A reader sent news of a Scottish initiative, in which the Glasgow Caledonian University (GCU) is drawing on the Grameen Bank model devised and overseen for many years by Professor Mohammed Yunus.
Grameen microfinance – the provision of unsecured loans for social business development – has made an impact on alleviating poverty and promoting economic growth for the most disadvantaged citizens in countries across the world. In the United States, it is enabling thousands of people to run their own businesses, supporting themselves and their families for the first time.
The project will have two goals:
- to encourage and support individual effort to get out of a welfare-dependent, jobless, low income situation, and encourage economic and personal development of the individual, their family and their community;
- to ensure that the Grameen branch reaches sustainability as a social business in its own right.
In the Scotsman article, which gives more detail, economist Professor Yunus says:
“The size of the challenge is great. In Scotland, and in the rest of the UK, there are pockets of poverty and welfare dependency which have not changed in the last 40 years. In the West of Scotland, around 300,000 people live in the poorest category of household income. Too many families are blighted by third or even fourth generation unemployment. More than half of the poorest households do not make savings of £10 a month or more. Predatory lenders sometimes target these communities and families, charging huge rates of interest.
“But despite these grim statistics, there remains a great deal of hope. Hope gives a poor person a chance. It empowers an individual, and through them a family. Grameen can provide that opportunity for change, and in doing so challenge the cycle of welfare dependency in the UK. It does that, very often, by paying special attention to the central role which women play in helping their families and their communities move to financial self-sufficiency.”
Professor Yunus will travel to Glasgow to meet a group of women from communities across Glasgow such as Provanmill, Pollokshaws and Maryhill, who were inspired by a Church of Scotland sponsored trip to India to learn more about how ideas of self-reliance work in other countries.
Some now run a community lunch club, saving the small amount of profit for future investment. Others have decided to set up a laundry repair business. Small amounts of credit would be used for a variety of purposes:
- one woman would renovate the room where she and her colleagues work;
- another would buy cutlery for the lunch club;
- a third would pay for extra training in sewing and stitching which, at £15 an hour from a teacher, is currently out of her reach.
Access to affordable credit, designed to support social businesses or community enterprises such as theirs, would make a real and substantial difference, not just to their lives, but to the lives of their families and to the communities in which they live.
The Grameen Scotland Foundation is raising money to support the process of bringing this lending model to the UK for the first time. With more than £100,000 raised so far, the charity is well on its way to reaching its initial £1m target.
With a central administration office hosted by GCU, the project will serve the local authority areas of Glasgow, North Ayrshire, West Dunbartonshire and Inverclyde.
The poverty trap
Antidote asked if the workings of our social security system – the ‘poverty trap’ – would penalise borrowers: “Will they be able to afford to participate if they lose income, housing and other benefits?”
The President of the GCU Foundation, Colin McCallum, answered that Professor Yunus and the Foundation are well aware of this ‘trap’, “with people locked on welfare for several generations”, some of whom are “looking for a way out”.
He adds, cryptically, that “there is some evidence that welfare reliance may not present the scale of barrier that we might assume.”
We look forward to hearing more about this project and hope that it will succeed and be replicated in other areas.#
Note that since Nobel Laureate Yunus was cleared of certain allegations, his accuser, the prime minister of Bangladesh, proposed him as a candidate for the chairmanship of the World Bank . . .