Giving Credit Where It's Overdue

By Christine Gorman

Melba Lucy Montenegro was poor but ambitious. The 29-year-old mother of three dreamed of opening a bicycle factory in her hometown of Cali, Colombia. But when she asked several banks in the region for a loan, they refused her because she lacked collateral. Then she heard about a group called Women's World Banking, which agreed to guarantee up to 75% of any loan she received. With the group's backing, Montenegro found a bank that was willing to lend her $3,125. Eight years later, she owns three bicycle-repair shops and employs 18 people. "The world has enough workers," says Montenegro. "What I wanted to do was create more jobs."

Women's World Banking, which celebrated its tenth anniversary in April, is unlike any other financial institution. The group, which has its headquarters in New York City and 47 affiliate chapters on six continents, arranges for women who have no collateral to receive commercial loans that typically run from $150 to $600. One of its smaller loans, for $50, went to a woman in India who built an oven to sell chapati, or flatbread. One of the largest endeavors helped raise $1 million to start a dairy cooperative in Thailand. "Our goal is to reach women who have been bypassed by the traditional banking system and bring them into the economic mainstream," says Ela Bhatt of Ahmedabad, India, the current WWB chairman.

WWB is run on a tight budget, but it has a sterling record. With nearly $12 million in loan guarantees outstanding, WWB has suffered only $35,000 in losses. "We're not a charity organization. We require that the individuals who come to us take on some of the financial risk themselves," says Michaela Walsh, a former partner in a Wall Street investment-banking firm who founded WWB with six other businesswomen from around the the world.

By helping women achieve greater economic independence, the organization has prompted political change as well. Barclays Bank in Kenya, which works closely with the local WWB group, no longer requires a husband's signature when a woman takes out a loan. WWB's formula for economic emancipation works so well that affiliate groups have formed in Ohio and Texas and may soon get started in Eastern Europe.

WWB plans to offer even more financial services. Says Nancy Barry, who will become the next president in September: "In the past ten years we have focused on access to credit. In the next ten years we will be helping women to find investors, to help them get more training and to develop larger markets." Not bad for a bunch of women who used to find themselves laughed out of the bank.