20 Great Asians - Muhammad Yunus - The Good Banker (Asiaweek)
It was hot, noisy and, by her standards, most uncomfortable. But for U.S. First Lady Hillary Clinton, this was a chance she was not going to let slip - the opportunity to see at first hand a social phenomenon she and her husband had heard so much about. That was why she was strapped in a seat on a C-130 military transport as it bumped along from the Bangladeshi capital, Dhaka, to the rural southwest of the country.
Her destination: the district of Jessore, where Clinton was to inspect the operations of a bank that had changed the lives of some 2 million of the countrys poorest families - and, along the way, had made its presence felt in her own familys home state of Arkansas. At her elbow on that day in April this year was Muhammad Yunus, one-time academic, maverick economist,peerless visionary, thorn in the side of the Establishment and founder and managing director of Grameen Bank.
As Clinton well knew, Yunus, 54, is no ordinary banker, and not by any stretch of the imagination is Grameen - meaning Rural Bank - a conventional financial institution. It exists for one purpose: to turn into deed the Yunus philosophy that the poorest of the poor are the most deserving in the land; that, given a decent break, they can lift themselves out of the mire of poverty and fend for themselves.
The break that Grameen Bank offers is a collateral-free loan, sometimes equivalent to just a few U.S. dollars and rarely more than $100. Not much, perhaps, but in rural areas it can make things happen. Yunus explains:- If you give a woman a loan worth about $75 to buy a cow, she can start selling the milk. She might make about $2.50 a week. Her installment payment on the loan would be about 50 cents. So the other $2 could be used to buy food and other necessities. As amazing as it sounds to people in the worlds rich nations, $2 a week can mean a lot in Bangladesh.
The Yunus philosophy of micro-credit first took shape in 1976, when Grameen Bank Project, as it then was, lent a total of $25 to 10 landless people in Jobra. Today, it disburses $20 million in loans each month to 1.6 million borrowers, 94% of them women. Grameen - known, fittingly, as the Poor Womens Bank - has 1,042 branches and 11,000 employees; it reaches into 34,000 of Bangladeshs 68,000 villages. Who qualifies for a loan? The less you have, says Yunus, the higher the priority you get. But Grameen is no charity. It charges annual interest of 20% and is strict about the terms. Handouts take away initiative and help maintain poverty, he says. Yet 98% of loans are honored.
Born into a wealthy business family, Yunus was an outstanding student, teaching economics by the age of 22 before winning a Fulbright Fellowship to study in the U.S. in 1965. A seamless career in academia seemed to lie ahead until, in 1976, a chance meeting with a cane weaver changed his life. She told him she took home only four cents a day, with the rest of her earnings going to repay a loan needed to buy the cane. Yunus determined to find a way to free Bangladeshs poor from the grip of usurious money-lenders.
The banker, who lives modestly in Dhaka with his physicist wife Afrozi, holds strong views about the causes of poverty in rural Bangladesh. - One can reasonably state that people are poor today because of the failure of the financial institutions to support them in the past, he says. Like the right to food, clothing, shelter, education and health, credit should also be recognized as a fundamental human right.
Yunus also has harsh words for the way the vast sums in foreign aid have been distributed in Bangladesh over the years. - If you look in our villages and among the poor families who live in them, you will find no imprint of this huge amount of assistance on their faces, he says. For the most part, it was spent on foreign consultants, contractors, bureaucrats and the purchase of equipment. The only people benefiting from this aid are those who are already wealthy, though they do so in the name of the poor.
This kind of talk has attracted attention around the globe, plus a raft of international awards. Clones of Grameen Bank have been set up in 40 countries across Asia and beyond, including Malaysia, the Philippines, Sri Lanka, India and Nepal. In the 1980s, Bill Clinton, then governor of Arkansas, asked Yunus to do the same there. The result: the Good Faith Fund in Pine Bluff. Scoffed at by local experts, who said Americans would not get out of bed for loans of less than $50,000, the Good Faith Fund quickly attracted clients looking for as little as $375. Academics have their ideas about the world, but reality is so different, says Yunus. I believe in the capacity and capability of human beings.
by Grameen Bank - The Poor Womens Bank