Thinking Big, Lending Small
In 1990, Nancy Barry was a top executive at the World Bank, overseeing annual lending of more than $4 billion. Her First World decisions on Third World assistance changed thousands of poverty-stricken lives. And she had risen fast: While still in her 20s, she was bargaining with the Mexican minister of finance and the governor of the Central Bank of India.
But 14 years later, Barry was facing resistance. Under her prodding, the World Bank had been moving into small business, granting loans of as little as $1,000 for enterprises such as brick making. Barry was enthused about reaching even smaller start-ups. But World Bank officials remained skeptical.
So when a tiny rival, Women's World Banking, recruited Barry to be its new president, Barry was ready. It was a gamble, to be sure. A typical loan by the World Bank was $250 million; at WWB, it was $250. The World Bank had a staff of 6,000; WWB's was 100. In short, Barry was leaving the world's biggest development agency for a little-known boutique.
Yet, she says, "I felt that my whole life had been preparing me to do this job." The oldest of five children, Barry had been raised on a message of spirituality and entrepreneurship. So it was perhaps natural that after college, Barry hopped a freighter to Peru with $400 and no job in sight. She took a position with a government project for earthquake assistance, only to discover that noble missions do not necessarily add up to great achievement. When goals are stymied by bureaucratic infighting, she realized, even the best efforts accomplish little.
Barry vowed to master the art of leadership while embracing her spirit as well. When you "connect with a purpose greater than yourself," she says, "you are fearless; you think big."
WWB was a good example. Its chief premise is that grass-roots initiatives are the ultimate drivers of prosperity: Small entrepreneurs create wealth, and together, they can do more to end poverty than all the top-down welfare programs combined.
Under Barry's leadership, WWB lent millions under rules that would make commercial bankers blanch. Jewelry could serve as collateral, and neighbors could accept joint responsibility for payback. With loans, poor women could buy raw material to make crafts or fertilizer to grow cash crops.
Well run, microcredit results in fewer defaults than traditional lending; repayment rates are near 99 percent. Yet "most commercial bankers," Barry says, "still think a guy in a three-piece suit, regardless of his credit rating, is a better risk than a poor ... woman."
Connections. It is these women, however, who form Barry's natural constituency. "I believe that we were put on Earth for a purpose," she says. "For me, that purpose is 'connectedness,' first, to the power greater than ourselves; secondly, in my case ... to poor people."
Earlier this year, Barry announced that she was leaving WWB to work with the Inter-American Development Bank. But her legacy remains. WWB now assists 20 million people through more than 1,000 lenders, and its affiliates have won more favorable treatment of poor women: In Kenya, for instance, Barclays Bank no longer requires a husband's signature for female loan applicants.
"[Poor people] show so much courage and ability to take the little that the deck has dealt them and transform it into livelihoods for their families and their communities," Barry says. Once, few commercial banks would touch microfinance; now banks worldwide have discovered "the fortune at the bottom of the pyramid."
Michael Useem is Wharton School professor of management, author of The Go Point, and a member of the America's Best Leaders selection panel.
This story appears in the October 30, 2006 print edition of U.S. News & World Report.
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