When it comes to social disadvantage, there are many ways you can try to measure it but occasionally, the data unmistakeably leads in one direction. In 2018, Grameen Australia undertook an analysis of three areas of socioeconomic disadvantage – Fairfield in Sydney, Broadmeadows in Melbourne and Grafton in regional NSW – to work out where best to pilot its first Australian microfinancing project.
Girls sharing a meal in Olsen Mall, Broadmeadows
There was no doubt that all three areas struggled to deal with unemployment and disadvantage but Broadmeadows was the worst. As Grameen Australia CEO and Philanthropy Australia (PA) New Gen member Kat Dunn explains it, the northern suburb location has an unemployment rate of 22 per cent, and that also means there is a significant opportunity to create jobs and start to make a difference. And that’s what interests Kat.
She turned her back on a career that would have been the envy of many others – a highly-paid role on the senior leadership team of a list fund’s manager – and at age 33 she packed it in, without another job to go to. Kat started F-OFF: the fear of failure forum that “…is a movement exploring our fear of failure and strategies to overcome it.’’ Many people miss the opportunity to make a valuable contribution to their community because of a fear of failure and F-OFF was a way for Kat to hack her way out of fear and finding the courage to pursue a path of purpose. Sold out F-OFF events proved that Kat wasn’t the only one trying to transcend this fear. It was a recipe for living with boldness and it was perhaps no surprise that her next step enabled her to combine, as she puts it, being a capitalist and a humanitarian. That was when she arrived at Grameen Australia, the local not-for-profit replica of Grameen Bank, an international microfinance organisation that was started by the Noble Peace Prize laureate Professor Muhammad Yunus.
Kat Dunn, Grameen Australia CEO and PA New Gen
Soon after she joined, Kat went to Manilla, where her mum was born, and saw first-hand the environment and poverty that her aunts and cousins struggled with every day. Kat’s mother escaped that when she married an Australian and moved to Geraldton in Western Australia. But Kat’s visit to the Philippines affirmed to her that there were ways that micro-financing could help address disadvantage.
In essence, Grameen Australia is working to become a ‘social bank’ that provides money to help locals invest in a job-creating business. Unlike mainstream commercial banks, Grameen Australia doesn’t work on asset collateral because it understands that the disadvantaged don’t have assets that can be part of any loan valuation. As Kat describes it, the long-term goal is to give locals, including those in Broadmeadows, the key to a destiny that is sustainable.
Philanthropists who invest in the program could get 100 per cent of their capital returned in the Grameen model. Dividends, which are often the marker of a business’s financial health, are ploughed back into the business rather than distributed to shareholders. Instead, the businesses who have the loans make repayments in small instalments when they start to make money. The model has been rolled out in the USA, with some success, after Professor Yunus trialled it in Bangladesh in the 1970s with 42 low income women who established profitable businesses that guaranteed them financial independence.
It is that financial independence that will be one of the key drivers in the Broadmeadows pilot. Critical to Broadmeadows selection for the trial is its high population density and its multicultural foundation: 28.9 per cent of its residents speak only English at home, reflecting the diverse background from Lebanon, Turkey, Pakistan and India among the community.
“The fact of Broadmeadows greater population concentration makes it more attractive,’’ Kat says. “There is also a large proportion of migrant and refugee communities: there is an entrepreneurial spirit there.’’
Enlisting the help of experts from Good Shepherd Microfinance and Grameen America as well as partners on the ground in Broadmeadows helped provide some local knowledge that will be the basis for delivering the program.
Fresh fruit for sale
“We want to develop financial capacity,’’ Kat explains. “And we know this model works.’’ There is no concern that a program that was developed in a different country cannot be successfully deployed in Australia. “Cultural differences are quite academic really,’’ Kat says. “Poverty has a very similar consequence, wherever you are…If you’re not solving the problem, it’s a never-ending cycle of disadvantage but with this we aim to break the cycle.’’
There will be other projects in other places, depending on the insights gleaned from Broadmeadows but there is no doubt where Kat’s immediate future lies: it’s using her own privilege, opportunity and skill set to help shift the needle. In an age when mainstream banks are held in such low regard, this kind of social bank has a chance to be a force for good in communities who desperately need financial support.