Maria Nowak is one of the key personalities involved in micro-credit in France and in the Western world. As an economist, she has been working to make micro-credit part of our economy for over 25 years, ever since she met Muhammad Yunus in 1985. He had created the Grameen Bank in Bangladesh in 1976, to lend money to populations that did not have access to bank loans, and she decided to transpose his idea to France. In 1989, she founded Adie, the Association for the Right to Economic Initiative, with a mission statement that could be translated as:
We give the means of entrepreneurial freedom to those who cannot afford it.
Through Adie, where today she is a member of the Management Board, she has been fighting to change both the legal framework and mentalities in favour of micro-credit. Adie also works with Danone through the Ecosystem fund, which supports two of its projects. One, the Micro-Entrepreneurship Centre, is in Volvic, France and provides funding and training to local entrepreneurs, helping 100 of them start their own businesses each year. The other was recently launched in Tunisia and aims to help milk producers start or expand their farms. The creation of a micro-finance institution is also underway. So we asked Maria Nowak about her vision of micro-credit in both the developing and the developed world, the role that corporate companies can play, and what remains to be done for the future of micro-finance.
What is your vision of cooperation between corporations, such as Danone, and NGOs, such as Adie? How is it pertinent for them to work together on social issues?
In the field of social and solidarity-based economy, what matters for NGOs is escaping their isolation, through partnerships with corporations. It allows them implement projects more quickly, and to adopt an economic and commercial vision which may be unfamiliar to them. I am deeply in favour of those links, and I believe that they are profitable to the companies too. You see, innovation always starts in the field, and companies do not necessarily have the time or resources to identify these new ideas. Working with NGOs helps them adopt a “bottom-of-the-pyramid” strategy – and it is really quite rare for large firms take an interest in the bottom of the pyramid! If you take the Tunisian example, the project helps milk producers to increase their revenue and improve their breeding and management competences, it provides Danone with a larger quantity of better-quality milk for its yoghurts, it contributes to the creation of a favourable ecosystem for the micro-finance institution-to-be, and it is also profitable for the community, with more growth, the creation of new jobs and the emergence of new cooperation which structures the farming world.
So it really is a win-win situation: it helps NGOs, companies and of course local communities and can even help the country in which the project takes place. In all cases, it is positive.
How does this project in Tunisia fit into the progression of your work to promote micro-credit?
The first thing that appealed to me was that straight after the revolution in Tunisia, the temporary government designated micro-finance as one of its 17 priorities for the country. They rapidly put together a very comprehensive law to promote micro-finance, moving much faster than France or Europe in this area. They chose to prioritize the spirit of initiative and job creation. I was very interested in the Arab spring as a whole, and I was struck by the mobilization of civil society. This type of mobilization is perfect for micro-credit! In Tunisia, many of the conditions for it to blossom are now in place.
Micro-credit and micro-finance were born in the developing world. Do you feel that they are contributing to the emergence of a new economic model in these countries?
Not really, in the sense that these countries are in the early days of their own industrial revolution, which might not happen exactly like ours. It means that micro-credit there applies first and foremost to traditional activities, such as agriculture. It does not create a new work model. If we lend a small amount of money to a farmer, he will continue being a farmer.
But he will also send his children to school. And because they have that education, as adults his children will enjoy a better life. Change really will occur in the next generation.
You have been working for years to establish micro-finance in developed countries too. Why do you feel that it is needed in our economy?
Micro-credit can be applied everywhere, because work and capital are needed to create wealth everywhere, and nowhere does everyone have access to capital. In France and in Europe, there are many people who cannot obtain loans from banks. In Europe, even today, around 92% of companies are micro-companies. This is a huge number. No one talks about them, because people always feel that it is more interesting to talk about large companies. But these micro-companies will continue to develop, especially in countries like France where industry’s share in the economy has fallen. To compensate, the tertiary sector keeps growing, and services are something that you can provide within very small work units. In our post-industrialized societies, the number of micro-entrepreneurs is set to continue increasing.
Has the economic downturn played a particular role? Do more and more people come to you wanting to start their own businesses?
Well, more and more people want to be their own bosses. They no longer believe that they will have a salaried job until they retire. And many, rather than living with the threat of being fired one day, prefer to take their chance and become their own boss. Public opinion has evolved enormously in this area. There is still a long way to go, but independent work is starting to be recognized.
What are the next steps for micro-finance in France and in Europe?
In France, we have already brought about changes in a dozen laws. In particular, banking laws have been amended to allow associations to borrow and lend money, which they could not do before. The recent creation of the auto-entrepreneur status was also a success for us. I really think the future of small companies lies there, in terms of social status. I wish this flexibility and ease of creating and managing a business could be extended to trades, for instance. But there are still a few major obstacles. For instance, the barriers to entry for a trade or profession are the same for everyone, regardless of the level of competence they will need to carry out their intended activity. French regulations stipulate the same training for a car mechanic and for someone who fixes bicycles! It is the same with the professional training fund: many unemployed people who are creating their businesses are not entitled to access it because they do not have the appropriate training to begin with. We have been trying to address this inflexibility with the government, but the weight of corporatism is very heavy in France.
At some point, we will have to find a way to move past this influence. Groups experiencing the most difficulties are the young and adults without qualifications. And we know how to help these people!
As for the European Union, it acknowledged the importance of micro-finance in 2007, through the creation of an Initiative for the Development of Micro-Credit in Support of Growth and Employment. Some aspects of this have already been implemented, such as funding and technical assistance for entrepreneurs. But the longest and most difficult phase will be modifying the legal framework, because changing the law means changing the mentalities first.