Microfinance for redemption: Sam Daley-Harris

Microfinance Focus , April 20, 2010 :“Microfinance thought leader and CEO of Microcredit Summit Campaign, Mr. Sam Daley-Harris has delivered a speech during launch of the National Host Committee for the Global Microcredit Summit to be held November 14-17, 2011 in Valladolid, Spain.” Here is the excerpt of the speech.

Sam Daley-Harris

“As many of you may know, the field of microfinance is not just at a fork in the road but beyond a fork in the road.  One fork treats microfinance as a profit-maximizing vehicle, as a way for investors and senior staff to make money from the poor.  Of course people like Professor Yunus stand for the other fork in the road, a path whose primary focus is to use microfinance to better end poverty, to improve people’s lives, not to make money for investors.

Here is how I have changed as a result of the Summit last week in Kenya.  I now see that the spiritual dimension of microfinance, the redemptive dimension of microfinance is central to my vision for the field.  The technical issues surrounding microfinance are important, but only if they serve the transformational dimension.

When Prof. Yunus lent a grand total of US$27 to 42 desperately poor Bangladeshis in 1976, it turned out to be much more than just an economic transaction.  One of the 42 borrowers was Sufia Khatum, a stool maker who struggled to survive on 2 cents a day.  That was all that was left after she borrowed money from the money-lender to buy the bamboo to make her stools and then sold the finished product back to the money-lend at a price he set.  The price he set barely covered the cost of the bamboo.  Her profit each day—just two cents.  As Prof. Yunus has said, he was ashamed to live in a country where people could work so hard and only make 2 cents a day.  But with her loan of less that US$1 from Prof. Yunus, Sufia Khatum was able to pay off the money lender, buy her raw materials, make her stools, and then sell the stools to the highest bidder.  Her profit soared 60 fold, from 2 cents a day to $1.25 a day.

Prof. Yunus talks about how surprised he was that such a small amount of money could make 42 desperately poor people so very happy.  It freed them from the money-lender.  It freed them from debt bondage.  And I would add it unleashed the human spirit.  It is not only a story of economic transformation but of spiritual transformation.  This is the story we must tell and must contrast with those going down the profit maximizing fork in the road

Prof. Yunus also says the very poor are like bonsai trees.  They have every quality they need to blossom and grow into a huge tree, but the conditions they are grown in keep them small, just as the conditions of poverty keep the poor small and don’t allow them to reach their full potential.  Prof. Yunus says that a loan of $50 to a poor woman allows her to discover who she is at $50.  The next loan of $100 allows her to see what her potential is at $100, and so on.  That is unleashing the human spirit—the spiritual side of microfinance.  Let me read this excerpt from my closing ceremony speech at the Summit in Kenya.

When the Summit opened, I spoke about the gang member known as “the general” whose life had been transformed by microfinance.  I said that there are many vision for microfinance including this one: microfinance for redemption.  The dictionary defines redemption as restoring one’s honor and worth, setting one free.

It was at the Summit in Kenya that I realized that there might be many visions for microfinance, but my vision for the field is microfinance for redemption.  On the first day of the Summit Ingrid Munro of Jamii Bora introduced us to Wilson Maina who was one of the most wanted criminals in Mathare Valley slum in Nairobi.  Wilson said he would rather die quickly from a policeman’s bullet than die a slow, death from hunger.  That was why he had turned to crime.

But a member of Jamii Bora’s staff saw a better life for Wilson and helped him see a better life for himself.  Over a one year period Wilson saved $10, none of it from stealing, and then received a $20 loan.  Wilson now has four businesses and has convinced hundreds of youth to get out of crime.  How is that for a return on investment?  He has convinced hundreds of youth to get out of crime.  It might not be the return on investment some investors want, but it is the return on investment that communities need and the return on investment that the world needs.

The world’s poor need this kind of redemption—redemption that restores their honor and worth and sets them free.  Redemption that Prof. Yunus saw with the $27 he lent to 42 people 34 years ago—redemption he has seen over and over again for more than three decades.

And here is another kind of transformation the world needs—that we look at people whom we had previously seen as the problem instead as the solution.  The world needs us to change our own thinking rather than writing people off as incapable of transforming their own lives.

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