GBTI’s Microlending Program – Part of a Global Movement to End Poverty

GBTI’s Microlending Program – Part of a Global Movement to End Poverty

One of the Caribbean region’s leading commercial banks, GBTI offers a full range of services for individual and business customers. The bank’s microloan program for small business owners, for instance, emphasizes assistance to single mothers hoping to build their own companies. 

Microlending for single mothers changes lives

Through GBTI’s Women of Worth microlending program, thousands of female entrepreneurs have received the funding they needed to build businesses and gain independence for themselves and their families.

baby and mother

GBTI has earmarked GYD 500 million (USD 2.4 million) to support this program, with the no-collateral loans administered through Guyana’s Ministry of Human Services. Single mothers who qualify to participate in the program can receive up to GYD 250,000 (USD 1,200) to start or grow their business. 

The standard interest rate for a Women of Worth microloan is 6 percent, with a two-year repayment period. To leave women free to concentrate on getting their businesses off the ground, there is a three- to six-month grace period before the first installment payments are due. 

Building businesses in multiple sectors

Many women participating in the microlending program have started farms, which often help them turn the subsistence farming they were already doing into viable, money-making enterprises. Loan recipients have also been able to purchase and cultivate additional land as their agricultural businesses have scaled.

And it’s not just farming—female entrepreneurs have used the Women of Worth program’s microloans to build out small restaurants and hospitality and personal service businesses. They have also been able to start or expand childcare businesses by renting additional space and hiring more employees. 

The growth of an idea

Microlending, in the form familiar to global markets today, was pioneered by Nobel Peace Prize-winning Bangladeshi economist Muhammad Yunus, often called the “Banker to the Poor.” Yunus established the Grameen Bank Project in the mid-1970s to study how non-exploitative bank loans could be made available to help people in Bangladesh lift themselves out of poverty. 

work

Yunus’ initial loan was for $27 to a group of female weavers making stools out of bamboo. Previous lenders’ unscrupulous practices resulted in only a 1-penny profit per stool going to the women. Because of the microloan Yunus provided, the women were able to purchase their own supplies and begin a thriving business, repaying the microloan when they began to succeed. 

Over the decades, the World Bank and other policy institutions have conducted independent research demonstrating the success of the microloan model. Other financial institutions began to follow Grameen Bank’s lead.

In recent years, microlending has become commonplace in the financial industry, with tens of thousands of these programs available all over the world. Also, the growth of the Internet as a source of peer-to-peer communication has boosted the popularity of peer-to-peer microlending through nonprofit platforms. 

The practice of microlending became so widely accepted that the United Nations designated 2005 as the International Year of Microcredit. Then-UN Secretary-General Kofi Annan said that microlending had demonstrated its value as a “weapon against poverty and hunger,” able to help struggling people around the world improve their lives over the long term. 

An answer to the needs of a developing world

Microlending has shown itself to be particularly well suited to answering the financial needs of the developing world. People who had previously been unable to access traditional banking services due to lack of collateral, poor or non-existent credit, or for other reasons now have access to the financial services that can help them become independent. Studies of microlending also show a traditionally high rate of repayment. 

Before the advent of larger-scale microlending supported by banks and international organizations, people hoping to establish a small business in a developing country could only turn to small community organizations and agencies such as credit unions, member-run mutual aid societies, or postal banks.

Due to a lack of size and resources, however, organizations of this type were limited in their ability to build a microlending infrastructure and help larger numbers of people. For example, due to technical constraints, they were less able to analyze for risk assessment of micro-enterprises and to deliver the full range of needed support services cost effectively. This is where established banks, such as GBTI, have emerged as major sources of microfunding.

Experts have recently pointed to the need for more funding and support for small business entrepreneurship in the developing world, among youth in particular. Young adults in Guyana have a strong role to play in their nation’s economy, with close to half the population now under the age of 24. Yet, to date, a relatively low percentage of younger adults have taken advantage of microlending programs.

GBTI, as a government partner and now one of Guyana’s leading microlenders, continues to focus on building and promoting its capacity to fund entrepreneurship through the Women of Worth program.

GBTI Women of Worth microloans are available to applicants between 18 and 60, and they can supply a life-changing amount of capital that will not only build a young mother’s future but, through her success, can contribute to sustaining the long-range economic prospects of the entire nation as well.