Banking for the poor and poverty stricken….

From the words of the founder of Micro-Finance, The Nobel Peace Laureate Professor Muhammad Yanus of Bangladesh,  “Start with the problem rather than the solution, if you have a problem to solve, find the rule a conventional bank would use, then do the opposite….the perfect solution for micro-finance!”. While pundits theorised the potential of failure, the focus is on educating the people, promoting, training and working with the poor people in small groups, nurturing ideas and teaching the 4 principles of Micro Finance.

“DISCIPLINE, UNITY, COURAGE and HARD WORK!”.

The Nayon Bank will service the poorest people (mainly women) in rural communities who need help the most and receive the least. Marginalised by the fact that they have no collateral, no ownership of title to land, they are deemed by society as superfluous. Realistically, these are the people who make it possible for the rich to flourish and generate their wealth, as blindness prevails the needs of the poverty stricken are largely ignored and exploited.

The conventional banking system is designed to help those who have money; to make more money. Banking is a business designed by those with money to earn more. A wealth generation business! Not a provider of assistance.

In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 8 Pesos to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a few cents profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.

Poor Women Basket Weaving

Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of US$17 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty.

While seeking a solution to rebuild the broken lives of the world’s poorest people he sought ways to make money available to these people to rebuild their lives. War and independence, along with floods and famine had left his people destitute. Talking to poor rural women he learned of the suffering and helplessness they suffered.

Loan sharks were lending them money, forcing them into slavery as their failed efforts to flourish left them destitute, even falling short of feeding their families. They nursed their dying babies in dispair!

Transparency for the Poor

Working tirelessly, he sought changes to the banking products of the time to include banking for the poor. The banks were not interested, people in poverty had nothing to offer as collateral they failed to meet the basic rules of banking. He resorted to using his own capacity to borrow money, then lending it to the poor. The bankers laughed at him, declaring that he should prepare to cover the failures of his borrowers. His idea worked, expanded and developed into the Grameen Banking project. During thirty years of dedication, training and development he perfected a system of banking for the poor. His Gremeen Bank now boasts more than eight million borrowers and over a billion US$ in collateral.

As founder and CEO of the Grameen Bank, in 2011 Professor Yanus finally retired, he relinquished his position as CEO and now serves only as an advisor… he continues his quest on the world stage, promoting the success and ideals of Gremeen Banking to alleviate poverty in countries around the world – Bangladesh to New York, Nigeria to Germany, no country is immuned from poverty.

Rural Poverty affects the Women

Our goal in the Philippines is to replicate the Grameen Bank system in Mindanao, providing the rural poor with affordable loans. This will enable them to unleash the burdens of questionable money lenders and to rebuild their lives. If we can empower these people and set them on the path to self reliance, to build successful lives we will have succeeded. Our primary goal will be education of all poverty stricken children to 16 years of age.

NOTE: grameen means village in Bengali – village is nayon in Tagalog.

Where ever micro-finance has been introduced around the world, the banks and borrowers have flourished. Empowering women, building courage, resilience and ingenuity allowing them to raise healthy, educated children; removing poverty – permanently.

Rural Children in School

The success of the Grameen Banking system (micro finance) is concreted in the benefits to the community and society, increasing prosperity and wealth of everyone. With less poverty in the community the strain on the public purse is relieved, more money is available for spending, for improvements to infrastructure and most important women’s empowerment – over population is reduced. With greater control and satisfaction in their lives women better manage their reproductive health – birth control.

The articles of association will determine the charter of the Nayon Bank. Ownership of the bank will eventually pass to the borrowers and investors. Initially, the bank will be developed, managed, financed and supported by Smiley Inc. Using internal and external business and communication skills to build the base.

Owners, operators and employees will be professionally trained in MicroFinance to ensure every effort for success is reinforced and maintained.

The Nayon Bank is based on the Grameen Bank model, a Social Business, a Bank of the people owned and managed by a board, chosen from the shareholders, by the shareholders.

Each shareholder will be limited to one share, the price of the share will be determined by the board and a dividend paid annually from profits.

Taking a Bank to the people, NOT people to the Bank!