“Wall Street does banking for the world, but it doesn’t do banking for its neighbours. We are here to show there is nothing wrong with banking with neighbours.” Moving from words to action, Professor Muhammad Yunus, the 2006 Nobel Peace Price winner, created that same year Grameen America (GAI), a microfinance institution (MFI) built upon the success of the Grameen Bank in Bangladesh. His assumption at the time was that the Bangladeshi model could work in the United States.

Yet, one might wonder whether it is advisable to duplicate a model specifically designed to meet the needs of developing countries in a developed country. After all, how can an institution based in the United States – a high cost country – reach breakeven with lower interest rates and higher operational costs?

But this was the audacious gamble made by Pr. Yunus. The methodology applied by GAI in its 20 branches is the same one as in Bangladesh: five urban women create a group in order to get a micro-loan. They then pay back during weekly meetings and also feed personal savings accounts. Even if there is no joint-liability by a third party, peer pressure among the members enables GAI to get high recovery rate (recent data shows that write-off, one measure for evaluating the risk of investment, stands at a low 0.2%).

The effective interest rate paid by customers is 18%: it is not that high considering the absence of hard collateral and the numerous staff required for regular meetings. Indeed, staff costs are currently slightly higher than loan income. To reduce such operational costs, GAI is resorting to technology to improve its performance.

Finally, financial sustainability is improving mainly thanks to the acquisition of new customers: the percentage of operating expenses covered by earned interest reached 62% in 2017. Their ambition is even higher, as they seek to reach breakeven by 2020, which is far from impossible to achieve, given their recent trends.

Meanwhile, and to cover their entire operational costs, GAI mobilised grants and donations, raising 64.4 million dollars in the last 7 years. This money is used as seed capital to bring GAI new branches to scale up during their first 2 years. This strategy is one of the reason why, as of today, 8 branches are sustainable with an average of five years for MFI to reach financial equilibrium.

GAI is about to succeed in creating a sustainable MFI in the USA. Its social return is already very positive, as it has supported over 97,000 women since 2008, helping them to build their businesses, create jobs, and build a credit history, which is essential to rent apartments, buy cars, and get loans through standard commercial banks.

Last but not least, GAI borrowers develop their saving capacity, holding more than 6.85 million dollars in savings, allowing them to build the foundations for a better future. This case demonstrates forcefully that not only is MFIs’ success in the South replicable in the North, but that this success is also a promising avenue for financial and social performance in developed countries.

Alain Levy
Head of microfinance for
Americas and Asia
&
Claudia Belli
Gglobal Head of Social
Entrepreneurship and Microfinance
BNP Paribas

https://vusak.org/ deneme bonusu
deneme bonusu veren siteler
mencisport.com
mt2
deneme bonusu veren siteler
Aliaga Escort
casino siteleri
Xxx rated legal age teenager porn
bonus veren siteler
footballofficialscamp.com
deneme bonusu veren siteler deneme bonusu veren siteler
zlibary ai deepfake porn
Kaçak İddaa Siteleri
deneme bonusu veren siteler bonus veren siteler
aresbet
deneme bonusu veren siteler
bahis siteleri
sweet bonanza
casino siteleri
1xbetm.info betticketbet.com trwintr.com trbettr.info oslobet
beylikduzu escort
deneme bonusu veren siteler
deneme bonusu veren siteler
Kazandra Giriş
maltepe escort ümraniye escort anadolu yakası escort
Skip to content