Nobel Prize-winning microcredit pioneer Muhammad Yunus announced this week that this year he will open the second American branch of his international microcredit institution, Grameen Bank, in Omaha, Nebraska. The Midwestern office will be the second American branch opened by Grameen since the bank specializing in small loans for poor entrepreneurs opened in New York City’s Queens borough last year. Bank officials say they chose Omaha for the second branch location because of strong local support and demand for microfinance services. Initially, the bank plans to serve the low-income entrepreneurs in South Omaha, extending loans to at least 250 borrowers in its first year of operation. Eventually, officials plan to expand to other parts of the state.
Traditionally, microcredit clients are sustenance entrepreneurs in developing countries, or low-income entrepreneurs who do not qualify for traditional bank loans. But as the recession takes more jobs and bank loans become harder to secure, the small-scale lending system is gaining in prominence as a means of spurring business. (See web-exclusive feature)
Yunus, the banker who popularized microcredit internationally after making his first loan to Bangladeshi villagers in 1976 with $27 dollars out of his own pocket, said yesterday that American communities should “consider having a Grameen America branch as a means of addressing the hardship caused by the financial crisis.”
The first Grameen America branch in the Jackson Heights neighborhood of Queens, New York, has lent more than $1.6 million to 660 women living at or below the poverty line since opening in January of 2008. The average loan size to date is $2,200.
“Grameen America’s success and growth in 2008 came in an environment where banks were cutting back on loans. Now, in 2009, Grameen America is expanding its operation to Omaha and continuing with its mission to make loans to low income people as a solution to economic hardships across the United States,” said Yunus, whose efforts to alleviate poverty in Bangladesh won him a Nobel Peace Prize in 2006.
Another Grameen veteran, Habib Chowdhury, will lead the bank’s Omaha branch. Chowdhury, who has managed Grameen microcredit programs since 1985, last launched and managed a Grameen microcredit program in Kosovo. In the nine years since the bank branch opened, it has provided loans to over 14,000 borrowers, including a large number of war victims, widows, and displaced women.
Ariella Cohen is Next City’s editor-in-chief.