Four Books About Microfinance

“Elephant and Mouse were best friends. One day Elephant said, “˜Mouse, let”s have a party!” Animals gathered from far and near. They ate. They drank. They sang. And they danced. And nobody celebrated more and danced harder than Elephant. After the party was over, Elephant exclaimed, “˜Mouse, did you ever go to a better party? What a blast!” But Mouse did not answer. “˜Mouse, where are you?” Elephant called. He looked around for his friend, and then shrank back in horror. There at Elephant”s feet lay Mouse. His little body was ground into the dirt. He had been smashed by the big feet of his exuberant friend, Elephant.”

Now hear the African storyteller”s moral: “Sometimes, that is what it is like to do mission with you Americans. It is like dancing with an Elephant.”

With, Not on

Need I say more about Steve Corbett and Brian Fikkert”s When Helping Hurts? If we American Christians are serious about helping the poor, we need to dance with them, not on them. Poverty blocks opportunity, fosters fears and sickness, and dashes hope. We know that. What we don”t always understand, though, is that poverty isn”t just about not having money, and tossing money at poor people can be like””well, remember the elephant?

The authors work at the Chalmers Center for Economic Development, equip-
ping churches “to minister to the economic and spiritual needs of low-income people.” On these pages they urge increased giving by North American Christians but at the same time caution us not to be careless with human, spiritual, financial, and organizational resources. Our goal must be to assist the poor restore relationships with themselves, their neighbors, their God, and his creation.

Helping doesn”t have to hurt. With care, the elephant can safely dance with the mouse.

A Simple Plan

Banker to the Poor recounts the founding of Grameen Bank, which majors in making loans no normal bank would risk, to people””mostly women””with no collateral and no visible means of repayment. But 98 percent of Grameen Bank”s borrowers do repay. For his extraordinary help to these persons with no other credit resource, Muhammad Yunus was awarded the 2006 Nobel Peace Prize.

When Yunus, a Bengalese economics professor who earned a PhD at Vanderbilt, came face-to-face with Bangladesh”s paralyzing poverty, he found much of his book learning of little use in freeing people trapped in a cycle of ever-increasing debt. One day he impulsively reached into his own pocket to lend 42 women a total of $27 to buy bamboo to make stools to sell. The women repaid his act of faith with interest. He extended more loans; they too were repaid on time. Eventually billions of dollars were loaned to millions of people. They were repaid.

Yunus”s plan was simplicity itself. With small loans, people living on less than $1 a day could support themselves making soap, selling baked goods, repairing bicycles, and sewing clothes. These people are poor but they are not dumb. They need a chance. Grameen Bank gives them that chance.

To live a poverty-free life in rural Bangladesh, Yunus and his colleagues agree, 10 indicators must be satisfied:

1. A house with a tin roof

2. Beds or cots for all members of the family

3. Access to safe drinking water

4. Access to a sanitary latrine

5. All school-age children attending school

6. Sufficient warm clothing for the winter

7. Mosquito nets

8. A home vegetable garden

9. No food shortages, even during the most difficult time of a very difficult year

10. Sufficient income-earning opportunities for all adult members of the family.

These are modest goals, to be sure, but out of reach of most of the world”s poorest people.

I read Banker to the Poor because I wanted to know more about this remarkable man with a plan. I had earlier read his Creating a World Without. In it, as in this volume, he preaches “social capitalism,” profitable businesses with positive social consequences.

Yunus”s principles are being applied in the Christian mission I work with. I can testify: they work.

Between Charity and Investment

For a more personal look into the world of microfinance, try Jacqueline Novogratz”s The Blue Sweater. The title comes from the gift her uncle Ed gave to her. She loved it and wore it often””until in her freshman year of high school a boy made fun of it. Embarrassed, she made her mother take her to the Goodwill store where she disposed of it forever.

Forever lasted until she was 25. Then jogging one day in Kigali, Rwanda, she saw a skinny little 10-year-old boy wearing her sweater.

Welcome to the global village, where the poor don the duds the rich cast off.

The Blue Sweater is part narrative, part essay. Novogratz recounts her journey from banking for profit to banking as mission. Her guru John Gardner taught her the importance of listening, a skill usually lacking among philanthropists. As a result, all of these books agree, good intentions too often yield disastrous results.

Her listening resulted in the founding of Acumen Fund, where “patient capital” is employed to help the poor. Patient capital is “not traditional charity, not traditional business investment, but something in-between. Patient capital is money invested over a longer period of time with the acknowledgment that returns might be below market, but with a wide range of management support services to nurture the company to liftoff and beyond.” Good counsel for impatient Americans.

She left her lucrative corporate banking career to work with poor women, applying the banking strategy of Muhammad Yunus. This is not the report of a Christian missionary; she claims to be neither. It is, though, yet another illustration of the building case for fighting global poverty not with a handout but by giving a leg up. In addition to her work in India and Pakistan, she writes compellingly of her work in Rwanda before and after the genocide that ripped that country apart in 1994.

Novogratz sometimes seems to wander between her personal story and her analysis of microfinance, but stay with her””she won”t bore you, and her take on microfinance is worth studying.

Multiplied Impact

A Billion Bootstraps delivers a refreshing no-nonsense word from a couple of astute businessmen with a passion for helping the poor. Phil Smith and Eric Thurman tell their own stories while evangelizing on behalf of microenterprise as mission. Here”s their argument in a nutshell: “By focusing their giving on microcredit loans in developing nations instead of on charities in the developed world, givers multiply the impact of their donations by much more than 100 times.”

It”s that impact they are after. The authors face up to some disturbing facts. The planet”s wealthiest 10 percent possess 54 percent of the income. The remaining 90 percent divide up the remaining 46 percent. Forty percent live on less than $2 a day. This is not fair, and right-thinking “haves” need to pony up.

But ponying up isn”t a matter of writing yet another charity check. Smith and Thurman appeal for intelligent investing. When it comes to missions, they plead, “Don”t check your mind at the door.” Rather, “Keep the zeal, but also keep your mind engaged to make certain you are accomplishing what you intend.”

To do that, you must follow three rules:

1. Have a bottom line. (Know what you are trying to accomplish; expect results.)

2. Measure success. (Are you in fact getting the results you expect from your investment?)

3. Support what works. (Sentimentality defeats the purpose. If your mission isn”t producing, move your support to a mission accomplishing its purpose.)

In his foreword, Yunus commends the authors for “breaking down the challenges of growth for microfinance into bite-sized elements any reader can benefit from” and for “showing us what is happening, what is possible, and what we can do from their perspective as successful business people.”

That”s what makes reading these four books so encouraging””changing the world using proven business methods is possible. Someone else said something like that, as I recall: With God all things are possible. Even wiping out poverty!

LeRoy Lawson is professor of Christian ministries at Emmanuel Christian Seminary, Johnson City, Tennessee, and international consultant with Christian Missionary Fellowship International. He also serves as a CHRISTIAN STANDARD contributing editor and a member of Standard Publishing”s Publishing Committee. His column appears at least monthly.