Growth for All: Including the Poor in Strategies for Economic Growth

Michael Castellano is a graduate student at The George Washington University, studying International Affairs and Development. He interned with Bankers without Borders^® at Grameen Foundation during the spring of 2012.

In the years following the global financial crisis, politicians and policymakers across the globe have harped on one cardinal goal: economic growth. Without a doubt, plans for growing the economy will dominate discussions in the upcoming U.S. presidential election. It seems as though we as a society have collectively determined that if only the economy would turn around, conditions would certainly improve across the board. If only we could enact legislation to spur economic growth, inevitably we would all be better off.

Fortunately, statistics show that the United States has seen steadily climbing annual growth rates since the nadir of the “Great Recession.” Developing countries and emerging economies have, on the whole, experienced average growth rates of more than 5 percent thus far in 2012 and will continue to propel the world’s progress, according to financial forecasts. So – this is good news for everyone, right?

Not necessarily.

Although a country’s national economy may grow, the poorest of the poor often remain completely disconnected from the financial, political and social systems in place. Without active bank accounts, the poor cannot easily save or access other financial services. In rural villages, people may not have easy access to healthcare and can quickly fall victim to external shocks such as disease or natural disaster. Without these services, poor people around the world cannot reap the benefits of overall economic growth.

During my time at Grameen Foundation and through my studies in International Development during this past year, one fundamental lesson has stood out: Though economic growth is certainly important, growth does little to reduce poverty if the poor lack access to essential services. This illustrates a key principle that development practitioners dub “pro-poor growth.”

Michael Castellano, shown here during a trip to Australia, served as an intern at Grameen Foundation this spring.

Pro-poor growth involves forming development policies and strategies that target the poorest of the poor and offer new ways of connecting them to financial markets. Professor Muhammad Yunus, Nobel Prize laureate and founder of Grameen Bank, stated, “The direct elimination of poverty should be the objective of all development aid. Development should be viewed as a human rights issue, not as a question of simply increasing the gross national product.”

Giving Back: A Simple and Powerful Idea

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

On Wednesday, May 9, I had the pleasure of attending a book signing event at the Museum of Art and Design in New York City.  Meera Gandhi, a long-time Grameen Foundation donor and volunteer whose husband Vikram sits on our Board of Directors, has come out with a beautiful and moving book.  It is titled simply Giving Back.  I was fortunate to arrive early enough that I was able to get my copy signed early, and didn’t have to wait in the long line that formed later.

The book tracks the long philanthropic journey that Meera has been on by profiling 75 organizations – including Grameen Foundation – that she and her family have backed.  It is a diverse group that she divides into four broad categories: women’s rights, children’s issues, protecting the environment/battling disease and poverty, and promoting culture and the arts.  She believes so deeply that those of us who are blessed should give back to society that she has created the Giving Back Foundation to help carry on the work described in the book and a related film of the same title.

Grameen Foundation is proud to be one among so many outstanding organizations profiled in Giving Back.  Walking through the Museum’s atrium, I met many people who are involved in organizations that have been touched by Meera over the years.  It was a uplifting and humbling experience.

I was also interviewed twice on camera, including once by International Television Broadcasting, Inc. (ITV).  I met a woman associated with the Birch Wathen/Lenox School, which is profiled in the book.  My brother attended this school in the 1980s, and I was pleased to be invited to speak there this coming fall.  (Meera spoke there previously and the students loved it!)

One of the best sections of the book is a brief one titled, “How to Find a Charity that Speaks to You.”  I’d recommend her advice to anyone, especially those just beginning their own philanthropic journey.  In this mini-chapter, she asks the reader a series of questions about their preferences in such areas as gift-giving, and then suggests how different answers might affect the way that someone can engage most productively and enjoyably in philanthropy.  Her basic message is this: Find both a cause and a way of engaging with it that excites and motivates you.  It’s a simple and powerful idea.

What is clear from Meera’s writing and actions is that “giving back” – when done thoughtfully and in the right spirit – does not leave the donor with less, but rather with more.

Panel Explores the Power of the Mobile Phone in Fighting Poverty

Alex Counts is president, CEO and founder of Grameen Foundation, and author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

I first met Isobel Coleman, Senior Fellow for U.S. Foreign Policy and Director of the Civil Society, Markets and Democracy Initiative at the Council on Foreign Relations, through one of our greatest Grameen Foundation Board members, Lucy Billingsley.  When Isobel and I were introduced to each other, she was running a small program at the Council focused on women’s issues.  She has since grown it into a flagship initiative of this prestigious institution, and her reputation as a researcher and thought-leader has naturally grown along the way.

I was therefore very pleased when she invited me to speak as part of her Women and Technology series last week, alongside Ann Mei Chang, senior adviser for women and technology, Office of Global Women’s Issues at the U.S. Department of State (and formerly with Google), and Scott Ratzen, Vice President for Global Health at Johnson & Johnson.  The title of the session was “mDevelopment: Harnessing Mobile Technology for Global Economic Growth.”  We had a planning call with Isobel, Scott and Ann Mei the week before and I realized I was joining some extremely knowledgeable and articulate people.  To prepare, I read up on all of Grameen Foundation’s many programs that work to alleviate poverty by leveraging the mobile phone revolution, as well as some related research on inclusive business models.

Alex Counts makes a point while (from left) Isobel Coleman of the Council for Foreign Relations, Ann Mei Chang of the U.S. State Department and Scott Ratzan of Johnson & Johnson listen.

The event was kicked off with remarks by Suzanne McCarren of ExxonMobil, which sponsors this speaker series.  Suzanne, whom I sat next to during lunch, explained why women’s economic development is a high priority for their company’s foundation, which has made more than $50 million in grants so far, according to my notes.  Then Cherie Blair, the former first lady of the United Kingdom and the founder of a foundation that bears her name, spoke.  She announced the release of an important new report titled, “Mobile Value-Added Services: A Business Opportunity for Women Entrepreneurs.”  I had met Cherie several times through Meera Gandhi, whose book Giving Back features the Cherie Blair Foundation for Women, as well as Grameen Foundation.

Can trust and reciprocity within social networks play a role in rural financial systems?

Julius Matovu is the Research and Program Coordinator for Grameen Foundation’s AppLab Money Incubator.

Let me introduce two interesting petty traders based in Owino market – the busiest market in downtown Kampala. They are Akim, a secondhand-shoes trader, and Patrick, a secondhand-clothes dealer.

Last weekend I visited this market for a variety of reasons – including buying some “new” secondhand clothes to revamp my wardrobe. As I wandered through the market I came across these two different petty traders; because each of these individuals had something that I may need at some point, I had a good entry point for an in-depth interaction with each of them, to understand what they do. During my interactions, I observed a huge business potential based on the high number of people who visit Owino market every day. I also realized that for someone to tap into this opportunity, they must have sufficient capital. Most petty traders do not have adequate capital and can not turn to formal financial institutions because they do not meet current requirements to access credit.

However, my newfound friends have found a solution to this problem. They have developed a network of people who run similar businesses within Owino, and rely on people in these networks to extend quick credit to each other in times of deficits.

Read the rest of this post at our AppLab blog >>

The Power of Microbusiness

Shannon Maynard is the Director of Grameen Foundation’s skilled volunteer program, Bankers without Borders^®. Maynard has more than 15 years of experience in nonprofit management and volunteer mobilization. Before joining Grameen Foundation, she served as Executive Director of the President’s Council on Service and Civic Participation, and managed strategic initiatives for federal agency the Corporation for National and Community Service.

One of the books that has been on my reading list for a while but I haven’t gotten to yet is The Coming Jobs War, by Gallup CEO Jim Clifton.  As a busy working mom, I’ve read reviews and excerpts, and have promised myself to read the entire book by the end of the summer.  I do know that the premise of the book, which is based on the findings of Gallup’s World Poll, is that what people in the world want most is a good job.

Here in the United States that typically translates to a formal job and steady paycheck. In the developing world that includes informal jobs, but the message is the same – people want steady, reliable pay in return for a hard day’s work.  Clifton argues that over the course of the next 30 years, economic force will trump political and military force in terms of determining which countries have power and influence and which do not.  The top U.S. cabinet position will be the Secretary of Job Creation – not the Secretary of State or Defense.

Shannon Maynard, Director, Grameen Foundation's Bankers without Borders volunteer initiative.

At Grameen Foundation, we focus our time on creating ways to give the poorest people, in some of the world’s poorest countries, access to information and financial services that will help them improve their livelihoods, most often through the creation of informal jobs.  In the United States, there is a similar effort afoot to provide greater access to financing and technical assistance to help microbusinesses – those businesses with between one and five employees – grow and create more jobs.  The Association for Enterprise Opportunity (AEO), the voice of microenterprise development in the United States, argues that if just one-third of these microbusinesses were able to hire one new employee, the United States would be at full employment.

A Real Education

Julia Arnold is a program associate for Grameen Foundation’s microsavings initiative, and will graduate from American University in May with a master’s degree in international development.

As a graduate student at American University and a Grameen Foundation employee, I have studied international development in the classroom and have seen it in practice through my work with Grameen Foundation’s microsavings initiative in India, Ethiopia and the Philippines, and our livelihoods work in India. This unique vantage point has given me many opportunities to reflect on the relationship between what is taught in school and what is done in the “real world” of international development. On a recent trip to one of the project sites of our microsavings project, I began to truly appreciate the difference between classroom theories and realities of the lives of the poorest.

Clients of Indian microfinance institution Cashpor take a break during a group meeting, where poor women like these meet to make payments on microloans and to make deposits in their savings accounts.

During our visit to the holy Indian city of Varanasi, my colleagues and I visited the homes of some of the urban and rural clients of Cashpor, a microfinance institution (MFI) we’re working with to deliver microsavings services to their ultra-poor clients. It was a privilege to be welcomed into the homes of the families for whom Cashpor provides access to vital financial services. The women I met were beautiful in their bright saris – and serious about their membership in the self-help groups (SHGs).

Though I was inspired by their resilience and determination, the women also bore the marks of very difficult lives. They were extremely small – a result of malnourishment – and extremely poor. Those in urban areas lived in one- or two-room homes in concrete apartment structures with little more than a bed and a curtain for a door, while those in rural areas shared their small homes with their precious livestock. One urban family lived in a very small room in an apartment that didn’t hold much more than a bed – shared among seven family members. The youngest of the five children was badly scarred from surgery for a broken leg and would never walk properly again.  Though most of the children wore school uniforms and were enrolled, I struggled to imagine where they studied or how long it would be before they would be pulled from school to help earn income for the family.

Several truths jumped out at me as a result of meeting these clients. These truths had been spoken during my classes, but I was not able to fully appreciate them until traveling to India to meet these women.

A 21st Century Trifecta: Two Months at Grameen Foundation

Matt Inbusch worked as an intern for Grameen Foundation’s Marketing and Communications team during the spring of 2012.

What a moment to come back from the field! After three years as a Peace Corps volunteer in rural Peru, I briefly returned to my hometown of Columbus, Ohio, over the Christmas holiday, and then – probably a little too soon for my mother’s liking – bought a one-way ticket to Washington. I was fortunate to be offered an internship at Grameen Foundation’s headquarters, and jumped right into the day-to-day work of what I believe is one of the most innovative development organizations around.  My eight weeks at Grameen Foundation have given me a good perspective on the incredibly exciting crossroads facing the development “industry” in 2012.

In his final year as a Peace Corps volunteer in Peru, Matt worked in Santa Lucia, a small village in the coastal department of Ica. He’s shown here with beneficiaries of the work he did as a rural-sanitation consultant, building eco-latrines and clean cookstoves for poor families as part of an earthquake-recovery project funded by the German government.

I was in for more than a few shocks upon my return to the US , but my own cultural readjustment pales in comparison to the changes that non-governmental organizations (NGOs), aid agencies and governments are making in response to new developments in developing countries. Actually that’s not the whole story; it’s really a two-way street, where unprecedented innovation is happening both from the top-down and from the bottom-up. The result is a total paradigm shift.

I know I’m not the first to observe some serious flaws in the traditional development model, but I have to say I count myself very much among those who want more than the  “aid” concept, which – for most of the last 60 years – has meant hand-outs and feel-good solutions, rather than a hand up and a focus on organic, sustainable systems. That’s why it’s so exciting to be getting my feet wet in this space right now. Technological innovation, market-based strategies and a growing public consciousness are combining to drive game-changing approaches that I see in three big 2012 headliners: David Roodman, KONY and Occupy.

Last-Mile Mobile Money Agents Bridging the Gap

Ali Ndiwalana is Research Lead for Grameen Foundation’s AppLab Money Incubator. Below is an excerpt from our AppLab blog, followed by a link to the full post.

Agents are critical for the success of a mobile money (MM) ecosystem; they provide an avenue for cash-in (converting cash into “e-value”) and cash-out transactions. Grameen Foundation’s AppLab Money team has been to many rural villages in our quest to better understand the needs of users, and have often encountered mobile money users, but no agents in the vicinity. When users told us they made regular transactions, we asked how they managed to do this. In many cases, it was via unofficial agents or “last-mile agents,” as we refer to them. So we started looking out for last-mile agents.

We did not have to wait long. Our next research assignment took us to Luweero, to interview individual users and learn more about their financial flows and sources of income. As luck would have it, we encountered two registered mobile money users who were also operating as last-mile agents – providing mobile money services to people in their village as a side business.

The first individual – for privacy’s sake, let’s call him John – was serving a community of unregistered users by sending and receiving money using his mobile money account. The bulk of his customers were villagers receiving money sent by relatives working far away. Because his customers dealt in low-value transactions, he made a profit by aggregating multiple small transactions into one large transaction, while charging for each separately. For example, if three villagers received money via his MM account and he had no cash on hand to clear them, he would aggregate all their money and just make one single withdrawal from his MM account.

Read the full blog post at the AppLab Blog.

Why Skills Matter: The Importance of Cross-Sector Collaboration

Rhia Bakshi is an international student from India currently living in Washington, DC. She will graduate from American University in May with a double major in international development and business studies. Her interests range from social entrepreneurship and innovation to youth development and the arts. Rhia previously worked with several D.C.-based nonprofits, including Ashoka and the International Labor Rights Forum, and currently serves as a volunteer with Bankers without Borders®, helping the team with communications and social media.

Rhia Bakshi, a Bankers without Borders volunteer, believes in the power of cross-sector collaboration.

Imagine a world without clearly defined roles — a world where we are able to contribute our time and skills outside of the traditional structure of industry, a world where there is ample opportunity to expand our perspectives, interests and, most important, exchange ideas and skills in an open, unrestrained environment.

I believe this is the type of world we need to achieve progress and alleviate poverty. The world has changed rapidly over the past decade. We have witnessed unprecedented growth in technology and innovation, contributing to the creation of a global village — a trend that has fostered a culture of shared benefits and responsibilities. The scale and complexity of the problems we face as a global society cannot be tackled unless we revamp our course of action and work together.

The concept of collaboration has altered the way we pursue social change. Whether through formal partnerships or by simply exchanging ideas, organizations are beginning to realize the value of engaging with one another, both within and across different sectors. We are learning that isolated action is no longer a feasible strategy to create change. To truly serve the needs of the poor, we must combine our areas of expertise and think creatively about the issues they face every day.

Falling in Love … with Microfinance

Tânia Sousa works in the Microcredit unit within the Portuguese banking firm Millennium BCP, where she is responsible for marketing. A Portuguese native with more than 10 years of experience in the financial-services industry, Tânia studied economics, and has an advanced degree in marketing. She joined Bankers without Borders®, Grameen Foundation’s skills-based volunteer initiative, in February 2012 and recently completed her first field project in Varanasi, India, with Grameen Foundation’s Microsavings team. Tânia, who currently lives and works in Lisbon, hopes to continue volunteering with Bankers without Borders.

Tânia volunteering in Varanasi, India.

When I was a little girl and people asked me what I wanted to be when I grew up, I always said that I would like to be a medical doctor. I didn’t imagine myself in a traditional hospital or office. I always imagined myself in a distant country, helping the kids that I saw on TV who were living in extremely poor conditions, with no food, no healthcare and no opportunity to just be … well, kids.

Life carried me away from medicine — my soul wasn’t really there — and I eventually studied economics, later graduating with a master’s degree in marketing. After graduation, I started working in a small investment bank called Activobank, which is owned by the largest private Portuguese bank, Millennium BCP. I remained at ActivoBank for 11 years, until March 2011.

Then something amazing happened: I was invited to lead the Marketing department at Microcredit Millennium BCP. I didn’t know much about microfinance, so the challenge was huge. I immediately started to do a lot of research and, to my surprise, I fell hopelessly in love with microfinance.