A little over four years ago, in September 2006 “Brazzil” published one of my articles where I said: “Never in the history of the world have we had an economic revolution similar to the one that it is under way today. The global reallocation of economic power from the current superpower – the United States – to the new emerging powers of the future such as China, Brazil, India, Russia and the Arab Gulf countries is mind-boggling.”
Soon after, in March 2, 2007 “Brazzil” magazine published another of my articles, and I started that article saying: “Here we are at a very exciting time – a turning point in world history – and the global economy is changing as never seen before, at the speed of light; and innovation and major advances in technology are helping in rearranging the entire global economy.”
Now 4 years later we can say that the new circumstances and realities of the new global economic system still are changing fast, and are a work in progress, even though we have witnessed the amazing economic rise of countries such as Brazil, and China, at the same time we are watching the fast economic decline of the old guard including countries such as the United States, England, and even Japan.
The future looks great for the Brazilian economy, but the coming years are going to be critical, very challenging, and even more important than the last few years, because of the massive changes that are underway and still are happening in the global economic and financial system.
It will be very important for the Brazilian people to vote for the best candidate who can help lift the Brazilian economy to the next economic level. Brazilians need to make the right choice in the final chapter of the presidential election in Brazil on October 31, 2010.
First of all, I believe Dilma Rousseff is a better candidate to take concrete steps and implement the economic development plan for Brazil that I have described in detail on various articles in “Brazzil” magazine.
Second, I am against the further privatization of Brazilian government assets such as Petrobras, and so on… and Dilma Rousseff is more in tune with that economic position than José Serra. I am sure that, if elected, José Serra probably would give away the store.
Third, in my opinion, Dilma Rousseff would be a better bet as the next president of Brazil in the next eight years (including her re-election in 4 years) to bring the Brazilian economy to the next level – to the level of an economy of first-world, and for the largest portion of the Brazilian population.
A key factor that would help bring the Brazilian economy to the next level in the coming years would be if Dilma Rousseff adopts and implements the plan described below to empower Brazilian women as never happened before in Brazilian history.
In the last eight years the economic policies adopted by President Lula are credited with helping to lift about 30 million people out of poverty in Brazil.
In the next eight years, I want to see a Dilma Rousseff administration helping to lift a further 60 million people out of poverty in Brazil – in turn creating a very large middle-class in Brazil.
If the Chinese were able to lift about 300 million people out of poverty in China in the last 20 years, the new Dilma Rousseff administration economic policies can provide the foundations for a quantum leap in Brazil, and leapfrog the Brazilian economy in many areas into the level of an advanced economy of the 21st century.
Advantages of Having a Woman in Business
Every five years, the advantages of having a woman in business are carefully reviewed by the U.S. Census Bureau. The review of women and other minorities involved in operating a small business are given particular consideration over their male counterparts because this is the way that lawmakers form the various programs that are funded by the Federal, State, and the agencies at the local governmental level.
We should adopt the same policy and do the same thing in Brazil.
On her webpage Carole Nicolaides wrote an article “Advantages of Being a Woman Entrepreneur” – I am going to quote her, because she is an expert in that area and I am not – and she said the following in her article regarding a woman entrepreneur:
“Even though I strongly believe that the entrepreneurial success strategies are not different for women or men, I also believe that women do have traits that help them in starting and running a business. After all, most successful entrepreneurs have a few things in common such as courage, vision, intuition and persistence.
…Girls learn to care, make friends and use their intuition to protect them from danger. They are taught to cook dinner while listening to the details of their partner’s workday. In essence, they learn the roles of being a multitasking caregiver. Our families have taught us well!
The most powerful advantage that women have is the development of our “intuition muscle”. And this is the most important skill for many successful entrepreneurs – following their gut instinct.
You’ve got an idea, nobody believes you in you, people try to reason with you and stop you from doing it. Yet, you ignore all the naysayers and move ahead, following your instinct.
Someone who doesn’t listen to his inner voice and waits for perfect timing or a logical explanation of why he or she should start a business usually will never start. Again, all these traits that I am going to discuss are important. Often times they are well developed by both men and women. I will just emphasize the traits that women have developed more effectively because of their upbringings.
So what else do women naturally have in their disposition that can help them in starting and running their own businesses? Below are few traits that I identified in being a woman entrepreneur.
1. Multitask oriented – Women are known for juggling many tasks at the same time and still producing excellent results. A woman can talk on the phone, open and read her email and schedule what else she needs to finish for the rest of the day all at the same time. Men have more trouble with this multitasking thing, therefore sometimes they miss many opportunities.
2. Connecting more easily with people – Women love to have a support group at work and in their personal lives. As a result we find it easier to ask for help in our businesses. Actually, we focus a lot on activities that can find the appropriate resources to help us out. Men, in contrast, sometimes wait too long before asking for help and this can often costs them business.
3. Being patient with the process – This is an extremely important attribute for entrepreneurs to have. Too often we hear of visionary entrepreneurs who tried to start their businesses and after a few months gave up. Very often we find these entrepreneurs gave up on their dreams too soon. They became impatient with the process. Women know naturally that you must wait in order to receive positive outcomes.
4. Branding and marketing themselves – Women are natural marketers. They are so passionate and enthusiastic about what they choose to do that they just do not stop talking about it. They don’t forget to emphasize the benefits of their services to their potential customers. They understand how to accentuate the positive.
5. Create and use your network – Women are real pros at using their contacts. We also tend to create new contacts and friendships that get us where we want to go. This feature of our personalities certainly plays a vital role in our business success.
6. Being consistent and thorough with daily tasks – If you stay consistent with your actions you are more likely to get clients. You have more chances to be seen by potential customers if they consistently see your name. Likewise, providing a consistently good product or service helps with maintaining repeat customers.
The Grameen Model of Microcredit / Microfinancing
Muhammad Yunus is a Bangladeshi banker, economist and Nobel Peace Prize recipient. He previously was a professor of economics where he developed the concepts of microcredit and microfinance. These loans are given to entrepreneurs too poor to qualify for traditional bank loans. Yunus is also the founder of Grameen Bank. In 2006, Yunus and the bank were jointly awarded the Nobel Peace Prize, “for their efforts to create economic and social development from below.” Yunus himself has received several other national and international honors. He is the author of “Banker to the Poor” and a founding board member of Grameen America and Grameen Foundation.
In 1976, during visits to the poorest households in the village of Jobra near Chittagong University, Yunus discovered that very small loans could make a disproportionate difference to a poor person. Jobra women who made bamboo furniture had to take out usurious loans for buying bamboo, to pay their profits to the moneylenders. His first loan, consisting of US$ 27.00 from his own pocket, was made to 42 women in the village, who made a net profit of BDT 0.50 (US$ 0.02) each on the loan.
Dr. Akhtar Hameed Khan, founder of the Pakistan Academy for Rural Development (now Bangladesh Academy for Rural Development), is credited alongside Yunus for pioneering the idea. From his experience at Jobra, Yunus, an admirer of Dr. Hameed, realized that the creation of an institution was needed to lend to those who had nothing. While traditional banks were not interested in making tiny loans at reasonable interest rates to the poor due to high repayment risks, Yunus believed that given the chance the poor will repay the borrowed money and hence microcredit could be a viable business model.
Yunus finally succeeded in securing a loan from the government Janata Bank to lend it to the poor in Jobra in December 1976. The institution continued to operate by securing loans from other banks for its projects. By 1982, the bank had 28,000 members. On 1 October 1983 the pilot project began operations as a full-fledged bank and was renamed the Grameen Bank (Village Bank) to make loans to poor Bangladeshis.
Yunus and his colleagues encountered everything from violent radical leftists to the conservative clergy who told women that they would be denied a Muslim burial if they borrowed money from the Grameen Bank. As of July 2007, Grameen Bank had issued US$ 6.38 billion to 7.4 million borrowers. To ensure repayment, the bank uses a system of “solidarity groups”. These small informal groups apply together for loans and its members act as co-guarantors of repayment and support one another’s efforts at economic self-advancement.
The Grameen Bank started to diversify in the late 1980s when it started attending to unutilized or underutilized fishing ponds, as well as irrigation pumps like deep tube wells. In 1989, these diversified interests started growing into separate organizations, as the fisheries project became Grameen Motsho (Grameen Fisheries Foundation) and the irrigation project became Grameen Krishi (Grameen Agriculture Foundation).
Over time, the Grameen initiative has grown into a multi-faceted group of profitable and non-profit ventures, including major projects like Grameen Trust and Grameen Fund , which runs equity projects like Grameen Software Limited, Grameen CyberNet Limited, and Grameen Knitwear, as well as Grameen Telecom, which has a stake in Grameenphone (GP), biggest private sector phone company in Bangladesh. The Village Phone (Polli Phone) project of GP has brought cell-phone ownership to 260,000 rural poor in over 50,000 villages since the beginning of the project in March 1997.
The success of the Grameen model of microfinancing has inspired similar efforts in a hundred countries throughout the developing world and even in industrialized nations. Many, but not all, microcredit projects also retain their emphasis on lending specifically to women. More than 94% of Grameen loans have gone to women, who suffer disproportionately from poverty and who are more likely than men to devote their earnings to their families.
Microcredit is the extension of very small loans (micro-loans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.
Microcredit is a financial innovation that is generally considered to have originated with the Grameen Bank in Bangladesh. In that country, it has successfully enabled extremely impoverished people to engage in self-employment projects that allow them to generate an income and, in many cases, begin to build wealth and exit poverty.
Due to the success of microcredit, many in the traditional banking industry have begun to realize that these microcredit borrowers should more correctly be categorized as pre-bankable, thus, microcredit is increasingly gaining credibility in the mainstream finance industry, and many traditional large finance organizations are contemplating microcredit projects as a source of future growth, even though almost everyone in larger development organizations discounted the likelihood of success of microcredit when it was begun.
Microcredit is based on a separate set of principles, which are distinguished from general financing or credit.
Microcredit emphasizes building capacity of a micro-entrepreneur, employment generation, trust building, and help to the micro-entrepreneur on initiation and during difficult times. Microcredit is a tool for socioeconomic development.
Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services.
More broadly, it is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers.” Those who promote microfinance generally believe that such access will help poor people out of poverty.
Traditionally, banks have not provided financial services, such as loans, to clients with little or no cash income. Banks incur substantial costs to manage a client account, regardless of how small the sums of money involved.
The fixed cost of processing loans of any size is considerable as assessment of potential borrowers, their repayment prospects and security; administration of outstanding loans, collecting from delinquent borrowers, etc., has to be done in all cases. There is a break-even point in providing loans or deposits below which banks lose money on each transaction they make. Poor people usually fall below that breakeven point. A similar equation resists efforts to deliver other financial services to poor people.
Seen from a broader perspective, the development of a healthy national financial system has long been viewed as a catalyst for the broader goal of national economic development in the opinion of prominent economists such as Joseph Schumpeter and others. However, the efforts of national planners and experts to develop financial services for most people have often failed in developing countries.
While the success of the Grameen Bank (which now serves over 7 million poor Bangladeshi women) has inspired the world, it has proved difficult to replicate this success in other places. In nations with lower population densities, meeting the operating costs of a retail branch by serving nearby customers has proven considerably more challenging.
Although much progress has been made, the problem has not been solved yet, and the overwhelming majority of people who earn less than $1 a day, especially in the rural areas, continue to have no practical access to formal sector finance. Microfinance has been growing rapidly with over $25 billion currently at work in microfinance loans. It is estimated that the industry needs $250 billion to get capital to all the poor people who need it.
The source of most of this information about the Grameen Bank and its model of microcredit and microfinance is Wikipedia.
Here is what I propose – that the Dilma Rousseff administration creates in Brazil in the coming years: The Entrepreneurial Bank of Brazil. This would serve as the foundation to help lift millions of women in Brazil out of poverty.
The Entrepreneurial Bank of Brazil
This new Entrepreneurial Bank of Brazil would be a new government funded bank, similar to BNDES the Brazilian Development Bank, but the main purpose of this new government organization would be to create and implement a banking system similar to the Grameen microcredit and microfinance system that has been helping to lift millions of women out of poverty in Bangladesh.
The purpose of this new bank and its microcredit and microfinance projects will be to target a specific group of the population, and its emphasis it will be on lending specifically to women. The basic idea is to try to replicate in Brazil the model of the Grameen bank where more than 94% of Grameen loans have gone to women, who suffer disproportionately from poverty, and who are historically more likely than men to devote their earnings to their families.
This new government bank would have branches in many major cities around Brazil, and these branch offices would have seminars on a regular basis to teach these poor women basic entrepreneurial concepts, and also would educate them about the principles that made it possible for these microcredit and microfinance concepts to be so successful and to be a viable business model in Bangladesh.
These branch offices will try to provide the necessary tools and know-how for these women to get their ventures off the ground and give them the necessary advice to help them create successful businesses and become economically independent. And the loans provided by the Entrepreneurial Bank of Brazil to all these poor women would be loans with government subsidized low interest rates. These centers will serve as learning centers for these women, and also as centers that will become a constant source of economic innovation.
I am sure that this program will be a success in Brazil when we take in consideration the fact that Brazilian women are very intelligent, hard working, flexible and adapt to change, and are very interested in improving their standard of living and quality of life.
You can read other articles by Ricardo C. Amaral at: Brazzil magazine – Columnist: Ricardo C. Amaral
Ricardo C. Amaral is a writer and economist. He can be reached at: firstname.lastname@example.org.
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