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A prophet has no standing in his own country
published: Sunday | June 15, 2008
Edward Seaga
The Grameen Bank is the answer to improving the lot of the poor. This is the message of the Grameen Bank founder Professor Muhammad Yunus of Bangladesh. The specialty bank lends money only to the poor and has a good recovery record on the loans it makes. Professor Yunus, deservedly, won a Nobel Prize for this splendid effort.
While we "ooh" and "aah" about the concept, it is worthwhile remembering that the novelty of lending exclusively to the poor started in Jamaica with the SOLIDARITY project as an off-shoot of the HEART programme in the 1980s. This project originated with Carla Vendryes (now Seaga) who developed the idea as part of her Master of Public Adminis-tration degree at American University in Washington.
The idea of lending money to the poor needed an institutional framework for it to work so that the loans would have a good chance for repayment.
Firstly, the programme penetrated the lower levels of poverty. Loans were made without any collateral to young people and other age groups, men and women, but on certain conditions:
Using an available building in Christiana which had enough rooms to be converted to a small hostel, prospective borrowers had to spend two weeks in training, learning how to distinguish between capital and income so that all the income was not treated as profit to be spent on self-indulgence. The trainees were taught to put back capital into the project from their sales or other earnings.
Each trainee had to have a 'partner' who was a businessman, or Justice of the Peace, religious leader, or some other outstanding citizen in the community. Hiss/her responsibility would be to examine the bank book of the project operator regularly to ensure that the account was in good order, principally that it was growing, if not, they would offer counselling and advice. This is why the project was called SOLIDARITY. It was a union of those with ability to help by joining hands with the poor and needy to assist them.
Capital for lending would come from a specific institution which I established called the Self Start Fund. This institution would vet the projects proposed by SOLIDARITY to assess feasibility. This ensured that each project was processed by two institutions;
Graduates could get loans for a number of projects in various categories:
Agriculture: chicken rearing, freshwater fish growing, rearing small ruminants (goats, rabbits), cultivation, of cash crops etc.
Vending: (for urban graduates) a cart I saw in Venezuela was imported. It was equipped with a container for hot products (soups) and cold (ice cream) but could sell juices and merchandise. It had a distinctive design and was well known as the SOLIDARITY cart.
proper operation
A trained SOLIDARITY supervisor was appointed for each parish to visit the projects in that area regularly to ensure proper operation. They would also check on those who were delinquent in repayments. The rate of compliance was nearly 80 per cent.
Thousands of loans were granted by SOLIDARITY up to 1989. The project was run by Dr Joyce Robinson as an off-shoot of HEART, for which she was responsible.
SOLIDARITY would have expanded to cover the island fully as new projects and trainees were added. But in 1989 there was a change of government and that marked a change of approach from lending on a credible basis to a 'give wey' programme. The doors were thrown open and the political hounds seeking free meat rushed in. They were given 'loans' with little supervision. Soon the programme ran up significant arrears. This argument was used to close down the project, which was the political intention, anyway, after raiding it for its substance.
Popular belief is that we lack solutions and problems need solutions from overseas. The solid economic growth in the last half of the 1980s came from projects like these which created 100,000 new jobs over three years.
The macro model used was self-grown not imported. I set out to answer the call of the unemployed and devised means of doing so by putting manpower resources at the centre rather than capital investment. This is precisely what China has done. With a massive number of unemployed, China structured its economy to create jobs suitable for the unemployed, then found appropriate programmes.
Some refer to this approach as 'labour intensive' rather than the traditional 'capital intensive'. Making the labour intensive model work depends on finding suitable projects which is where the planners usually fall short and become frustrated. SOLIDARITY established that projects existed in the midst of poverty and that hope existed for the poor to be successful as small entrepreneurs.
Women in West Kingston who buy a gallon of cooking oil to be sold in smaller amounts, which are affordable, make a profit on this service. Others buy brown paper from which they cut squares and sew two sides to make a small brown paper bag which poor people use. On this value-added, they make a profit.
Many more opportunities like this exist, created out of the entrepreneurial genius of the poor. All they need is small loans to make a start. Who will be the starter to help them drive their ambitions and achieve their dreams?
<span style="font-weight: bold">Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the UWI. Email: [email protected]</span>
EDITOR'S NOTE: The first draft of this article was amended, hence the promo used in Friday's Gleaner is not published here.
published: Sunday | June 15, 2008
Edward Seaga
The Grameen Bank is the answer to improving the lot of the poor. This is the message of the Grameen Bank founder Professor Muhammad Yunus of Bangladesh. The specialty bank lends money only to the poor and has a good recovery record on the loans it makes. Professor Yunus, deservedly, won a Nobel Prize for this splendid effort.
While we "ooh" and "aah" about the concept, it is worthwhile remembering that the novelty of lending exclusively to the poor started in Jamaica with the SOLIDARITY project as an off-shoot of the HEART programme in the 1980s. This project originated with Carla Vendryes (now Seaga) who developed the idea as part of her Master of Public Adminis-tration degree at American University in Washington.
The idea of lending money to the poor needed an institutional framework for it to work so that the loans would have a good chance for repayment.
Firstly, the programme penetrated the lower levels of poverty. Loans were made without any collateral to young people and other age groups, men and women, but on certain conditions:
Using an available building in Christiana which had enough rooms to be converted to a small hostel, prospective borrowers had to spend two weeks in training, learning how to distinguish between capital and income so that all the income was not treated as profit to be spent on self-indulgence. The trainees were taught to put back capital into the project from their sales or other earnings.
Each trainee had to have a 'partner' who was a businessman, or Justice of the Peace, religious leader, or some other outstanding citizen in the community. Hiss/her responsibility would be to examine the bank book of the project operator regularly to ensure that the account was in good order, principally that it was growing, if not, they would offer counselling and advice. This is why the project was called SOLIDARITY. It was a union of those with ability to help by joining hands with the poor and needy to assist them.
Capital for lending would come from a specific institution which I established called the Self Start Fund. This institution would vet the projects proposed by SOLIDARITY to assess feasibility. This ensured that each project was processed by two institutions;
Graduates could get loans for a number of projects in various categories:
Agriculture: chicken rearing, freshwater fish growing, rearing small ruminants (goats, rabbits), cultivation, of cash crops etc.
Vending: (for urban graduates) a cart I saw in Venezuela was imported. It was equipped with a container for hot products (soups) and cold (ice cream) but could sell juices and merchandise. It had a distinctive design and was well known as the SOLIDARITY cart.
proper operation
A trained SOLIDARITY supervisor was appointed for each parish to visit the projects in that area regularly to ensure proper operation. They would also check on those who were delinquent in repayments. The rate of compliance was nearly 80 per cent.
Thousands of loans were granted by SOLIDARITY up to 1989. The project was run by Dr Joyce Robinson as an off-shoot of HEART, for which she was responsible.
SOLIDARITY would have expanded to cover the island fully as new projects and trainees were added. But in 1989 there was a change of government and that marked a change of approach from lending on a credible basis to a 'give wey' programme. The doors were thrown open and the political hounds seeking free meat rushed in. They were given 'loans' with little supervision. Soon the programme ran up significant arrears. This argument was used to close down the project, which was the political intention, anyway, after raiding it for its substance.
Popular belief is that we lack solutions and problems need solutions from overseas. The solid economic growth in the last half of the 1980s came from projects like these which created 100,000 new jobs over three years.
The macro model used was self-grown not imported. I set out to answer the call of the unemployed and devised means of doing so by putting manpower resources at the centre rather than capital investment. This is precisely what China has done. With a massive number of unemployed, China structured its economy to create jobs suitable for the unemployed, then found appropriate programmes.
Some refer to this approach as 'labour intensive' rather than the traditional 'capital intensive'. Making the labour intensive model work depends on finding suitable projects which is where the planners usually fall short and become frustrated. SOLIDARITY established that projects existed in the midst of poverty and that hope existed for the poor to be successful as small entrepreneurs.
Women in West Kingston who buy a gallon of cooking oil to be sold in smaller amounts, which are affordable, make a profit on this service. Others buy brown paper from which they cut squares and sew two sides to make a small brown paper bag which poor people use. On this value-added, they make a profit.
Many more opportunities like this exist, created out of the entrepreneurial genius of the poor. All they need is small loans to make a start. Who will be the starter to help them drive their ambitions and achieve their dreams?
<span style="font-weight: bold">Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the UWI. Email: [email protected]</span>
EDITOR'S NOTE: The first draft of this article was amended, hence the promo used in Friday's Gleaner is not published here.
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