the Center of Agriculture and Rural Development (CARD). In 1997 this program had acquired more than nine thousand borrowers, an excellent repayment rate and seven branches. Only six years after, CARD had grown to 69 thousand borrowers with same results.
Encouraged by the success of the programs in Malaysia and the Philippines, the Grameen creates the Grameen Trust that starts motivating many Latin American countries. For instance, Bolivia has lived a very difficult economical and political situation during 1980-1990.
According to Mosley (1999), the government relaxed its banking regulations, allowing nonbank finance companies to begin accepting deposits and making small loans.
Nongovernmental organizations such as Prodem9 and ProMujer followed the Grameen
9 Prodem means “The precursor to Sol Bank”
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microcredit model, including reaching out to the rural poor and lending to groups. “The initial rapid growth of micro-lending in Bolivia contributed to a measurable reduction in poverty”10.
Another good example is Guatemala. The “Asociacion Civil Guatemalteca Grameen Credit”
(ACGGC) is a Grameen project that was set up in December 2005 to provide microcredit for poverty alleviation in Guatemala with financial assistance from the Whole Planet Foundation.
Up to year 2007 they reached 6,617 clients and disbursed USD 1,489,414 in micro loans with a maintained 100 per cent repayment rate11.
10 Paul Mosley, (2001), Microfinance and Poverty in Bolivia
11 Retrieved from: http://www.grameen.com/dialogue/dialogue64/Central%20America.html
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Pacific Ocean. The country is divided in three natural regions and an island; the Coast, the Highlands, the Amazon and the Galapagos Islands, each with its own different characteristics, customs and weather. The following table summarizes the basic information about Ecuador.(See Table 5)
Table 5. Ecuador basic profile
Source: ProEcuador12
The economy of Ecuador is based mostly on exporting oil and products such as coffee, cacao, flowers, bananas, shrimp, gold, and the emigrant money transfers. According to the government, Ecuador closed the year 2014 with a 3.8 per cent unemployment rate, 34 per cent