November 12, 2008
The Peter J. Tobin College of Business is introducing a novel,
student-run Global Micro-Loan Program that actively engages
students in international finance while fulfilling St. John’s
Catholic and Vincentian mission of helping the poor and the
marginalized.
The Program marks “the next stage in business education on the
global level,” says Linda Sama, Ph.D. Dr. Sama spearheaded the
initiative, which is scheduled to debut in Spring 2009 with the
introduction of a three-credit elective called
Entrepreneurship.
Delivering her remarks at the October 14, 2008, Provost’s
Dialogues of the Future Lecture on “Bankers to the Poor,” Dr. Sama
unveiled the Program’s salient components. She cited its dual
goals: exploring the utility of micro credit as a tool for
combating poverty in locales where banks are virtually
non-existent, “while exposing our students to the challenges of
lending and collecting money in the developing world.”
Micro Finance — lending small amounts of money to businesspeople
who do not have the necessary collateral required by traditional
financial institutions — has been increasingly embraced by
entrepreneurs in marginalized geographic areas, in particular, by
women entrepreneurs. Loan candidates are carefully vetted and
repayment trends vary from six months to a year, with typically low
default rates tending to be low running at 3-4
percent.
Entrepreneurship Elective
Starting this spring and every semester thereafter, qualified
juniors and seniors in the Tobin College are invited to apply for
admission to the Entrepreneurship elective, enabling them to
participate in the Global Micro-Loan Program. As part of this
initiative they will be involved in the process of helping to
provide business loans to small entrepreneurs in distressed
countries.
Relying heavily on the Web, the course deftly combines St.
John’s award winning IT capabilities with student talents in
marketing and financial assessment. The Daughters of Charity, as
Program Field Partners, supply the necessary distribution and
collection of funds worldwide.
Division of Labor
The Program blueprint centers on a division of labor between
participating students and Daughters of Charity and is designed to
achieve effectiveness and minimize administrative and start-up
fees.
With an established presence in 72 developing countries and
familiarity with their local communities, the Daughters of Charity
approve initial applications. They then communicate with and
distribute funds to approved candidates and subsequently collect
loan repayments. Since the Program is Web-based, donors can submit
funds to fulfill loan requests in denominations of $50 to $1,000
from anywhere in the world where there is Internet access.
Donated monies are routed to a special St. John’s restricted
fund to be wired to vetted applicants. “As monies are repaid they
flow back into this fund generating a growing source of capital for
larger numbers of candidates,” Dr. Sama explains. The loans are
provided effectively interest free thus eliminating many of the
concerns rising from high interest rates attached to such
loans.
Program students assist IT in designing and maintaining the
Program Website including providing links for donor contributions.
They monitor loan repayment and fees, develop marketing strategies
and assist in lending risk and business plans. “As the Program
gains momentum,” Dr. Sama notes, “ the students will assume more
activist roles such as providing outreach to potential donors and
helping to identify lending candidates. An anticipated Student
Fellows Program will permit students to meet with entrepreneurs who
are recipients of the Program’s loans to be assessed first-hand to
measure the Program’s effectiveness.
An Opportunity, Not a Panacea
“We are starting with just a few countries— Ethiopia, Bolivia,
Nigeria and Northern India have been recommended as countries where
technology is available, English is spoken and the Daughters of
Charity have a presence. Ultimately other countries will be
included and the potential for community-based loans may also be
explored since micro-finance is just one possible poverty
eradication tool, “ says Dr. Sama. “
The Provost’s Dialogues on the Future is a lecture series on
topics that impact the global community and the future designed to
encourage a University-wide exchange of ideas for effecting
change.
This year, the University Community is reading Banker to the
Poor by Muhammad Yunnus as the starting point for discussing the
issue of how micro-finance can help eliminate global poverty and
empower communities. The theme will also be examined within the
context of the challenges presented by seeking to meet the United
Nations’ first Millennium Development Goal of eliminating world
poverty and hunger by 2015.
For more information contact Dr. Linda Sama, Associate Dean for
Global Initiatives Management at (718) 990-7323 or by email at samal@stjohns.edu