By Maria Pantoja
During my first year as an MBA student, I realized that in order to fully understand the microfinance concept I needed to experience it firsthand. This encouraged me to apply for an internship at Grameen Bank. So far the experience has been fantastic; Bangladeshis are the kindest people I have ever met. They are always willing to help and appear to be quite glad to have visitors in their country.
Grameen Bank is a financial institution that provides microcredit to the poorest people in Bangladesh (97% of the loan recipients are women). The funds are used mainly to start small businesses or to grow existing ones. The bank was founded by Muhammad Yunus in 1976. The bank and he were awarded the Nobel Peace Prize in 2006 due to the value his initiative has created within Bangladeshi society, which is counted as one of the poorest and most dense populations in the world.
Back in my home country, Colombia, I worked with the local chapters of the United Nations High Commisioner for Refugees(UNHCR) and the Ford Foundation, there I was able to see how a small loan could deeply transform a person’s and a family’s life. That experience led me to pursue the MBA at UNC given its focus on sustainability. All of the courses I have taken at Kenan Flagler have been very applicable to my internship experience; classes such as Entrepreneurship and Innovation in Developing Countries, Strategy and Marketing have all enhanced my learning experience at Grameen Bank. UNC also has a strong group of MBA students and alumni that have experience in strategies to help the poor.
Early in my internship experience, I was taken out into the field to a village about 100 miles away from Dhaka. There I was able to see the reimbursement process of the microcredit loan, talk to the beneficiaries, see how their lives have changed, and also was able to talk to the branch and center officers. It is amazing how women who started 25 years ago with a Grameen Bank microcredit loan now have children who hold Doctoral degrees and improved living standards.
Grameen Bank has a very interesting structure for lending the basic microcredit loan. Its customer base (people who need financing), are divided into groups of five borrowers most of which are women. Grameen does not extend credit to an isolated individual, he or she has to belong to a group of five, and then each one of them receives the funding. The only requirement the members need in order to get together in a group is that they are not blood related and immediately start saving part of the loan. Every group belongs to a Center; every center is part of a Branch and every branch belongs to an area office which reports to the Head Office. Currently Grameen Bank has benefited 8.3 million borrowers.
The group system ensures Grameen Bank’s high payback rate (98%) since members help each other and exert peer pressure towards every member fulfilling her dues. When, for whatever reason, one of the women is not able to make her payment, the other four chip in and pay her part. Later on, when she has recovered, she pays them back.
Grameen’s model is being replicated all around the world, generating a large impact in the benefited communities and creating sustainable solutions to poverty. The MBA at UNC and the Grameen Bank Internship have been an incredible experience so far in both my personal and professional life. I hope someday that I can also contribute to this important initiative and be able to make a difference, even a small one, in the lives of others.