MUHAMMAD YUNUS

Founder and Managing Director, Grameen Bank

Created the micro-credit industry used in many developing countries. He was educated in Bangladesh and in the US at Vanderbilt University.

He was a professor of economics in Bangladesh we he provided the equivalent of $26 to 42 women to start craft businesses. From those humble beginnings Grameen Bank has grown to more than 1,050 branches serving two million customers.

Muhammad Yunus, human rights pioneer, 1940 -

Introduction: sketch portrait of a modern hero

I have come to believe, deeply and firmly, that we can create a poverty free world if we want to. I came to this conclusion not as a product of a pious dream, but as a concrete result of experience gained in the work of the Grameen Bank. (1)

--Muhammad Yunus

It is far too early for anyone to know exactly how history will remember Muhammad Yunus.

He will be remembered favorably. That much is as sure as anything can be. Armed with a simple idea and the determination to make it work, he has already helped millions of people to build better lives for themselves.

Among the poorest people in rural Bangladesh, one of the poorest countries in the world, where many other development efforts had failed, he searched for a way to combat poverty. Years of study and experimentation led to what is now known as the Grameen Bank. Over and over again, he was told this could not be done, but he refused to give up, and built an institution that is now admired and copied around the world.

Some might be content to rest after this, but Muhammad Yunus continues working to show that the idea behind these successes has much greater potential. Before he is finished, his efforts may yield a brighter future for billions of people.

His admirers have been tempted to call him a genius or a saint. They might be right, but after studying his life and work, I think such titles cannot help us truly understand his achievements. He has certainly never asked anyone to venerate him, nor does he go to the opposite extreme of putting on a mask of false humility. His humility is real, I think, because he makes no effort to appear humble by talking about himself.

Instead, he talks about the work. His goal is to see the core idea of the Grameen Bank reach its full potential to help people, both in his home country and around the world. He is willing to make use of his personal fame to serve that goal, but the effort to eradicate poverty always remains central. When he talks about his own experiences in this struggle, it is mainly to recall that its critics constantly sit on the sidelines claiming it is "impossible," and to show how this undermines all their claims about its future possibilities.

For these reasons, Muhammad Yunus qualifies as a hero and a role model. The key difference between him and the rest of us is not a genius intellect or a saintly morality. What he did, many others could have done, but they did not. His distinction is nothing more and nothing less than action. That is a distinction open to any of us if we choose it.

An idea in action

I certainly had no intention of starting a bank. (2)

--Muhammad Yunus

The core idea in this global battle against poverty was not inspired by any finely argued point of logic in the vast volumes of socialist or capitalist economic theory. It was not put forth to prove or disprove any particular political ideology. It arose from action and was refined by trial and error.

Muhammad Yunus was certainly aware of economic theory while he worked to refine the idea that was to become the Grameen Bank. At the time he was chairman of economics at Chittagong University, which is second only to the university in Dhaka, the capital of Bangladesh. He held a doctorate in economics from Vanderbilt University.

He surely took this knowledge into account while devising his approach, but far more important, then and now, was a practical question. What will help the poorest 50 percent of the population? Development programs that fail to do this are often worse than useless, achieving nothing but an increase in the gap between rich and poor.

A relentless focus on this key question led to experiments with the practice of lending small amounts of money. These loans are not for the consumer purchases often made on credit in Western industrialized countries. They are business loans. Their purpose is to let people gain control of their own financial situations.

The first of these loans were made in 1976, to 42 landless women who were at the bottom of the economic ladder in the village of Jobra, just outside the Chittagong University campus. A total outlay equivalent to $26 in United States currency was all it took. That was enough to let these 42 women make the investments they needed to gain independence from local moneylenders. Before this, they lived hand to mouth, barely surviving because their only source of income required them to pay interest rates of 10 percent per month or higher.

Before this, their labor had brought them barely enough income to survive, and left them with no profit to improve their lives. After gaining independence from the moneylenders, these women were not only able to pay back their initial loans, they also profited enough to begin saving for future investment.

Many adjustments and changes have been made in the intervening years, but the core process has remained the same to this day. The Grameen Bank has over two million borrowers in Bangladesh today, with a cumulative repayment rate of more than 97 percent. Thousands more have been helped in other countries which have built their own microlending institutions based on the Grameen Bank's experience.

Most everyone agrees that the idea at the core of the Grameen Bank's success is simple. This does not mean everyone agrees on what, exactly, this idea is. Many attempt to hijack Grameen's success and portray it as some sort of proof for their own pet ideologies' truth.

Advocates of capitalist economic theories claim the Grameen Bank succeeds because it is based on market principles. This requires them to conveniently forget the hundreds of other development projects "based on market principles" that have utterly failed, often making the conditions of life even more miserable for the poor.

Advocates of socialism fare little better in their attempts to hitch their wagon to the Grameen star. For example, some try to argue that the idea of social collateral involved in Grameen's lending system proves something about the inherent merits of socialism, but once again, they fail to account for the many miserable failures of development efforts based on socialist ideologies.

Professor Yunus tends to avoid any dogmatic stance on these issues, preferring instead to accept whatever political and philosophical support might advance the process of helping the poor.

Instead of taking a side between the capitalists and the socialists, he cuts straight to the heart of the issue by advocating a principle which is revolutionary in its own way, but whose moral and practical implications would apply within either system. He argues that access to credit for the purpose of self employment should be seen as a fundamental human right, just as vital to human dignity as the right to vote, or to freedom of speech.

Whether this concept of credit as a human right will ever be widely accepted remains to be seen, but Muhammad Yunus is not waiting around for people to decide. He continues working to prove that access to credit can improve life not only for those who receive it, but for everyone who shares a community with them. Whether the community in question is a village, a nation, or the planet as a whole, the beneficial effect of credit for self employment has a growing body of evidence in its favor.

The myth that credit is the privilege of a few fortunate people needs to be exploded. You look at the tiniest village and the tiniest person in that village: a very capable person, a very intelligent person. You have only to create the proper environment to support these people so that they can change their own lives. (3)

--Muhammad Yunus


Notes:

  1. Banker to the Poor, Author's Preface.
  2. Quoted in The Price of a Dream, Chapter 2
  3. Quoted in The Price of a Dream, Introduction.

Bibliography:

  • Bornstein, David. The Price of a Dream: The Story of the Grameen Bank and the Idea That Is Helping the Poor to Change Their Lives. New York: Simon and Schuster, 1996. Hardcover ISBN 0-684-81191-X.
  • Yunus, Muhammad, with Alan Jolis. Banker to the Poor: The Autobiography of Muhammad Yunus. Oxford: Oxford University Press, 2001. Hardcover ISBN 0-195-79537-7 (First edition, published by South Asia Books, 1998; Hardcover ISBN 9-840-51467-9, may be difficult to obtain. A very similar volume has also been published under the title Banker to the Poor: Micro-Lending and the Battle Against World Poverty. New York: PublicAffairs, 1999. Hardcover ISBN 1-891-62011-8. This version of the book may be the easiest to find, at least in North America.)

Other References:

  • "Summary." PublicAffairs Books web site. Visited 27 March 2003. http://www.publicaffairsbooks.com/books/ban-sum.html
  • "Grameen - banking for the poor." Grameen Bank web site. Visited 27 March 2003. http://www.grameen-info.org

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