Grameen's Action Plan 1998-2005
                                                   Microcredit : Most Powerful Weapon to Fight Poverty


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Twenty-two years back when we began our journey, the word "microcredit" did not exist. Today this is a much discussed, much inspiring word across the globe. Micro-credit is a new technology in the financial world. Like any technology this can be used for the purpose intended by the user. 

One institution may use this as a vehicle to enter into the vast untapped market to sell his product, another may see this as a business to make money. Another institution can look at it as an opportunity to create a life-line for the people who never could get on board the mainstream economy, or as a can-opener to open the potentials lying hidden among poor individuals, men and women. Once a technology is made available, users can give it the shape they want, to suit their objectives. 

 Action Plan 

Our gols 

How do we measure uccess?  

Redoubling efforts to reach the poorest  

Grameen Trust will expand its outreach  

Attaining viability gradually  

In Grameen we decided to use the micro-credit technology to get the poorest out of poverty. We have exciting successes to report, and we have failures to  grapple with. But the essential fact remains : we don't give up. We don't give up particularly because we don't see anything more promising than micro-credit in addressing the issue of poverty. The Microcredit Summit has inspired us to work harder. My colleagues and I thought long and hard about what we could contribute towards meeting the Summit's goal, and how we could use our experience over the last 22 years to guide us. We finally came up with a Plan of Action that we were happy with. 

Our goals 
As you can see in our Institutional Action Plan that you have in front of you, our goals are: 
  • To expand our outreach in Bangladesh to 3 million borrowers by 2005; 
  • To ensure that 70% of Grameen Bank's borrowers are above the poverty line by 2005; 
  • To maintain our focus on women, the poorest, and being financially self-sufficient; and 
  • To reach 10 million borrowers one-tenth of the Summit's goal through Grameen Trust's Grameen Bank Replication Program. 
I would like to share with you my thoughts on  what it will take to reach these goals, and what it will take all of us to reach our collective goals. 

As you can see in our Action Plan, we have added 200,000 borrowers since the Microcredit Summit was held, and will add another  700,000 between now and the year 2005. While this may seem like a large number, in percentage terms it is one of the slowest rates of growth in our history. Instead of focusing the bulk of our energies on horizontal expansion in Bangladesh, we are concentrating on getting our existing borrowers above the poverty line. One goal is to have at least 2 million families among the 3 million who are members of Grameen in 2005 to be living a poverty-free life. 

How do we measure success? 
How do we define "poverty-free life"? We have talked to our borrowers about what a poverty-free life means to them, and then operationalized it in a rigorous test that our staff and outside evaluators can measure quickly and easily. 

We settled on ten indicators of living a poverty-free life. They are having: (1) a tin-roof house, (2) beds or cots for all members of the family, (3) access to safe drinking water, (4) access to a sanitary latrine, (5) all school-age children attending school, (6) sufficient warm clothing for the winter, (7) mosquito-nets, (8) a home vegetable garden, (9) not having a food shortage even during the most difficult time of a very difficult year, (10) and having sufficient income-earning opportunities for all adult members of the family. We will be monitoring this on our own and are inviting local and international researchers to help us track our successes, and setbacks, as we head towards this goal. 

Ensuring that more than two-thirds of our borrowers are poverty-free will require that we do our banking business more efficiently and that we undertake an aggressive vertical expansion. 

We commit ourselves to come up with innovative programs through creative use of newly available technology  in all areas of knowledge, in order to expedite the process of getting Grameen borrowers out of poverty and to make sure that they can stay out of poverty for the rest of their lives. 

We have been introducing new loan and savings products. Our present loan products include general loans, housing loans, seasonal loans, equipment leasing, and loans to finance the entire cost of higher education for children of Grameen families. 

We are collaborating with world leaders in many fields in order to bring the latest technologies to serve the interests of the poor. 

Grameen Phone is an example. This one-year-old cellular telephone company brings income generating opportunities to the telephone ladies in Grameen villages who sell telephone services to the rural population. This company was created in partnership with Telenor of Norway. We intend to set up 50,000 Grameen Bank borrowers with cellular phones over the next 6 years. We see that a woman who becomes a telephone lady of her village can easily earn a net profit of $2 per day, or $700 per year. That is triple the average per capita income in Bangladesh. We are exploring new partnerships as well. All of the companies we are establishing will in some direct way be helpful to our borrowers' efforts to cross the poverty line faster. Most of these companies will ultimately be owned by Grameen borrowers, as Grameen Bank is today. We are mobilizing funds  to finance these companies from commercial sources as well as through a new program called Grameen Investments, through which individuals can invest funds for 1 to 5 years to finance new and existing Grameen programs. We will be paying interest on these funds. 

For any of this to have meaning, Grameen Bank must maintain, and even strengthen, its focus on the poorest women, and also continue to be financially viable. We will continue to instruct our staff to search out the women in new Grameen villages who do not approach us, but instead shy away from us, because they think our program is not for them. We try many kinds of techniques to convince them that Grameen Bank is for them, and sometimes it takes a long time. But we tell our staff, "We have all the time in the world. Wait for the poorest. Your motivation work will pay off." 

Redoubling efforts to reach the poorest 
In old Grameen villages, we will re-double our efforts to reach out to the people we missed  and to non-borrowers who were not poor when we entered the village but whose situation has deteriorated so much they are now among the poorest. We have in place a monitoring system that ensures that borrowers who enter our program are among the poorest, and we are strengthening that system to include new checks and balances by our senior managers and auditors. 

As we add more financial products and innovative programs, we see that many non-poor people are trying to join Grameen Bank. 

Sometimes they literally disguise themselves as a very poor person in an effort to conceal their wealth from our bank workers. It is the job of our staff to make sure they do not become members. We are sometimes amazed at the lengths non-poor people go to in order to join Grameen these days. We tell them, "We are happy you want to join our program, but we cannot allow you to join since we are for the poorest." Sometimes people are heart-broken. But that is our commitment. We may find other ways to work with the non-poor, but not as member-borrowers of Grameen Bank. Now more than ever, if our commitment to only allow the poorest to enter our program is not rock-solid, we will become a program for the less poor, and then for the non-poor. 

We would then be irrelevant to reaching the goal of the Microcredit Summit. We want to avoid that at all costs. And we will. 

Grameen Trust will expand its outreach 
Through the Grameen Trust, we have made a commitment to reach 10 million borrowers�one-tenth of the Summit's goal�by the year 2005. 

Today, Grameen Trust reaches more than 220,000 borrowers in 26 countries through 71 partners organizations that it provides funding to. This number has grown from 160,000 borrowers at the time of the Microcredit Summit. Grameen Trust serves as a micro-credit wholesaler, receiving grants from international organizations as well as from individuals through a program called the People�s Fund, and provides loans in local currency to organizations that want to establish a microcredit program modeled on Grameen Bank. More that 80 percentage of the funds Grameen Trust receives are lent to partner organizations that provide credit to the poorest. The balance is used for technical assistance, research and training for the staff of partner NGOs. 

We insist that these programs focus on the poorest and on women, and have a long-term goal of institutional viability. We focus first on the viability of the individual branches of a micro-credit project, not on the institution as a whole. Our experience with balancing the need to be focused on the poorest and to be financially viable is best approached by initially concentrating on outreach to the poorest within the context of a long-range plan to reach branch and institutional viability. If the outreach to the poorest is compromised in the early stages of a project, the entire operation is in trouble. 

Our experience tells us that, in any given village, it is very difficult to form groups of borrowers who are poorer then the people who joined a program in the first few months of operation. That's why it is so important to reach out to the absolute poorest first; otherwise, a program will probably never reach them. 

Attaining viability gradually 
We believe that if a micro-credit program can demonstrate that one or more of its branches have become viable within a reasonable amount of time, then it is a good candidate to receive 
additional funds for adding new branches, even if doing so will mean that the operational loss of the institution increases in the short-term since the new, additional branches we fund will not break-even for several years. 

We do not think that our partner micro-credit programs should be so concentrated on institutional viability that they miss opportunities to expand their outreach  to the poorest, as long as that outreach is based on a demonstrated experience to reach organizational  viability in the long-run. 

Indeed, we encourage them to develop one or more prototype branches that are viable and then work with them to fund as much of their expansion as possible. 

We also encourage other donors to support their expansion. That is the only way we will reach 10 million, and that is the only way we all will reach 100 million. 

As you can see, we are in the pro-cess of developing  a supportive network of institutions, technologies, and people around the world to generate momentum in our work so that we can safely reach our goal by the year 2005. This support is growing, though we have a long way to go.  Thank you all for your very precious support. 

Presented at the Microcredit Summit Meeting of Councils, New York, June 1998