[Microcredit] Making a difference one loan at a time

from MSNBC

Former auto industry executive helps Samoan poor help themselves

By Mark Potter

APIA, Samoa - On a blustery and rainy morning, in the rustic village of Manunu, a traditional welcoming ceremony was in full swing.

The Samoan chief and several of the village elders competed at full volume over who could lavish the most praise upon the honored guest. Nearby, women in bright green outfits worked diligently to prepare a sumptuous feast.

At the center of all the attention was a seemingly unlikely guest: A former Ford and Mazda auto executive in slacks and plaid shirt, kneeling uncomfortably on a woven mat, awaiting his chance to finally address the gathering.

He is s 42-year-old Greg Casagrande, a hard-charging American businessman, who eight years ago stepped off the corporate treadmill, vowing to devote the rest of his life to helping the poor.

"My passion is working with underprivileged people, giving them meaningful opportunity," says Casagrande. "I sincerely believe that by empowering the poor, we can eradicate poverty."

After moving his family to New Zealand, Casagrande began to search for a way to make a difference.

Helping the poor help themselves
His brother, who worked at the World Bank, suggested he look into the economic principle known as microfinance, which was growing in popularity in developing countries.

Microfinance promotes giving small unsecured loans to the poor, who normally — with no collateral or business skills — would be denied credit.

The theory is that with just a small loan, and a bit of training, the poor can open their own small businesses, improve their health care and living conditions, educate their children and take control of their lives.

After reading books and studying the concept on the Internet, Casagrande was convinced he could use his extensive management skills honed in the auto industry to help people with the very least in life actually help themselves.

"There is no one who is more motivated to get out of poverty than that poor person, him or herself," he says.

I’ll take Samoa
After searching for a place to begin, Casagrande settled on Samoa, a tiny independent nation in the South Pacific near the equator. It is only a short flight away from American Samoa, the U.S. territory.

With its mountainous coastline and lush tropical landscapes, Samoa appears at first glance to be the sort of island paradise framed in postcards.

But, economically, there are major problems. Wage-paying jobs are scarce; only 20 percent of the population can hope for paid employment. Many people live in abject poverty in rustic villages, sleeping in pebble-floor huts without running water.

Because Samoa is also a gentle and peaceful nation, it seemed the perfect place for Casagrande to open the South Pacific Business Development Foundation (SPBD), a not-for-profit loan company.

Much of the start-up money came from his own pocket.

Business is booming
In downtown Apia, the capital city, a long line of women formed outside the SPBD office, as budding entrepreneurs waited their turn to apply for small-business loans. If they qualified, they were each to be given the equivalent of about $200, and receive training in simple accounting and business practices.

With loans in hand, the eager villagers did all the rest. Working in groups, they opened many of their own small businesses throughout Samoa. Many of them made and sold handicrafts, jewelry, clothing, mats and construction material; others opened roadside stores and restaurants, drove taxis and grew coconuts and other produce.

"They've taken the bull by the horns. They've invested in themselves, they've got some dreams, they've got some skills, and they're making money," said Casagrande. "I'm impressed."

Ulufale Umage used her loan to buy a machete, fertilizer and a pesticide sprayer. She also rented market space so she could begin selling coconuts.

Lonise Godinet began sewing dresses and school uniforms and earned enough money to re-model her home.

Weaving baskets and raising pigs, Gaupole Kenose moved her family from their run-down home to a much bigger and brighter one with a better floor. And her plans didn't stop there.

"I want another big loan, to make another new house for me, and my husband and my children," she announced, flashing a wide grin.

Accountable women
Casagrande's loan program has concentrated most of its efforts on empowering women. In Samoan society, women play a critical role in managing family life, and the SPBD directors came to believe that they were the ones most likely to spend their business profits wisely.

To stay in the program, they must pay to have all their children put in school within a year of their first loan. They also are required to closely account for all their finances, and to help other women whose businesses suffer, and who fall behind in paying off their loans.

Casagrande insists he is not running a give-away program, but a serious, self-sustaining business.

In six years, SPBD has issued nearly 10,000 loans, totaling $3 million. And almost every one of them has already been repaid with interest — on time.

Casagrande credits the impressive repayment rate — better than that of most commercial lending institutions — to SPBD's attention to Samoan cultural sensitivities. The program has the blessing of village chiefs, women's groups and the Samoan government.

"This is not only a great thing for the economy, but I always keep making the point it's vitally important for social stability," says Deputy Prime Minister and Finance Minister Misa Telefoni. "You're not just empowering women, you're adding dignity to their lives."

And speaking of Casagrande, whom he's been pestering to expand the loan program, Telefoni adds: "I think he's definitely made a difference, and coming from the United States as he does, I think he's also flown the flag for the United States here in Samoa, in a very effective way."

A big appeal
In the village of Vaitele recently, Casagrande was treated to yet another welcoming ceremony, an important Samoan tradition. As a huge lunch was spread over the head table, a women's business group, decked out in bright blue outfits, sang and danced to Polynesian rhythms. In honoring Casagrande, they also celebrated their own success in sewing and food production. And they proved they weren't unfamiliar with the art of the deal.

Facing Casagrande, the group leader drew a big laugh when she loudly asked for a really big loan. In broken English, she said, "We need big, 10, $10,000!"

Everyone laughed, all right, but few thought the determined entrepreneur was actually kidding.