Grameen Bank Housing Programme
Section 1 - Introduction
1.1  An all out assault on structured poverty The workers and the management at the Grameen Bank are of the view that poverty is a structural problem which is neither created nor sustained by the poor; it is the result of an institutional arrangement. They believe that it is possible to mount an effective, structured, and self-funded assault on poverty, and that it is possible to eliminate the prevailing absolute poverty from the face of the earth within our lifetime. The Grameen conglomerate (see Appendix A), so far, consists of 12 companies, the best known of which is the Grameen Bank. Some of these companies, such as the Bank, are incorporated as 'for-profit', while some are incorporated as 'not-for-profit'. Some of these companies, such as the Grameen Bank, are dedicated to serving the 'poorest of the poor' while others seek their clientele amongst people who are while poor are not the 'poorest of the poor'. All of these companies, except the Grameen Trust, have an exclusive focus on Bangladesh. The Grameen Trust (see Note 1) provides seed capital and technical assistance to Grameen Bank "replications" all over the world (including Bangladesh) (see Note 2). 1.2  Grameen Bank The Grameen Bank (GB) was incorporated in Bangladesh in 1983. It specialises in the provision of financial services, including credit, savings and insurance, to the 'poorest of the poor' among the rural landless. Today, the Bank employs 12,600 staff, works in 37,350 villages, and lends half a billion dollars in 4 million collateral-free tiny loans each year. Women, being the most marginalised among the poorest of the poor, make up 94% of its clientele. On-time loan & interest repayments exceed 98% while bad debts are less than 0.5%. Saving at the rate of two taka (5 cents) a week, Grameen borrowers have collectively amassed a saving in excess of $ 153 million (see Note 3). 1.3  Housing Loans The Bank introduced housing loans in 1984. So far 376,627 houses have been built. Each month 7,000 to 8,000 new houses are added to this number. Repayments on these loans are near-perfect (see Note 4). 1.4  The scope of this submission This submission is about Grameen Housing Programme. However, like the knots in a fisherman's net, all different Grameen programmes are intricately interwoven and sustain each other. This makes it very hard to describe the Grameen Housing Programme on its own, without referring to other products and services of the Grameen Bank. This is illustrated by the following few lines taken from an unpublished book, 'Heroism and Grandeur of Self-Reliance' by Jesse Williams (see Note 5) :
When a borrower joins the Bank and borrows a tiny 'working capital loan', she also undertakes a set of 'decisions' [see '16 Decisions' in Appendix D ]. Decision Number 3 states : "We shall not live in dilapidated houses any longer. We shall repair our houses and work towards constructing new houses at the earliest". Although she would not qualify for a Housing Loan for at least one year [more likely two years] she will re-affirm this "decision" each week in the Centre Meeting after repaying her 'working capital loan' instalment. In the meantime, the 20% [simple] interest she pays on her tiny loan would cross-subsidize the interest on housing loans taken out by others [the interest on housing loans is 8%, 7% below the market]. Her chances of getting a housing loan is considerably influenced by the actions and inactions of others in her 'Centre'. For example, her housing loan application would receive priority if not just her own household, not just her 'Group' [of 5 borrowers], but her 'Centre' [which consists of 6-8 Groups, or 30-40 borrowers] is "dowry free".
It is this intricacy of interactions between the different Grameen programmes, processes, products, services, practices, activities, and values that make it necessary to include some description of the Grameen Bank as a whole. Most of that information is in Appendix B ("The Price of a Dream"), Appendix C ("Participation As Process"), and subsequent appendices. We recommend that the reader should read at least Appendix B ("The Price of a Dream") before reading the rest of this submission. Specifically, the reader should note the 'Group' and 'Centre' concepts - which is how the Bank is organised at the grassroots level - and 'Sixteen Decisions', also known as the 'Social Development Constitution of Grameen Bank'. Therefore, in the rest of this submission, we shall use Grameen terminology and ideas with the assumption that the reader is familiar with them.
1.5  Women at the Centre Both the 'working capital' loan and the housing loan can be seen at work here. This woman is a highly skilled seamstress with very good income. Being very busy, she was neglecting the maintenance of the plinth, which shows signs of wear and tear. "Poor women have an intense drive to move up; they are hard working, concerned about their human dignity; concerned about their children's present and future, willing to make personal sacrifices for the well-being of their children. In Grameen Bank, with 75% [now 94%] of our borrowers being women, we find it much more easy to address a whole gamut of social and economic issues with a high level of effectiveness" (Yunus, 1989:48) Women's economic and social empowerment is central to the work of the Grameen Bank. Their desperation to secure a better future for their children is fully exploited by the Bank in Bangladesh and its replications in other countries. A Grameen Bank replicator in Philippines, describing motivational work among extremely poor women there, writes "We talk about their dreams for their children. Teardrops fall, and we know that the first battle is already won." ('Credit for the Poor' No. 8) The Grameen Housing Programme is totally women-centred, as described in later sections. Therefore this submission is written from that point of view. 1.6  Our aim in making this submission Our aim in making this submission is three-fold: To put forward the proposition that a wider credit intervention which includes housing loan could provide a sustainable housing programme for the poor, especially in countries which cannot afford the 'right to shelter' for its citizens. To argue that Grameen is not a one-off miracle, but the entire Grameen model is highly replicable. This case is made in Appendix A where the Grameen conglomerate and overseas replications of Grameen model are discussed. As mentioned in Section 1.1 and the associated notes, adaptation (see Note 6) of the Grameen model in Bangladesh and other countries is beginning to happen. Hopefully the exposure the Grameen Bank could get through the World Habitat Award - if we win it - would fuel more optimism and confidence, and encourage more replications. It is often assumed that social housing is an exclusive domain of the government and/or the non-profit/NGO sector. With one-fifth of human population on earth - a staggering 1.2 billion people living in absolute poverty - unable to participate in the economy and unable to contribute to taxes, it is hard to see how government and non-profit/NGO sector can provide shelter to all who are shelterless. The Grameen Housing Programme demonstrates that the for-profit private sector can also play a useful role in the provision of sustainable housing for the poor. We hope that the exposure Grameen Bank Housing Programme would get through the World Habitat Award will generate increased private sector interest. 1.7  History of Struggle We have included some history of the "struggle" in this submission, simply to make the point that the Grameen Housing Programme - in fact, the entire Grameen initiative - exists in the same imperfect world marred with bureaucracy, corruption, and hostile cynicism that many programmes wanting to serve the poor find themselves battling against; that it is still possible to dream dreams and realise them; that it is possible to build such competent and creative alternate institutions that opposition would simply disappear; and that it is possible to do all these things within the existing framework. 1.8  Currency Please note that "$" in this report refers to US$, and an exchange rate of $1 = 40 taka is assumed.
Notes: Organisations such as the Grameen Trust are called 'tier-2' organisations. They work at the "wholesale" level. They scrutinize and identify retail practitioners; and provide them with seed capital, training, experience-sharing, and monitoring. CASHPOR based in Malaysia is another example of a 'tier-2' organisation. Grameen Trust is advocating for the creation of national/regional 'tier-2' organisations in all countries/regions. Back to text Presently, there are over 200 Grameen Bank replications in 56 countries, 50 of those are directly funded by the Grameen Trust. Trust's 5-year rolling plan aims at the creation of 300 new replications in the next five year. Back to text Grameen Bank - as at August 1997 (source: 'Grameen Dialogue') 1 Number of clients - female - male 2,192,418 2,070,925 121,493 2 Number of lending centres 63,655 3 Number of villages 37,352 4 Number of branches 1,093 5 Cumulative amount disbursed US$ 2,079,230,000 (taka 81,483,690,000) 6 Amount disbursed during May 1997 US$ 29,580,000 (taka 1,269,760,000) 7 Borrowers' savings US$ 153,840,000 (taka 6,055,000,000) 8 Savings of non-borrowers US$ 17,240,000 (taka 752,670,000) Back to text Grameen Bank Housing Programme - as at August 1997 (source: 'Grameen Dialogue') 1 Number of houses built with Grameen Housing Loans 376,627 2 Housing Loans disbursed so far US$ 154,590,000 (Taka 5,987,310,000) 3 Number of houses built during May 1997 7,561 4 Housing loans disbursed during May 1997 US$ 1,880,000 (Taka 80,580,000) Back to text According to its Australian author, this book is expected to be published by mid 1998. Back to text Local practitioners must customise the Grameen "model" to their local conditions and local context through action-research. This is an iterative process which must be undertaken by the local practitioners and found to require little support and advice from foreign "experts". Back to text