Microcredits help pull women out of poverty, off of welfare

By Hillary Rodham Clinton

WASHINGTON: A few years ago, I met a group of extraordinary women. They were all entrepreneurs in Denver. One of them ran a desktop publishing business, another owned a bakery and a third was in the computer business. Each of these women had pulled herself out of poverty or off welfare.

For years, they were among the thousands of people in this country who can only dream of getting a bank loan to start a small business. The reality is that "too many great ideas die in the parking lots of banks," one woman told me.

But given the opportunity -- and a small cash loan -- these women were able to open businesses that helped them become self- sufficient and move off welfare and into the economic mainstream.

This concept of extending modest business loans to low-income citizens who are willing to work hard -- but have little or no collateral -- is called microcredit. And though it's called "micro," microcredit is really a big idea. Modest loans can transform lives, reclaim cities and rural areas from decay, and reduce the number of people living in poverty.

Just ask Connie Evans. Evans is president of the Women's Self- Employment Project, an organization that has provided business training, technical assistance, loans and moral support to thousands of women in Chicago. As a former community counselor in a public housing development, Evans met many women who needed a little jump start for their ideas. "It was clear that what they needed wasn't counseling but money," she said.

For more than a decade, Evans has watched low-income women build successful businesses and self-esteem with modest loans and the encouragement of other women. The Women's Self-Employment Project's success can be measured in countless ways -- in day- care centers, in catering businesses, in hair salons and in the hopeful eyes of children who have watched their parents work hard and succeed.

"I like being in control of my own destiny, my own fate," said Arinez Gilyard, a mother of three who started an in-home day-care center with business training and a US$200 loan from the Women's Self-Employment Project in Chicago. "I believe I will be self- employed the rest of my working life."

Why does microcredit work? Because it's a concept that provides opportunity, demands responsibility and strengthens communities. Many of the loan programs are built around peer- support networks. Borrowers become members of groups that meet regularly to discuss their challenges and seek and offer advice. The members also make sure that the loans are repaid on time. No new loans can be made unless all group members have kept up with their payments. As a result, most microcredit organization can boast loan repayment rates of more than 90 percent -- a rate that is the envy of many commercial banks.

I've seen firsthand how providing credit to people on the margins of society can reap economic and social benefits. I have met with women worldwide who have told me how their lives changed from destitution to inspiration because community banks gave them the opportunity to start small businesses. These women live in the most remote parts of India, in the poorest barrios of South America and in places that have weathered civil wars and earthquakes. They now have the tools to secure better livings for their families and, in turn, strengthen their countries' economies.

While microcredit was conceived in the developing world, it can be an important "tool of opportunity" for many Americans -- for farmers whose livelihoods have been undermined by bad luck or bad weather, inner-city parents who are struggling to balance a job on the night shift with family responsibilities and welfare mothers eager to move off the public dole into work.

Last week, the President and Treasury Secretary Robert Rubin presented the first Presidential Awards for Excellence in Microenterprise Development to organizations that have pioneered efforts to extend credit and economic opportunity to needy yet promising entrepreneurs. The Small business Administration has awarded $70 million in grants to non-profit microlending organizations. The President announced last week that he is requesting a $1 billion increase over the next five years for community banking.

All of these efforts will be crucial to making sure no one is left behind in the new millennium. In an era of greater competition and scarcer resources -- an era when the gap between rich and poor is widening in many parts of the world -- microcredit can help our poorest citizens take control of their lives and their futures, and ultimately make the world a better place for us all.

-- Creators Syndicate