Keynote speakers of the 2004 Microcredit Summit in Bangladesh. Begum Khaleda Zia, then Prime Minister of Bangladesh, was the “chief guest.”
We are pleased to bring you this #ThursdayThrowback blog post, which was originally published in The State of the Microcredit Summit Campaign Report 2007. We hope this will encourage you to reflect on both how long we have been fighting to convince the policy makers (and other doubters) that microfinance can reach the extreme poor as well as be inspired by our early revolutionaries.
Microfinance Revolution at the Very Bottom: A Radical Departure
The following is an excerpt from an interview Campaign Director Sam Daley-Harris conducted with Jamii Bora founder Ingrid Munro in October 2007.
Microcredit Summit Campaign: RESULTS volunteers in the United States and in other countries have been working for four years to get half of World Bank microfinance funds to those living on less than a dollar a day. The arguments that come from the World Bank and others is that you cannot reach the very poor with microfinance, they need safety nets first. The president of the World Bank said this in an October 2007 meeting with 29 members of the U.S. Congress. Do you agree with this position?
Ingrid Munro: I don’t agree with that at all, because in Jamii Bora we know that you can reach the very poor. Not just reach them, not just feel sorry for them, pat them on the head and say, we are going to help you to come above the poverty line…
Our experience is, first of all, the most desperate are the ones that need microfinance the most, and they can handle it, we have proven that. It’s not something that is a theory, it is a proven fact…The poorer they are, the more they need the microfinance. And, they don’t need charity because charity is a way to keep people down. If we keep saying, “I feel very sorry for you because you can’t manage this yourself,” you start thinking [to yourself], “I should feel sorry for [myself] because I can’t manage [on my own].”
But, if we say to you, “You can make it. You have talents. God has given you talents like He has given everybody talents, and He wants you to use them.” And [if] you see some of your friends who were begging beside you on the same street now walk around in nice dresses, their children are in school, they eat three meals a day, they live in a better house — then you also dare to dream that that is possible for [you too].
Microcredit Summit Campaign: You say that some groups have tried to do what you do in reaching the very poor, but they get their fingers burned. What are some of the principles that can allow microfinance to succeed when you work with beggars, landless laborers, and prostitutes?
Ingrid Munro: …You have to be very close. You see, the beggar is a professional, it is a profession in itself. So, if you come and give a beggar $100, and say, “You go and start a business,” they will run away with that money. You have to prepare everybody for what it is, and we think you have to start by getting them to save, because then they are in that habit of setting aside a bit of money every day. That makes it easy for them to pay back the loan.
You also have to be there and encourage them when the problems come. The city authorities chase you away from where you are doing your business. A police officer might even take your goods, or thieves break in to your little kiosk, or you have a fire that [burns] down everything. You can’t be like a normal bank and say, “Okay, we will still hunt you. You have to bring the money back.” [Instead] you come together and say, “Now how do we solve this situation?” And you help them get on their feet so they are helped to pay back the old loan, but also a new loan. It’s a matter of being there all the time and understanding.
If you are naïve and you just go up to somebody who you haven’t spoken to about a loan, who doesn’t know [your] group, who doesn’t trust you…and you say, “Here’s $100, go start a business,” then you will lose that money. And there are naïve people who do that, and I think those are the ones who are spreading this dangerous message that you can’t reach the very poor, because they’ve done it the wrong way themselves, not because you can’t reach the very poor. I invite anyone who doubts to come visit us…
In that sense I think we are a movement, a people’s own movement, more than we are an institution, a normal financial institution. But we’re still microfinance.
Microcredit Summit Campaign: There are so many different things that Jamii Bora does from housing to the “get sober” program. Please talk about another of your innovative offerings, health insurance. How did it come about, what does it costs, and what are the benefits?
Ingrid Munro: In early 2001 we were one year and a few months old. We realized we had some people who were…falling behind in their repayments. So we decided to make a hundred percent research. We would visit every single one of them with our staff and try to note down what are [their] problems. Why can you not pay?
It was such a shocking result. We found that 93 percent had the same problem, they had a patient in hospital…It means my son, my daughter, my baby, my grandchild, or my spouse, or my sister — somebody very close to [them] had to be admitted in hospital, otherwise they would die. Now, of course, you can’t expect that anyone will let their child die because they have to pay their loan to Jamii Bora. So, it was clear to us, this was something we could not compete with. This was something that we had to solve.
So we went to all the insurance companies and asked, “Could you develop an insurance product for us?” They said, “Oh yes, yes.”
We had 6,000 members in those days, and they thought that was a lot. But the cheapest they could come up with was 6,000 shillings, and 6,000 shillings is about US$80 per year. And, US$80 per year, if you are a single mother with five children, you see, you have to [multiply that] times six. That is a lot of money. That is way above what anyone could dream of.
We then decided we’ll start our own in-house product. Everyone told me, “Now Ingrid, you are killing this beautiful organization. This will pull you down. It will not work.” But we never did any research. We sat in a group of staff with a lot of knowledge about our members. We decided we could charge 1,000 shillings a year, which was US$12 at the time, on condition that the members could pay every week, a small amount (about 30 cents US), and they didn’t have to pay everything up front. And, we decided it would cover an adult member and a maximum of four dependent kids. If they had more than four kids, they would add an extra US$2 per child per year. We would cover in-patient, that is, treatment in hospital. If they came into hospital, we would cover everything.
We started by linking up with one of the big mission hospitals in Nairobi. We said, “We’ll give you a deposit of what we think it could cost per month,” because mission hospitals cannot afford to give you services on credit. So we paid them up front. Then our members would come with a letter from us saying, “This patient has health insurance from us and please treat her. If she has to be admitted, we will pay everything.”
There was not more research than that. The background was, “This is what our members can afford to pay and we have to get it to work.” Over time, this has become a most incredible part of our organization. We also decided weren’t going to ask for any donor funding, because then they would send a lot of consultants and they’d tell us it’s not possible to do what we had decided to do, and they would also say, “So and so should qualify and those clients should not qualify.”
We wanted it to be for everybody. We decided it would cover maternity, it would cover any kind of operations, it would cover any kind of in-patient treatment, and we would not exclude people with HIV and AIDS, because then it was a useless insurance for us. And today, [October 2007] it is soon going to be seven years that we have run this.
We have always covered all our costs. We have never had any donor subsidy, not even US$1, and we have never asked for it either. I am sure we would have got it if we had asked. It has saved so many lives. Right now 120,000 people [are covered by the health insurance], because [every member of Jamii Bora] doesn’t take out health insurance…