Grameen’s Australia microfinance project, led by CEO Kat Dunn, will launch this year. A steering committee comprised of leading Australian, American and Bangladeshi microfinance practitioners will implement the pilot. Founding CEO Operations of Grameen America Shah Newaz will be part of the steering committee and pilot. Support for the feasibility study came from foundation partner Bendigo Community Bank (South Grafton) under the leadership of chair Peter James and board member Karen Toms.
Dunn points to the success of Grameen America as a good indicator that the model can work here: since Grameen America started in 2008, during the global financial crisis, the organisation has disbursed more than US$1.27b in microloans to about 120,000 low-income women across the US.
Microfinance in Australia
Grameen Australia ran market studies in Broadmeadows in Victoria, Fairfield in Sydney and Grafton in regional New South Wales, because these are some of the most disadvantaged socioeconomic areas in the country, explains Dunn. Her team will pilot the model in Broadmeadows first.
There is 22 per cent unemployment in Broadmeadows and the market would be low-income migrant or refugee women who are either topping up a family income by scaling their microbusiness, or are single mothers,” she says. “The loans will be in the range of $5000, which can help someone with a cleaning business that has two vacuum cleaners to scale up, buy more equipment and employ two more people. If these microbusinesses scale and can actually generate a profit, the entrepreneurs can send their kids to school or improve their housing situation in a way they otherwise wouldn’t be able to afford.”
Grameen Australia’s microfinance model is being built on trust networks — the organisation will identify an entrepreneurial woman in the community who is well regarded. That woman will then identify four more people she believes have a similar profile and the group of five is given a loan to share. They will all attend weekly meetings to talk through their challenges, receive mentoring and business coaching, and track how they’re managing repayments and savings.
“It’s not just one person taking the responsibility,” says Dunn. “If someone hasn’t made a repayment, is it a trust issue? Is her husband beating her up so she can’t work? Or does her business model need reshaping? You’ve got that positive peer support where it’s in everyone’s best interest for each other to succeed.”
Dunn says small loans managed by small groups can help people from marginalised communities improve their credit scores, whereas previously they might have struggled to cover the high interest rates typically built in to high-risk credit from traditional banks. She notes nearly one in six Australians are financially excluded because they’re seen as risks. “When an entrepreneur gets a microloan, they create jobs and growth immediately through self-employment,” says Dunn.
They pay tax; they’re more likely to educate their children, more likely to form social bonds and transform their community from one that’s marginalised into one that’s prosperous.
To empower people who don’t have assets to get access to capital, all we need to do is redesign our financial system.”
“By 32, I was working in a senior role at a fund manager, making lots of money, and I should have been super happy.” Kat Dunn, CEO Grameen Australia
Value of financial independence
Grameen Australia is a not-for-profit focused on solving social problems by financing businesses and helping to create jobs in poor communities. It was inspired by the work of Nobel Peace Prize winner Professor Muhammad Yunus, who set up a community development bank in Bangladesh in 1976 named for its purpose: Grameen (“rural” or “village” in Bengali) Bank.
Grameen Bank’s initial microloan, of US$27 per client, helped 42 low-income women entrepreneurs build profitable businesses and achieve financial independence. Yunus set out to provide a fair alternative in impoverished communities to predatory moneylenders, who often imposed punitive high interest rates. Grameen Bank instead allows borrowers to pay back their loans in small instalments once they start making money from their businesses.
The microfinance program is a type of social business,” explains Dunn. “It is a business designed to solve a social problem. Unlike charity, it has the potential to repay philanthropic investors up to 100 per cent of their capital. And, unlike a for-profit business, instead of the dividends making shareholders rich off the struggle of poor people, it reinvests all the dividends back into the program to solve poverty at scale.”
Grameen Bank reports it has so far administered microloans worth US$27b for more than 10 million people in Bangladesh, almost all of them women, with a repayment rate of around 97 per cent.
Social business (the Grameen way)
- Solves a social problem
- Is profitable
- Reinvests the profits
- Donors get their money back
Now she’s CEO of Grameen Australia, Manila -born Dunn says she’s finally found her level — connecting people, ideas and money for social good. It actually happened before she was given the role. One component of the recruitment process was a trip to Manila, which took her back to where she was born to meet women benefiting from microloans via Grameen Asia.
When I visited the Manila centres and met the borrowers, it was shocking how alike we were,” she says. “They were 30–35 years old, some had kids, all had tenacity, intelligence and drive. What they didn’t have was resources and an environment that enabled them to thrive, which is exactly the same problem my mum had. I realised it was the ideal place to marry my finance and advocacy skills to something I’m really passionate about. The purpose of Grameen Australia is to tackle poverty and unemployment through microfinance as a social business in Australia, enabling women such as my mum who came from poverty to have a better quality of life through entrepreneurship.”
When she stepped into the CEO role on New Year’s Day 2018, Dunn was given a not-so-simple mandate — develop the social business ecosystem in Australia. Up to that point, the organisation had mostly focused on developing social businesses in Asia through its partnership with Dana Asia, founded by Duncan Power, who also headed Grameen Australia for several years. Its successes included a chicken farm in Siem Reap, Cambodia, and a social business/microfinance hub in Manila.
The challenge for us was to design a pathway to move into Australia and I soon realised we couldn’t build Asia and Australia concurrently,” says Dunn. “When we de-merged from Asia, we were testing a few different things as well as microfinance, but it split our focus. We realised we’d eviscerate our resources if we tried to do too much, too soon, so we reorganised our energies into getting our microfinance social business off the ground.”
No-one had deployed a Grameen style of microfinance in Australia before, so Dunn’s first big project was to study its feasibility. She remembers a lot of people saying the Grameen model isn’t needed in a developed country — although perhaps those people hadn’t heard of Grameen America.
Grameen Australia board
- Peter Hunt AM (chair) — investment banker/philanthropist
- Paul Murnane FAICD — investment banker/corporate adviser
- Prometheus Siddiqui — long-term member of the Yunus Social Business family
- Ian Neil SC MAICD — barrister/advocate
- Dilek Saticieli — marketer/businesswoman
Choosing the right path
Some influencers are born ready to make their mark. While some people confidently walk through every door opened for them by family connections and resources, others, such as Katrina “Kat” Dunn, learn to hustle. Born into poverty in Manila in the Philippines, Dunn says her first big break came when her mother married an Australian and they moved to Geraldton in Western Australia.
Her family’s work in agricultural aviation afforded Dunn a “more privileged environment” than her peers in the Philippines, including being supported to study. No-one in her family had tertiary qualifications or experience with corporate Australia, but they saw her ambition and encouraged her to make something of her life.
By the age of 20, she’d gained her private pilot’s licence and been admitted into law at Monash University. She then rose through the ranks of the Australian Law Students’ Association, landed a coveted clerkship at Clayton Utz and developed specialist skills handling financial services issues.
By 32, I was working in a senior role at a fund manager, making lots of money, and I should have been super happy,” she remembers. “But it wasn’t what was advertised at law school. It wasn’t what I felt like I would be doing with my life; it felt quite meaningless.” Sure, she’s proud of some of her accomplishments in the corporate world — particularly her involvement in the diversity council at Perpetual — but underneath it all, her massive fear of failure was holding her back from doing what she really wanted to do.
In 2017, she quit her job without another to go to, started the F-OFF: Fear of Failure Forum and wrote a lot about sustainable business models of the future.
I was wondering why we always had this apartheid between the for-profit world and the NFP world,” she says. “Why couldn’t we create business models that blended the best of business and of purpose into one unifying way? So when I was asked to lead Grameen Australia, for the first time, I didn’t have to choose between being a capitalist or a humanitarian — I could do both.”
Advice from Kat Dunn
Focus your vision
One of the biggest challenges to growth for a NFP or social business is having a massive vision without the appropriate resources to deliver it.
Pay for attention and focus
If you really want to scale and have top talent paying focused attention to a common goal, then you need to pay for that level of attention and focus — instead of relying on goodwill.
What social enterprises really need from boards are introductions. They typically need capital, access to market and board members who are willing to make the right kinds of introductions.
Be upfront about what’s realistic
If you’re invited to be on the board of a social enterprise or NFP, be honest about what you can contribute, and if you can’t contribute to your fullest, say no. You also need to be prepared to give more of your time as a hands-on board member, especially in the early stages.
Find ways to make business and purpose fit
You can’t run a social enterprise the way you’d run a for-profit business. At the same time, you can’t necessarily treat it with your charity mindset. Social enterprises need a blended model.