This spring, Net Impact is challenging its members to simulate the experience of a Grameen Bank borrower. The inspiration for this project is derived from the first micro-loan Muhammad Yunus issued in 1976 to a group of poor women in Jobra, Bangladesh. The small loan of just $27 ended the groups’ reliance on ruthless moneylenders, thus empowering the small business owners, and inspiring Yunus to start Grameen Bank.
Students have one week to start a small business and any profit generated from their business will be used to support Grameen U’s upcoming “Live on $5 a Day Challenge,” in which college students around the country will limit their consumption to just $5 a day, providing insight into poverty in the US by living in solidarity with many Grameen America borrowers.
In the process of trying to simulate the life of a microcredit loan recipient, I inevitably thought about my observations during the Dominican Republic Field Study in the summer of 2011. After interviewing and observing Esperanza international microloan recipients, primarily Haitian borrowers, I was struck by the lack of innovation and diversity as the majority of borrowers seemingly operated clothing re-sale enterprises. However, after trying to start an innovative business, our group realized that re-sale, while lacking innovation, is a quick and easy solution due to lower start-up costs rather than, for instance purchasing equipment to make unique products.
Our lending group composed of five Net Impact members ultimately decided to sell Domino’s pizza in freshman dorms for $2 a slice. Our main consideration in selecting our pizza supplier was cost. Domino’s pizza, while not in close proximity to campus compared to multiple other potential pizza suppliers, had the lowest start-up costs–$17.10 covered the price of two large pizzas including tax! We conducted our business after 10 pm when the dining hall closed in an effort to make our product a commodity for students looking for a late night snack. After two nights of selling pizza around the dorms, we were ultimately successful in repaying our loan.
The $27 challenge is a valuable experience in that it exposes students to the challenges of starting a business with little capital. While we were afforded the ability to market our business to benefit a good cause, it is important to note that our experience will never truly compare to the daily realities of a micro-entrepreneur in a developing country. Real micro entrepreneurs must rely solely on innovation, determination, and business savvy to operate a successful enterprise.
