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Street roots
13
Aug. 29, 2014
A Grameen-style bank in Portland, microloans to lift incomes
BY M . NELS JOHNSON
those living in the Other Portland, the city
ought to think outside the box and tap into
he last few months have seen a spree
its potential for innovation; perhaps it’s time
of really good news for Portland’s
that Portland started its own Grameen .
tech industry. From Intel’s $13.8
Bank.
billion second quarter (up 8 percent from a The Grameen Bank was founded in 1983
year earlier), to Bain Capital taking a $230
in Bangladesh by economics professor
million stake in online banking startup
Muhammad Yunus. Yunus had recently I
Simple, to the host of new and exciting tech
returned to his home country of Bangladesh
companies like Buddy Up; the future of
after teaching economics in America. Upon
Portland’s tech industry is really bright. All
his return he was shocked not only by the
of the good news in techbrings good jobs to abject poverty all around him, but the
the region. Publications from Forbes to
absolute lack of opportunity for poor folks.
Business Insider now consistently view
He realized that all most people néeded-
* Portland as one of the nation’s upcoming
was a chance to succeed. He found that :
tech hotspots. Needless to say, a growing •
many people knew what they wanted to do,
tech industry is really good economic news
but simply didn’t have the capital to do it.; |
for Portland.
Yunus soon realized that the capital -
But the good economic news doesn’t
requirements that most people needed f
trickle down for everyone, there’s another
weren’t a lot of money. A cow was really
Portland - the Other Portland. The Other
cheap, but could produce milk that could be
Portland is where the medium income for a
sold at the market every, day and earn
family 6f four is around $40,000 per year,
enough income to lift a family out of abject
which his significantly lower than the metro poverty. So Yunus got tne wild idea of
wide figure of $58,883. The Other Portland:
making microloans to people, To date the
predominately east of $2nd Avenue, where
Grameen bank has lent $10.11 billion to
there are higher concentrations of poverty
over 8.4 million borrowers. The program
and crime, lack of access to transportation,
has allowed the poor and disadvantaged to
jobs. The Other Portland: the ones who felt
tap into their own entrepreneurial potential
the acute pain of rents in the city increasing
and lift themselves out of extreme poverty.
6 percent last year, which continued to push
In 2006, both the Grameen Bank and
the poverty farther and farther east The
Muhammad Yunus were awarded the Nobel
Other Portland is were people spend their
Peace Prize,
days grinding — just trying to survive.
The Grameen Bank is based qn micro
Earlier this year, researchers from
finance, which means they focus on giving
Princeton University and Northwestern
out small loans to people. In Bangladesh, it
University conducted a study titled “Testing
might be $50 for someone to buy a cow and
Theories of American Politics” which
then sell the milk at the market, In.
concluded, among other things, that we’re
Portland^ it could be $1,000 fof someone to
missing many rungs on the ladder of the
buy a lawnmower and lawn equipment and
American Dream. Its not easy or even likely
start a lawn care business. Gr Toan someone
that someone can start on the very bottom
$500 for a website and raw materials for
C O N T R IB U T IN G C O L U M N IS T
B
Nets Johnson is an
elected director
serving on the board
of the Multnomah '
Education Service
District, adjunct
professor at Warner
Pacific College and is
an attorney in private
practice. He and his
wife live in Northeast
Portland.
rungpfsocjety.ancrw ork their way"upfoPhe
top. Our economy has changed.
With limited education, skill sets and
access to capital, people living in the Other
Portland have limited access to opportunity.
Many of the great, manufacturing and
construction jobs that paid a living wage are
gone as a result of the Great Recession and
trends in globalization, and are unlikely to
come back. People living in the Other
Portland often find themselves locked out of
the exciting new opportunities popping up
in the tech industry all across the city.
Instead, they are often doomed to a life of
struggle and low wage work. It’s time we as
a city started thinking differently about
economic development and job creation.
We need to lower the barrier to entry into
the world of entrepreneurialism and
opportunity.
When thinking of how to create jobs for
th'eif'Bti^h^B^sbnihg jan isan a jellies’online.
The bank has a cautious approach to,
lending, which has led to a loan recovery
rate of 96 £fJ percent. The bank seeks to
lend to entrepreneurs who have an idea for •
a business and demonstrate the drive and
skills necessary to make it a success. The
bank also works with the lendees to help
them refine their business plans. In
Portland, the bank could hire a few people
to work with the folks it lends money to and
provide the valuable business consulting
needed to help them succeed. A Grameen-
style bank could also serve as an incubator
for innovation.
Certainly, the economic situation facing
Bangladeshis in the 1970s was much more
dire, than the economic situation facing poor
Portlanders today. Moreover, its much more
expensive to start á catering service here;
than it is to buy. a cow for $40 in Bangladesh
and sell the cow’s milk fof income. Portland
and Bangladesh are not the same and face
totally different challenges. Butthey do
share common needs for lifting large swaths
of people out of poverty as well as
increasing their ability to innovate.
Expanding opportunities for
entrepreneurship among the poor is one of
the best remedies for poverty.
Starting a Grameen-
style bank wouldn’t
cost the city, or other
local governments,
While some parts ©I the city
much money at all. To are thrivin g and growing at
fund it, all the city
a rapid pace/the Other
would need to do is
Portland Is straggling,
move some of their
mightily« Increasing poor
reserve from more
traditional banks like
folks' access to capital and
Chase, or U.S. Bank,
ta k in g advantage o f th e ir
to a Grameen-style
skills and strengths could
bank. The Grameen-
unleash
a spirit of
style bank would lend
entrepreneurship
and
the money out in the
same, way a traditional economic growth in a part of
bank would. The city
th e c ity th a t s o fe ly -'needs- It.
could withdraw on its
deposit at any time,
the samé way it could
at a traditional bank.
This is the sort of low-risk/high-reward
economic development strategy that merits
greater exploration and attention.
The point of using some of the city’s
reserves is one of scale. Though Mercy
Corps has explored the concept of a micro
loan program before, the city of Portland
has the ability to implement a micfoloan
program on a truly bank-sized scale. Such a
large scale would have a profound im paeton
lifting people out of poverty.
While some parts of the city are thriving
and growing at a rapid pace, the Other „
Portland is struggling mightily. Increasing
low- or no-income people’s access to capital
and taking advantage of their skills and
strengths could unleash a spirit of ,
entrepreneurship and economic growth iri a
part of the city that sorely needs it. We
Portlanders have a rugged, independent
streak in us. We also think differently, are
highly creative and entrepreneurial.
A Grameen-style bank in Portland would
allow all Portlanders to tap into that Unique,
creative and entrepreneurial spirit that lives
keep down inside of all Of us. And it also
might change us from a city divided along
the fault line of opportunity to being united
into One Portland.
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www.tprojects.org