Grameen America & Citi: Scaling Financial Resilience for Women

Image Courtesy of Grameen America

Across the globe, millions of women are sidelined from the financial mainstream, leaving them financially vulnerable. Globally, less than two-thirds of women (58%) report having an account at a formal financial institution.

According to Professor Muhammad Yunus, Chairman & Founder of Grameen Bank and recipient of the 2006 Nobel Peace Prize, "It is a legitimate right for people to have access to financial services. This is a sort of 'economic oxygen' for people; without it, people cannot function. The moment you connect them, they become active and enterprising."

While entrepreneurship is increasingly a pathway to financial growth for women, in the United States they typically start businesses with half the capital of men and receive only approximately 3% of all venture capital funding. As a result, women are more likely to leverage personal savings and credit card debt to start or sustain their businesses, resources that are not an option for women with low or no credit scores, or those living on lower incomes.

Though often associated with the emerging markets, the need for microfinance loan programs in industrialized countries like the U.S. is often not sufficiently appreciated, even by experts in the field. In advanced and emerging markets alike, access to safe and affordable financial services is the chief driver of financial inclusion and economic mobility, empowering people of every age and gender to save, borrow, and invest for their future and that of their communities.

That's why ten years ago, Citi collaborated with Grameen America to help them establish the organization's first office in Queens, to demonstrate that the peer-lending model that has proven effective in emerging markets can work just as well in the United States. Grameen America members -- who are low-income, primarily minority women -- are provided with microloans, fee-waived Citi savings accounts, peer support, and financial education to help members expand their businesses and generate income for themselves and their families. With Citi's support, Grameen has also built a technology infrastructure to increase its ability to manage rapid national growth and enable continual enhancements of products and services to support their clients' broader transition from cash to digital banking.

Together we recognize that to build and scale this global movement, we need to invest in data that will enhance our approach and encourage others to join us in the effort to expand financial inclusion.

To commemorate International Women's Day, Grameen America released early results of the most rigorous independent third-party evaluation of group microfinance conducted in the U.S. to date. The study, led by the nonprofit social research group MDRC, examines the challenges and opportunities faced by approximately 1,500 women who applied in groups of five to the Grameen America microlending program in Union City, New Jersey. The six-month results, supported by Citi Community Development, underscore how small loans and the Grameen peer-lending model can be instrumental to boosting economic resilience for women in the United States.

The early results are positive: more than 94% of Grameen America members say their financial situation is better than it was the previous year, a 13% increase over the control group. Members also saw a 22% increase in credit score attainment 7–12 months after study enrollment, and a 6% increase in the attainment of a prime credit score, the top tier of creditworthiness.

This important preliminary research on Grameen America's lending program demonstrates that helping women build positive credit histories and raise credit scores is a powerful approach to expanding economic opportunity for fledgling entrepreneurs. Through years of collaborating on innovative financial empowerment models, Citi and Grameen have seen and demonstrated that credit building programs and access to formal financial services can create tangible impact for women and their families. In fact, over the past decade, more than 110,000 women have received over $1 billion in microloans to start and grow their businesses -- with 99% repayment.

Together, we are proving that microloans, financial education and investment in women can be a sustainable, scalable solution to help close the financial inclusion gap in the U.S.