Summary

Launched
2014
Estimated duration
6 years
Estimated total value
$48,915,000
Regions
Northern America
Locations
United States
Partners
Dalio Foundation, Inc.; The Citigroup Private Bank; Upper Manhattan Empowerment Zone; Grameen America, Inc.

Dhaka to Harlem: Empowering Women as Engines of Growth

Summary

In 2014, Grameen America committed to bringing the microfinance model pioneered by Professor Muhammed Yunus to Harlem, in New York City, and disburse $50,000,000 in microloans to low-income women over the next six years. Grameen’s Harlem branch will be strategically located to offer an alternative to predatory lenders, advancing Grameen’s inclusive vision for poverty alleviation, allowing the program to expand within African American and West African immigrant communities. Grameen’s sustainable business model will serve 7,000 women in this community in the next six years and transform the branch into a self-sustaining financial institution. Grameen will provide first-time loans of up to $1,500; a five-day group-training programs on interest rates, savings products and credit establishment; credit-building services with Experian; open no-fee, no-minimum-balance savings accounts for members by partnering with commercial banks; and encourage members to learn from each other during weekly meetings, making small repayments and savings deposits, and developing a strong network of support.

Approach

APPROACH:
In 2014, Grameen America commits to disbursing ,000,000 in microloans to low-income women in Harlem over the next five years.
The commitment will be implemented through a unique group-lending model, pioneered by Muhammad Yunus and the Grameen Bank. Grameen America has applied this lending model, and its peer-driven underwriting process has proven successful in diverse markets across the U.S. From the Bronx to Los Angeles, Grameen members are building businesses, increasing their income and joining the financial mainstream.
Grameen America’s Harlem branch will be strategically located to offer an alternative to predatory lenders. The location will also further Grameen America’s inclusive vision for poverty alleviation, allowing the program to expand within African American and West African immigrant communities. Grameen America’s sustainable business model will make it possible to serve 7,000 women in this community in the next five years and transform the branch into a self-sustaining financial institution.
Key components:
Microloans – Grameen America requires neither a credit score nor collateral from its members to receive a microloan for income-generating purposes. The maximum first-time loan is ,500.
Financial Education – Members receive a five-day group-training program in which they learn about interest rates, savings products and credit establishment.
Credit Building – A good credit score is a vital component to financial well-being, facilitating access to affordable consumer products and services. As members repay their microloans, Grameen America reports repayments to Experian to establish and improve their credit history.
Asset Building – Grameen America creates a relationship between members and the traditional banking system by partnering with commercial banks to open no-fee, no-minimum-balance savings accounts for members.
Group Model – Members join a group of five who encourage and learn from each other. During weekly meetings, members make small repayments and savings deposits. This structure develops a strong network of support and helps build communities.
ACTION PLAN:
Through 18 branches operating in 11 U.S. cities, Grameen America has invested over ,000,000 in more than 32,800 low-income women entrepreneurs in underserved communities. In 2013, the first branch in Jackson Heights reached operational sustainability, with interest income from the outstanding loan portfolio covering operating expenses. In New York City alone, Grameen America has invested more than ,000,000 in more than 22,000 low-income women.
With this proof of concept, Grameen America plans to expand lending to women in Harlem in October 2014. Over five years, the program will invest ,000,000 in Harlem’s neighborhood businesses owned by poor women, addressing the affordable credit desert in the community.
Based on the success of Grameen America’s existing branches, the organization expects that it will have provided 500 low-income women with active microloans (microloans outstanding over the past year), training and support in the first year, amounting to more than ,480,000 in cumulative loans disbursed.
During the second year, the organization aims to grow its active member base to more than 1,700 women, investing over ,870,900 in their businesses.
By year 3, Grameen America plans to have reached 3,100 active members in Harlem and provided over ,380,700 in microloans.
In the fourth year, the organization aims to have cumulatively invested ,914,300 in 4,000 active members’ businesses.
By the end of the commitment period, Grameen America projects that it will have served more than 7,000 women in Harlem with a total of ,000,000 in microloans. Each of these members will boost their income stream, establish credit scores, build assets and develop peer networks to help them expand their small businesses.

Background

Persistent poverty indicates an ever-increasing need for employment strategies, including small business development, that support income growth.
In Harlem, access to even basic financial services is extremely low. With poverty rates in excess of 30% (U.S. Census Bureau, 2010 to 2012 American Community Survey), non-bank alternatives such as hard money lenders and pawnshops have moved in to fill the void. Today, 36% of residents rely on these services (NYC Department of Consumer Affairs, 2010), which can charge interest rates of over 400% and often leave borrowers in a cycle of expensive debt. With no source of affordable capital, no access to the banking system and no way to build credit or learn about financial products and services, these individuals face tremendous barriers to creating financial opportunities for themselves.

Progress Update

May 2017

Grameen America Harlem branch provides services of microloans, asset building, credit building, financial training, and peer support to women who live in poverty to build small businesses and achieve economic empowerment for themselves and their families. As of January 2017, Grameen America in Harlem has served 1,170 low-income women entrepreneurs in Harlem, NY with 2,186 disbursed microloans. The group lending model provides critical financial products and services to the most vulnerable low-income women, who lack access to the capital and credit that can lift them up out of poverty.

Partnership Opportunities

Grameen America is seeking funds to help support its new Harlem branch. In Harlem, access to basic financial services is extremely low. Today, 36% of residents rely on non-bank financial institutions that can charge interest rates of over 400% and often leave borrowers in a cycle of expensive debt. Grameen America commits to disbursing $50 million in safe and affordable microloans to women living in poverty in Harlem over the next six years.

NOTE: This Clinton Global Initiative (CGI) Commitment to Action is made, implemented, and tracked by the partners listed. CGI is a program dedicated forging new partnerships, providing technical support, and elevating compelling models with potential to scale. CGI does not directly fund or implement these projects.