Consider Uganda’s telephone aunties
Just ask and you will receive an answer: “How can we destroy the harmful insects on that tree?” “What is the current market price of coffee beans?” She then calls a center that provides various database services. This is a pilot project called “Question Box,” which aims to alleviate the widening knowledge gap with the third world.
The telephone aunties, who play a pivotal role in this project, borrowed $200 each from the renowned Grameen Bank to buy their cell phones. Using the phone to get an answer from Question Box is free, but if local residents want to use the phone for other purposes, they have to pay a fee to the telephone aunties, who make at least $2 per day off the fees. In Bangladesh, where the project started, there are 260,000 women participating. Grameen Bank, which became famous for providing tangible benefits - say, lending farmers capital to buy cattle and chicken - is now helping people escape from poverty by developing a new business model befitting the digital age.
Microcredit is evolving. This can be seen most clearly at Kiva, the world’s first person-to-person microlending Web site. There, lenders are connected to the entrepreneurs they’re helping through photos, background information and business plans. Most of the customers get cash from a wide variety of donors, who each contribute small amounts. In the past four years, some 570,000 people lent more than $100 million through the site, helping about 240,000 people succeed.
Surprisingly, the rates of repayment of capital and interest at Grameen Bank and Kiva are as high as 98 and 99 percent, respectively. What is the secret behind this success? First of all, the first step is taken discreetly. Experts familiar with the local communities select residents with a strong will to support themselves. They also check the progress of each business continuously. Grameen Bank even requires that five borrowers form a group and cooperate among themselves. And the rates of interest, 20 percent and 22 percent, are not low at all. This is meant to maintain the project for a long time without running a deficit.
And the microcredit movement has come to Korea, too, with the opening of Smile Microcredit Banks by big businesses and financial companies last week. However, I am worried that after pouring cash indiscriminately into the system, they may stop lending money sooner or later. The absurdly low interest rate of 4.5 percent per year just adds to my doubts. I wonder whether these new Korean banks took the time to benchmark the operations of Grameen Bank and Kiva.
The writer is an editorial writer of the JoongAng Ilbo.
By Shin Ye-ri
with the Korea JoongAng Daily
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