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Commentary: Micro-Lending: From Mongu to St. Louis

This article first appeared in the St. Louis Beacon, Oct. 12, 2011 - The Incarnate Word Foundation's journey to bring micro-lending to St. Louis began in Mongu, Zambia, an eight-hour bus ride through the bush from the capital of Lusaka.

Several of our Mexican sisters from Congregation of the Sisters of the Incarnate Word were there working with mothers in an HIV/AIDS clinic. We planned to develop micro-lending and early childhood development programs. Even though I had not done micro-lending, I was familiar with the concept. With the hubris I see in the philanthropic world and in myself, I was confident that I could easily conduct a workshop on this topic. How hard could it possibly be? As it turned out, it was surprisingly easy -- but not because of anything I did.

Once in Mongu, I began my meeting with the newly formed Masupanzila Women's Empowerment Association by passing out a PowerPoint. I quickly realized that my approach was completely wrong. How could I tell these women how to organize their micro-lending program just because funds were being provided through Women's Global Connection, an international ministry of our sisters? I had never walked their path. It turned out the PowerPoint handouts made great scrap paper.

The women quickly delineated how the program would work. Some were outspoken, others reserved, but all participated. They determined the interest rate by going around the table. The funds would be divided between a micro-lending program to start businesses and money that could be tapped for the rice cooperative, children's school fees, emergency needs and a funeral fund.

I was a long way from St. Louis, and I had re-learned some important principles: Building healthy communities is all about empowerment of the people themselves; and foundations can bring resources and knowledge, but these are tools not solutions.

I returned to St. Louis determined to do micro-lending here. I began by tracking down an expert in the field who had served as faculty at a leading university and was currently an international micro-lending consultant.

His reaction was quite negative. Micro-lending could never work in the United States if left to the hands of the people themselves. We have an entitlement culture, and the poor could not be trusted. The poor were uneducated and unmotivated. If I were to forge ahead, he recommended working with immigrants because they would be more responsible and industrious. I thanked him for his advice and said I was going to do it anyway.

I began by inviting several agencies to a meeting. Incarnate Word Foundation would provide $5,000 in start-up funds as a grant. I decided to make this a grant, not a loan, so that the agencies would not be compelled to run the lending program but would serve as conduits to community members who would form the micro-lending groups.

Three of our five groups have thrived. The Women's Helping Hands Bank, sponsored by Midtown Catholic Community Services, offers the best example of how micro-lending can be an essential tool for building healthy communities. It began with 11 women who worked together to develop the outline for their program. It is driven by the women themselves -- not by agency staff.

The Women's Helping Hands Bank focuses on providing loans for daily living -- car repairs, appliance purchases, school tuition, back bill repayment. This enables members to avoid rent-to-own stores, payday loan offices and other predatory lending. Loan repayment has been about 94 percent.

From this experience, I believe micro-lending in St. Louis requires:

  • Addressing cultural biases that erroneously regard the urban core as an entitlement culture that lacks fiscal responsibility and integrity.
  • Avoiding hierarchical models and challenging participants to recognize that they have valuable knowledge and skills, and can develop by themselves -- not rely on outsiders with more education and resources to impose a program upon them.
  • Building upon the strong relational skills and networks among women in communities.
  • Creating joint decision making within the group and a shared sense of responsibility.
  • Stressing the ability of each woman to explore her own dreams and determine her own destiny.

Whenever I speak about the Incarnate Word Foundation, micro-lending is the program that most engages the imagination. It is a tangible manifestation of the possibility within people to realize their own potential if they have to tools to do so. The path to creating health communities is within the people themselves.
The Incarnate Word Foundation, Citi Community Development, Nonprofit Management Leadership Program and Public Policy Research Center at UMSL will host the area's first microfinance conference Thursday. We hope it will inspire the St. Louis community to continue developing the tools that will create positive financial opportunities for low- and moderate-income individuals and households.

Bridget McDermott Flood is executive director of the Incarnate Word Foundation.