During my trip to Haiti in 2007, I was struck by the proliferation of NGOs and international aid agencies throughout the country. I later came to learn from President Clinton, that with the exception of India, Haiti has more NGOs per capita working there than any other nation in the world. And what has been the result of all this well intentioned assistance? According to FRIDE, a European think tank, "foreign cooperation has contributed over $2.6 billion to Haiti since 1984, with little to show for it." While no one would disagree that resources are critical to support emergency relief efforts, the bigger challenges are in coordination in and finding sustainable long-term solutions that empower the Haitians to rebuild their country.
Tackling extreme poverty requires a bottoms up approach, one built more on broad participation by local community members and less on a top down system that traditionally over relies on ideas generated by leaders living in the North. As a global community we can work as partners with the poor by first understanding how they perceive their challenges, and then by removing barriers that will unleash their creativity to break the poverty cycle. Women, in particular, are key drivers of positive social change. Across the globe it has been proven that empowering women with economic opportunity creates a virtuous circle effect that brings social and economic benefits to the whole family and ultimately to the entire community.
As Haiti seeks to recover from the recent devastating earthquake, international aid agencies, nongovernmental organizations (NGOs) and millions of individuals are looking for ways to assist with emergency efforts and the subsequent rebuilding process. However, all this attention and financial support needs to be tempered by the reality of the country's history. Haiti has struggled for more than a decade to break free from their dependency on foreign aid, corruption, weak infrastructure, environmental degradation and extreme poverty.
It's worth taking a look at other countries, like Haiti, that suffer from extreme poverty, corruption and vulnerability to natural disasters to see what is working before we recreate the wheel. Bangladesh is subject to devastating and deadly monsoons and tsunamis. It's one of the most densely populated countries on earth, with more than 150 million people (half the US population) living in a country the size Wisconsin. In the 1970's before the Nobel Laureate, Professor Mohammad Yunus and others, created the world's largest microfinance companies, Bangladesh's poverty and public health indicators ranked among the lowest in the world.
Professor Yunus discovered that by investing in women he could change that paradigm. Today after making his first loan of $27 to 42 women in the village of Jobra in 1976, he has changed the lives of more than 40 million people in Bangladesh alone by making small loans to more than 8 million people, 97% of which are women. According to the 2009 Microcredit Summit Report, as of December 2007, 3,552 microcredit institutions reported reaching more than 154 million clients world-wide, 70% of whom were among the poorest when they took their first loan." If each loan reaches a family of five, over 500 million of the world's poorest families are now reached by microfinance.
How has Bangladesh's microcredit industry impacted the country's development report card? According to a published article increasing access to small scale loans to Bangladeshi women has increased total household incomes by as much as 53% in real terms over three years. This has translated into increased access to food, medicine and medical services and improved completion rates of primary school education among their children. Grameen Trust studies show that extreme poverty was reduced by more than 70% within 5 years among their borrowers. As well, there was a 34% reduction in infant mortality among borrower's families. The country is now on target to reach the 2015 Millennium Development Goals.
Can this be replicated in Haiti? I believe it can. With 50% of Haitian households run by women, the first thing the global community should consider is engaging these women in the discussions on how to rebuild their country. While microcredit alone cannot solve the problem of poverty, it lays down a solid foundation on which all other programs that serve the poor can be sustainable. In addition, microcredit institutions that are run as social businesses, can mitigate some of the Haitian's dependence on NGOs with their traditional hand-out approach, providing a mechanism for the development of micro-enterprises and eventually small to medium size businesses. Proven models like Grameen's rely on the establishment of social networks and self-made groups of friends and family. These networks strengthen the community of borrowers and their families by providing encouragement, accountability, and practical assistance in dealing with debt and the challenges of running a business.
Finally, engaging the private sector in establishing social businesses like Grameen's joint venture with Dannon or Viola, which not only provide jobs, but solve critical health issues, can change the development landscape from one that relies on a limited supply of donor funds, to scalable market-based solutions designed for local economies. The social business model can be applied across industries to improve prosperity among the poorest, and at the same time drive economic development creating emerging markets for profit maximizing businesses. That's a win/win by most people's standards and a hand-up indeed.