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4min chapter
Acumen: Jacqueline Novogratz
Wisdom From The Top with Guy Raz
Rwandan Women's Microfinance Bank
Rwandan women were not allowed to take out loans under Napoleonic code until 1986. Women, the average income at the time was about $112 a year. "I look back now as it was a radical move, but it was also crazy," she says of her co-founders' decision to ask even poor women to contribute to microfinance bank.
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Speaker 2
So you get to Rwanda. This is an opportunity for women to be able to take out loans, which was a 1986, 87. This was this is revolutionary women until that point. We're not able to take out loans to start businesses.
Speaker 1
No, they were under Napoleonic code until 1986. They were put in the same category as the mentally incapable. And it was also the time the country had elected its first three women and parliamentarians who were three of my co-founders. You know, all run owned, managed by Rwandan women.
Speaker 2
And together you built this microfinance institution. And what did you, I mean, initially was it, was that model making micro loans and, you know, sort of a timetable for repayments? Was that the initial model or was it just a grant of money for women entrepreneurs? So
Speaker 4
we would make these $30 loans
Speaker 1
at very low interest to incredibly poor women. Women, the average income at the time was about $112 a year. And yet I was undaunted by those low income levels. And it was really important to me that the women owned this, that it was theirs. And that included asking even poor women to contribute to the bank, which I look back now as it was a radical move, but it was also crazy. And yet people did. They would bring just a few Rwandan francs and they would contribute to it.
Speaker 2
With the women who were accepting the loans and kind of, I don't know, I mean, they were getting loans from these, you know, this microfinance bank that was backed by, you know, big Western donors. I mean, did any of them say, were any of them sort of puzzled about the repayment system? I mean, in other words, do you know what I'm saying? Well, why would it matter? I mean, these big, you know, Western countries or donors aren't going to care about $500 loan or $200 loan.
Speaker 6
Yes, there were a number of
Speaker 1
our borrowers who assumed that we weren't individuals.
Speaker 5
And so ironically,
Speaker 1
while they might pay 10% per day to the local money lender who they knew and had a personal relationship with, they would default on
Speaker 4
our 12% per year
Speaker 1
loan. And when I would be, you know, crushed and feeling betrayed, that we weren't being taken as seriously, the explanation, which came only after a couple of years of being there, was exactly what you say, that we don't know the money that's behind this.
Speaker 5
Whereas
Speaker 1
we need the people in our community. And so I started to understand at a deeper level as well, the kind of entanglement within community, and the risk of both under empathy and frankly over empathy. And so when we could hold this tension between generosity and accountability, that's when we started
Speaker 4
to cook with gas, and everybody started to understand the rules and feel really
Speaker 1
proud to be part of the organization, but we had to do a lot more capability building, both among our team and among the women in the markets, so that they could not only have access to financial services, but they could make use of the access, make use of the opportunity and begin to thrive. And I think that's so often what we miss today, when we look at poverty, and we say, well, you know, everyone has an opportunity, but that's not enough. We have to also build capability to
Speaker 2
make use of opportunity.
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