Microcredit, or making small loans from $100 - $2,000 to poor residents for self-employment projects has gone “pop,” since Bangladeshi banker and economist Muhammad Yunus, founder of the Grameen Bank, won the Nobel Peace Prize for his “efforts to create economic and social development from below.” 

Yunus’ Grameen Bank has made over $7 billion worth of loans to mostly Bengali women (97%) in amounts of roughly 1,750 Taka ($27), which is more than enough for a Bengali woman to start and operate a small business. However, there is huge difference between making small loans to Bengali women than to Black Americans in South Dallas.

The Plan Fund, a non-profit organization whose mission is to assist entrepreneurs to achieve success in starting and or expanding their small businesses with roughly $1,500 loans, has been trying to show that it can work. Since 1999, the Plan Fund distributed 490 business loans worth almost $725,000, but has inevitably had to deal with people defaulting on those loans. 

Over the years, default rates for the Plan Fund have ranged from 5 percent to 40 percent. Compare that to the Grameen Bank’s default rate of less than 5 percent. Why the huge difference in default rates? “Cultural-mentality” 

In Bangladesh, the Grameen Bank emphasizes a group-based credit approach which relies on peer-pressure within the group to make certain borrowers have financial discipline and will eventually repay the loans or risk being “put in check Bengali style” and not mess up the credit system for everyone else.

With so much creativity, innovation, and passion resting in South Dallas, we can definitely make microcredit a success, but not without first enhancing our “cultural-mentality” and developing a stronger sense of community and togetherness. 

Truth is Black America already knows this, since the days of Harriet Tubman, W. E. B. Du Bois, MLK, and now President Obama, but we just don’t apply what we know.

View other articles within this section>



All content is protected by copyright
and can only be reprinted with our permission