Their accents put the sound of Arkansas into the air. But Christian businessmen Dale Dawson, Dabbs Cavin, and Todd Brogdon are half a world away from Little Rock. They are in the garden of Des Milles Collines, better known as Hotel Rwanda and featured in the film by that name. These three are here on a life-changing mission: to help build Rwanda's largest bank for the poorest of the poor.

How these men got from Arkansas to Rwanda is a story they eagerly retold to Christianity Today during their recent trip to this East African nation—one still recovering from the 1994 war and genocide.

Economics of transformation

Dawson spent the first half of his life in investment banking and later went into the truck-parts business. By the time Dawson sold his firm to the AutoZone retail chain, it was the largest in the U.S. He was 46 and well-off beyond his dreams. He went back into investment banking, but sensed that something was missing. "I had lost the passion," he said. "I was in the wilderness." Dawson envied friends who could "surrender everything and go to serve God in Africa." Finally, it clicked. "I needed to make myself available to God."

Dawson prayerfully did so, and things began to happen. He found himself at an event hosted by Opportunity International, the Chicago-area ministry that specializes in microenterprise development.

Microenterprise makes small loans to organized groups of entrepreneurs, helping them build sustainable local businesses such as dressmaking or selling produce. Last year, this poverty-fighting strategy grabbed global headlines when Muhammad Yunus and Grameen Bank from Bangladesh won the 2006 Nobel Peace Prize. Microenterprise is designed to reach the chronically poor. In many nations, 90 percent of clients are women. More than 3,100 programs operate worldwide. Major faith-based groups, including World Vision, are involved as well as major banks, such as Citigroup.

Having come from big business, Dawson thought microfinance sounded strange. At the OI conference, he watched a video of a Filipino woman who got up at 3 A.M. each day to sell vegetables. It gripped him because years ago his father had sold milk, eggs, and ice. The impact was piercing. "I just began to cry. I knew I had found my calling," he said. He worked up a personal vision statement—"To build a bridge between the rich and the poor and to transform both"—and then waited to see where God would lead him next.

In the meantime, Dabbs Cavin was being stirred. Instead of truck parts, Cavin had made his money in community banks. In 2002, Cavin and his partners sold their bank in Little Rock to a larger bank. Cavin had always wanted to serve God in Africa. Now he was free and financially able to do so. But where? In Little Rock, Cavin was part of a small breakaway congregation, whose members had split from the local, left-leaning Episcopal parish. Their church, St. Andrew's, turned to Rwandan Bishop John Rucyahana for pastoral oversight.

Soon Cavin found himself in northern Rwanda helping out at Sonrise, the bishop's top-ranked Christian school. Returning to Arkansas, he raised $1 million to support the school, seeking the help of a longtime friend: Dale Dawson.

After helping raise the funds, Dawson asked Bishop Rucyahana what else he could do. "He quickly told me that, while his school for orphans could provide superior education and business training, unless Rwanda had a better economy to provide career opportunities, his students would leave after graduation for America or Europe."

That's when everything came into focus. OI had told him it would take millions of dollars to meet the government's equity requirements to set up a fully licensed microbank for poor Rwandans. Dawson took it as a personal challenge. Through his personal network, he and OI raised millions of dollars to make the bank a reality—all in 90 days.

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The money was in position but not the manpower or the know-how. That's when Cavin confronted a fateful question: Should he uproot his family and move to Kigali? Though not many friends encouraged him, he felt, as he told CT, "If God is calling you to something, just respond." So he did.

Experience told Cavin he needed a strong team, so on a Friday afternoon, he picked up the phone and called a close colleague, venture capitalist Todd Brogdon. The call was such a shocker that Brogdon has it committed to memory. Cavin said to him, "Todd, this will sound strange to you, but God keeps your name in front of me." He asked Brogdon to join him in creating a microfinance bank in Rwanda.

Brogdon, then enjoying a promising career, was stunned. "I had never thought of coming to Africa," he said. He had grown up in poor Eastern Arkansas and saw no need to globetrot to help the poor. "We have the poor here!" he said. And while Dawson and Cavin were more financially stable, he was not. "I do not have a big checkbook at home." Nonetheless, he called his wife. Their conclusion: "This could be God."

Finally the core of a new team was in position: the visionary Dawson, the banker Cavin, and the venture capitalist Brogdon.

Empowering families

Since the 1994 genocide when 1 million or more Rwandans were slaughtered, the nation of 9.1 million has become a showcase for economic reform. But even though its economy is growing at a rate of near 6 percent, Rwanda remains one of Africa's poorest nations, heavily dependent on agriculture and a cash economy.

Ephraim Kabaija, presidential adviser on rural development, explained that most families grow cash crops and earn about $225 annually. It's difficult to save anything with such low incomes.

He said, "Do you know how many children die in our country every year because their mothers cannot afford the $2 to $10 needed to buy medicines to treat diarrhea, fever, malaria, and other common illnesses? Do you appreciate how much angst, misery, and despair we could eliminate from our country if every family had $50 in a savings account?"

As part of the remedy, business and government leaders set out a bold objective to transform Rwanda from a cash-based to a savings-based economy. Kabaija said, "We have studied new industrial economies in Southeast Asia—South Korea, Taiwan, Singapore, and Hong Kong. Early in their development, they moved to a savings-led economy, and today they have some of the highest individual savings rates in the world.

"Transforming Rwanda to a savings culture will not only provide a cushion for families and communities, but it will mobilize the capital of our people so it can be reinvested in businesses and municipal works and make us less dependent on the outside capital of others."

Back in 1997, three years after the genocide, the evangelical agency World Relief began a nationwide microloan program called Urwego Community Banking, loaning out as little as $20 in Rwandan currency to villagers willing to learn how to start and run a small business. Meeting regularly, the clients would discuss business problems, repay loans, and borrow additional funds as their businesses grew.

By 2006, Urwego had thousands of clients, an enviably high loan repayment rate (over 95 percent), and the largest microfinance operation in the country. World Relief Canada and Hope International joined World Relief as financial partners. Sammy Mah, World Relief president, said, "While others focused on relief work, we led with microfinance activities, believing that was the best way to overcome poverty, instability, and conflict in Rwanda."

But Faustin Zihiga, then managing director of Urwego, realized his organization had nearly maxed out its ability to grow. In order for his staff to deliver even more and better services, they needed more capital investment. "We were upscaling and needed significant resources."

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That's when Dawson and Opportunity International came on the scene. Until recently, OI was not active in Rwanda. After Dawson raised enough capital to start a microbank, though, the organization recruited Ross Nathan, an Indian expert, to head operations. They began the process of registering the bank, finding a location, and setting up systems. They landed a 10-year lease on prime property in the central business district of Kigali.

In the meantime, Dawson was in Washington D.C. to attend the annual National Prayer Breakfast. By happenstance, he met Peter Greer, president of Hope International. That unexpected encounter led to other meetings and eventually, in 2007, Urwego and OI agreed to merge their banking, savings, and loan operations.

This first-ever bank merger in Rwanda created a new entity: Urwego Opportunity Microfinance Bank (UOMB). The combined enterprise has offices in 27 of 30 districts nationwide, 28,000 loan clients, and 3,000 savings clients. The bank has $4.5 million in equity capital, including a loan portfolio of $1.7 million. A few months ago, Rwandan bank regulators signed off on the merger. The parties describe it as a 50/50 partnership. Each of the major players has a presence on the bank board.

The new board of UOMB named Zihiga as vice president for marketing, administration, and rural operations. Urwego staff were assured job security and training in the operations of the new bank. World Relief's William Toannon said, "Opportunity brings extensive cutting-edge biometric technology to build the savings side of the business and offers additional technical capacity."

Around the world, as microenterprise programs have grown quickly, scholars have questioned whether they actually cut poverty rates significantly. There isn't a consensus on that yet. This summer, Aneel Karnani, a business professor at the University of Michigan, published the essay "Microfinance Misses Its Mark."

He wrote, "The critical issue is whether microcredit helps eradicate poverty. And on that front, it falls short." He noted that China, Vietnam, and South Korea have all reduced poverty but have not used microcredit programs extensively. They have created factory jobs and invested in infrastructure. He said Bolivia, Bangladesh, and Indonesia have used microcredit programs a lot but have not reduced poverty much at all.

In a Web-published rebuttal to Karnani, World Relief leader Gareth Evans said programs today provide a wide range of financial services to poor families, not just loans. These may include mortgages, housing loans, leasing services, savings, and insurance. He noted that it's inappropriate to compare the economies of huge nations like China and India to small, rural countries that may not have a single industrialized city.

"Microfinance benefits and empowers every family it touches," he said.

Another common criticism of micro- finance programs is that the interest rates on the loans are too high. Typically, the annualized rates are between 30 to 50 percent. But program leaders say you can't compare a microloan with the rate you might get in the wealthy West. Rates for microloans may need to take into account high inflation rates, the lack of credit availability and collateral, and shorter repayment schedules.

Dignity works

At the grassroots level in Rwanda, microfinance looks like a lifeline. At 11:30 on a sunny morning in Kigali, CT traveled along with loans supervisor Speciose Mukakamazi to meet with her clients.

She walked out of one of the bank's branch offices with a brown bag, as if taking an early lunch. She jumped into a roughed-up Toyota pickup truck and headed for Muhima, a residential area of 1,200 extremely poor households. Her distance was short but hilly. The destination was a local government office where two groups of women—about 60 in each—had been waiting since early morning. This was a big day. The brown bag was full of cash—new or bigger loans and some returns on savings.

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While Mukakamazi's boss, Orren Niyongabo, fixed a flat tire on the Toyota, several women explained to CT how microfinance loans have changed their lives. "I can dress and feed my children and pay school fees," said Madalena Mukaseku. These were not rags-to-riches stories (many were still in humble outfits), but stories about changing from extreme down-and-out poverty to viable and dignified living.

Later, at a different site, CT visited more than a dozen UOMB clients at one of their "trust group" meetings, where they come together for discussion, training, and loan services. Client Josiane Nyinawabasinga told CT that she would rather get a $30 microfinance loan than line up for handouts. "A loan will not only help me buy food, but also make money to buy soap."

Group members are expected to make regular loan payments and commit to covering loans for members who fail to pay. Most loans are used for small businesses. But recently, other loans were introduced for bicycle purchases, home improvements, and school fees. Larger loans are available to successful borrowers.

As Nyinawabasinga spoke, her loan officer, Erick Kaitare, scooted from one to the next of the 50 gathered women, collecting loan payments. He ended up with the local equivalent of $400. "Not bad," his smile said.

A major factor in the rapid growth of microfinance has been grants from U.S. taxpayers through USAID and deep-pocket donors—from billionaires Bill and Melinda Gates and eBay founder Pierre Omidyar on down. At one group meeting, Linda Lair and Gail Bradley, board members of the Weberg Foundation in Arizona, came to hear about the results of their foundation's grant of $2.7 million.

"Our goal is to help the poor in the developing world with a hand up rather than a hand out," explained Lair. Her parents, John and Jacque Weberg, created the foundation after selling their business. "Dad, being an entrepreneur himself, wants to help others start businesses so that they can support their families," she said. The foundation will give $50 million over the next 10 years to microfinance programs operated by Opportunity International, World Vision, and World Relief.

Bradley, a vice president with the Northern Trust Bank in Scottsdale, Arizona, was impressed with Urwego's operations. "They are very professional," she said. "Urwego meets the definition of a bank." She was moved by the professional treatment extended to Urwego clients. "It is important for people to have dignity."

While traveling with Lair and Bradley, OI's marketing executive Mark Lutz said, "Serving the poor is an act of worship. Every time you serve the poor, you express your love for Jesus. If Jesus came today, he would be a microfinance banker."

In the field, local program officers are the biggest champions of microenterprise. Celestin Gatera, World Relief's Kigali-based regional technical advisor for the Great Lakes, minced no words about who microfinance programs are designed for. "They are [for] the unbankable," he said. Several stints in microfinance work in Africa, including Nigeria, have refined his understanding. He said, "Microfinance is a system through which people excluded from formal financial services can access finance within their proximity. Micro-finance is the frontier of a new approach. It is a blend of missions and ministry."

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The Kigali slum Matimba serves as one example of this missions-ministry blend. Nathan Gasatura, a World Vision team leader, said this slum was infamous for crime, prostitution, and drug and alcohol abuse. He said, "Even the government failed to penetrate this part of the city." Then World Vision made a risky decision: "We decided to use microfinance to empower the women." A $100,000 fund was established to train women in microbusiness ventures such as vegetable growing and tailoring.

One year later, most women had abandoned prostitution, had repaid their loans, and were sending their children to school. "That is one microfinance miracle we have seen," said Gasatura.

Explosive growth

Thirty-one years ago, Mohammad Yunus, the Nobel Peace Prize winner, started Grameen Bank with $27 out of his own pocket. Today, that bank and the Grameen Foundation (its international associate) handle 2 million clients in 23 countries, loaning millions of dollars each year.

In Africa, Opportunity International is experiencing huge growth of its own. Its startup in Kenya increased its number of clients by 400 percent in six months. And Opportunity staffers are quick to talk about Opportunity International Bank of Malawi (OIMB). The government issued the start-up with a banking license in March 2002, but it was not until May 2003 that the first branch opened in Lilongwe. Though the beginnings were humble, the vision—"helping those living in poverty transform their lives"—was big, because Malawi is one of the poorest countries in Africa.

By the beginning of 2007, OIMB had six branches, 150 staff, over $5 million in loans, and 53,000 savings accounts totaling $6.4 million. The bank offers more than 10 products—everything from small loans to foreign currency services—and utilizes up-to-date innovations such as biometric fingerprint identification technology, smart cards, and mobile ATMs.

Eric Thurman, coauthor of the new book A Billion Bootstraps, probably has more experience thinking about and implementing microfinance programs than any other evangelical leader. Thurman has served as CEO of Opportunity International, Hope International, and Geneva Global.

"There are only about 100 million families currently using microcredit, and the truth is that somewhere between 10 and 20 times that many people could improve their lives if microcredit were available," Thurman said in a recent interview with Kiplinger.com.

But Opportunity has found that microfinance doesn't work in every nation. South Africa's relatively affluent economy, where people have greater access to resources, has posed a unique challenge. Opportunity clients number only 389, with a paltry loan portfolio of under $125,000. The ongoing political crisis in Zimbabwe has severely crippled OI's work there. And in Zambia, alleged local leadership infighting led to the closure of the Opportunity initiative in the country. Elsewhere in Africa, OI has acquired nonprofit microfinance operations, which have a hard time raising significant capital and sustaining operations long-term.

Despite these challenges, Opportunity is growing its programs in Africa. In 2005, the organization launched the Lending Hope to Africa campaign aimed at raising $25 million to fund 10,000 trust groups. By the spring of this year, 7,562 groups had been created.

OI president Chris Crane said, "We are working toward the day when all poor Africans who need a loan to grow their businesses, a safe place to deposit their savings, or an insurance policy to protect their families' health and assets [will] have access from an organization that is dedicated to their needs and well-being."

After 16 intense months in Rwanda, Dabbs Cavin and his family returned to Little Rock in mid-August to catch the start of the academic year for their school-age kids. Urwego's acting CEO is Todd Brogdon, who will remain in place until a permanent replacement is hired. The combined operations of Urwego now include 170 employees. Dawson serves on Urwego's board.

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For all three Arkansans, the experience has been a defining moment in their lives. Cavin sums it all up with the convicting question: "What is our duty in the world when we live with so much abundance?"

Isaac Phiri is a journalist based in Lusaka, Zambia.



Related Elsewhere:

Opportunity International has more on OI Bank in Rwanda.

Christianity Today's "Small Loans, Big Goals" explained how Muhammad Yunus' Nobel Prize boosts growing microfinance ventures.

"Lessons from the Poor" explains why giving the award to an organization that encourages entrepreneurship is significant.

PBS has a transcript of an interview with Muhammad Yunus

A preview of "A Hand Up is Not Always a Handout" by Yunus is available at the Wall Street Journal.

PBS has an article on the history of microfinancing

The Economist writes on the pros and cons of microlending in "The Hidden Wealth of the Poor."

The Association of Evangelical Relief and Development Organizations has a paper on Microenterprise Development and links to Christian development organizations that implement MED.

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