Wednesday, February 18, 2009

Slumdog Entrepreneur

Slumdog Entrepreneur
by Sam Daley-Harris

When my wife and I slipped into our theater seats to watch Slumdog Millionaire, we braced ourselves for a journey into urban slums, a world inhabited by over one billion people globally.

But unlike the movie-goers in the theater that night who pinned their hopes for one chai wallah (tea seller) escaping the horrors of the slums of Mumbai, India, on the long-shot odds of his winning the Indian version of Who Wants to Be a Millionaire, we knew that right now there is a tool that has helped not just one movie character but more than 100 million of the world’s poorest people actually begin to escape the worst devastations of poverty. That opportunity is not a game show but microcredit—small loans to start or expand businesses like selling tortillas or cell phone time to your neighbors. And if there was an Oscar for assisting beggars, thieves, and prostitutes to find a dignified route out of the slums, I’d know where to look for the winner.

I wouldn’t look in the cool dark of a movie theater, but in the bright, hot sun of Nairobi where you can see the success of entrepreneurs in the urban slums, Jami Bora’s “slumdog entrepreneurs.” Jamii Bora, which means good families, is a Kenyan microfinance institution that has grown from lending money to 50 women beggars ten years ago to serving more than 200,000 members today. One of those entrepreneurs is Joyce Wairimu. Wairimu was one of the 50 women beggars who started Jamii Bora with founder Ingrid Munro in 1999. Munro calls Wairimu one of the fast climbers out of poverty. How fast? In ten years Wairimu has built six businesses and employs 62 people.

Another of the fast climbers is Wilson Maina. Before Jamii Bora, Maina was a thief, one of the most wanted criminals in Mathare Valley slum. Starting with a loan of $20, Maina has built four businesses and a new life for himself and his family. Along the way, he has convinced hundreds of youth to get out of crime. Now that’s a “lifeline” that really matters.

Munro didn’t stop at proving microcredit to help the poorest slum dwellers. She decided to build a town with decent housing and business space for her entrepreneurs. “Every poor person’s dream is to move out of the slums,” Munro says, “not patch up the slums.” On January 30th, that’s exactly what happened when the first 246 families moved out of the slums and into the newly created Kaputiei town with nearly 1,800 families to follow. For the same monthly mortgage they had paid for their one-room shacks, each family now lives in a home with two bedrooms, a bath, a kitchen and a living room. But this is ultra sub-prime lending that works because in order to qualify for a mortgage the residents have to have successfully repaid three micro-business loans.

Where does Munro’s capacity to innovate and defy conventional wisdom in the microfinance field come from? It started 20 years ago when she and her husband adopted three street children. It was in the fertile ground of Munro’s relationship with the mothers of her sons’ friends in the streets—women who were beggars— that her profound insights would grow. When Munro, a Swedish trained architect and urban planner, retired from the African Housing Fund in 1999, she thought she would also retire from the little group of 50 beggar women with whom she had been working. But when the women pled with her not leave them, Munro agreed to stay and insisted that they must lift themselves out of poverty. For Munro that meant the women had to start developing the discipline of saving on a regular basis.

She had them come every Saturday with about 50 cents in savings. When they deposited their 50 cents she would give each of them two scoops of corn and one scoop of beans for free. She admits now that for those first two months she was tricking them into saving with the lure of free corn and beans. After two months, the bags were empty, but the beggars continued to save and the free corn and beans never returned.

Another of Munro’s breakthroughs is that all Jamii Bora staff are former members, previously destitute themselves.

Winning the war against poverty won’t come from summoning the right “final answers” to a handful of trivia questions to strike it rich on a game show. Winning the war against global poverty will come when we realize that we have one of the answers—microcredit—and summon the political will to lift up those microcredit programs that have figured out how to reach the world’s most destitute people. This is a final answer we can stand behind.

Sam Daley-Harris is Founder of the Microcredit Summit Campaign which seeks to reach 175 million poorest families with microcredit and of RESULTS which seeks to create the political will to end poverty
Sam Daley-Harris, Founder
RESULTS and Microcredit Summit Campaign
750 First Street, NW, Suite 1040
Washington, DC 20002
C 202-390-0012

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