86 | Speak Truth to Power MUHAMMAD YUNUS

“AS WOMEN BECOME EMPOWERED, THEY LOOK AT THEMSELVES, AND AT WHAT THEY CAN DO. THEY ARE MAKING ECONOMIC PROGRESS AND ALONGSIDE THAT, MAKING DECISIONS ABOUT THEIR PERSONAL LIVES.”

Founder of the Grameen Bank, the world’s largest and most successful microcredit institution, Muham- mad Yunus was born in one of the poorest places on earth, the country (then part of Pakistan) of Ban- gladesh. As a professor of economics, he was struck by the discrepancy between the economic theory taught in universities and the abject poverty around him. Recognizing the poor remained poor because they had no access to capital, no collateral for loans, and borrowing requirements so modest that it was not cost-effective for large banks to process their needs, Yunus started experimenting with small collateral-free loans to landless rural peasants and impoverished women. In 1983, he founded the Gra- meen Bank. Its rules were strict and tough. Clients find four friends to borrow with. If any of the five defaults, all are held accountable, building commit- ment and providing community support. Initial loans are as little as ten dollars, and must be repaid with 20 percent interest. Nearly twenty years later, this revolutionary bank is flourishing, with more than 1,050 branches serving 35,000 villages and two mil- lion customers, 94 percent of them women. Ninety- eight percent of Grameen’s borrowers repay their Muhammad Yunus, ©2000 Eddie Adams loans in full, a rate of return far higher than that of the rich and powerful. More importantly, the clients When I started the Grameen program to provide access to credit for the poor, are transforming their lives: from powerless and de- I came upon two major obstacles. First, commercial banks were institutionally pendent to self-sufficient, independent, and politi- biased against women. Secondly, they had absolutely blocked credit to the poor cally astute. The real transformation will be felt by by demanding something no poor person has access to: namely, collateral. the next generation: a generation with better food, After overcoming the second issue, I addressed the first. I wanted half of education, medication, and the firsthand satisfac- the borrowers from banks in my program to be women—a challenge. At first, tion of taking control of their lives, thanks to Yu- women were reluctant to accept loans. They said, “No, no, I have never touched nus’s vision, creativity, and confidence. Among many money in my life. You must go to my husband. He understands money. Give the awards, Dr. Yunus was awarded the Nobel Peace money to him.” So I would try to explain why a loan would benefit her family. Prize in 2006 and the U.S. Presidential Medal of But the more I tried to approach women, the more they ran away from me. Freedom in 2009. Together with Nelson Mandela, My colleagues and I worked hard to come up with a way we could build trust in fellow Defender Archbishop Desmond Tutu and se- women so that they would accept loans from men. We slowed down our work lect other prominent statesmen, human rights lead- just to include more women, since this trust-building took time. ers and public figures, Yunus is a member of the Six years later, proud that half our loans were to women, we began to see “Global Elders” group. something very remarkable. Money that went to families through women helped the families much more than the same amount of money going to men. Unlike Speak Truth to Power | 87

men, women were very cautious with money and passed than a transformation of that person. In the beginning of it all, benefits on to their children immediately. They had learned she was trembling, she was tossing and turning, she felt she was how to manage with scarce resources. And women had a nobody and she really did not exist. Now she is a woman who longer vision; they could see a way out of poverty and had the feels like she is somebody. Now she can almost stand up and discipline to carry out their plans. Perhaps because women challenge the whole world, shouting, “I can do it, I can make it suffer so much more from poverty than men, they are more on my own.” So it’s a process of transformation and finding self- motivated to escape it. worth, self-esteem. Proving that she can take care of herself. In contrast, men were looser with money. They wanted to You see, if you only look at the lending program of Grameen, enjoy it right away, not wait for tomorrow. Women were always you have missed most of its impact. Grameen is involved in a building up things for the future, for themselves, their children, process of transformation. The sixteen decisions is an example: their families. We saw a number of such differences between we found that Grameen children attend school in record men and women. numbers because their mothers really take that commitment We decided to make a concerted effort to attract women seriously. And now many of the children are continuing in clients because we got much more mileage out of the same colleges, universities, going on to medical schools, and so on. It is amount of money. So I created incentives for our loan officers really striking to see young boys and girls go on to higher levels because they had such a hard time convincing women to of education. The program has been so successful that we now borrow money from the bank. Today, 94 percent of our loans foresee a big wave of students needing loans, so we recently go to women. came up with another loan product to finance higher education It has worked in ways we never anticipated. For instance, for all Grameen children in professional schools. Now they don’t women borrowers decided to commit themselves to a set of have to worry about whether their parents will be able to pay promises that they called the “sixteen decisions.” These are for their higher education when tuition is so expensive. commitments to improve the welfare of the borrowers and A recent study in Bangladesh showed that children in their families above and beyond the loans. They agreed to send Grameen families are healthier than non-Grameen children. their children to school, they decided to maintain discipline, to Scientific American did a study of population growth in create unity, to act with courage, and to work hard in all their Bangladesh showing that the average number of children per endeavors. They agreed to keep their families small, to send family twenty years back was seven, but now it has been their children to school, to plant as many seedlings as possible, reduced to three. What happened? Why did it happen? Scientific even to eat vegetables. These are some of the resolutions American has spurred controversy by claiming the change is created by the women, not imposed by the bank. These due to our program. As women become empowered, they aspirations were critical to their lives. Listening to them, you see look at themselves and at what they can do. They are making what a difference women make. economic progress and alongside that, making decisions about A typical initial loan is something like thirty-five dollars. The their personal lives and how many children they choose to have. night before a woman is going to accept that money from the And of course Article 16, Decision 1, says that we should keep bank, she will be tossing and turning to decide whether she is our families small. So this is an important part of the equation. really ready for it. She is scared that maybe something terrible At the population summit in Cairo all the sessions spoke of will happen to her. And finally in the morning her friends will the Grameen model, because the adoption of family planning come over and they will try to persuade her: “Let’s go through practices of women in our program is twice as high as the with it. If you don’t go, we can’t. We can’t always worry. It was national average. Now, we are not a population program, but not easy coming to this point. Let’s go.” And finally, with their this is a beneficial side effect. encouragement, she will come to the bank. There are other side effects. Starting seven years back we When she holds that money, it is such a huge amount in her encouraged Grameen borrowers to participate in the political hands, it is like holding the hope and treasure that she never process by voting. Their first reaction was negative. They said, dreamt she would achieve. She will tremble, tears will roll down “The candidates are all devils, so why should we vote for them?” her cheeks, and she won’t believe we would trust her with such It was very depressing that people looked at their electoral a large sum. And she promises that she will pay back this money, process in that way. because the money is the symbol of the trust put in her and she So we replied, “Okay, yes, they are all devils, but if you don’t does not want to betray that trust. go and vote, the worst devil will get elected. So go sit down And then she struggles to pay that first loan, that first in your centers, discuss who could be the worst, what could installment, which is due the following week, and the second happen if he gets elected, and if you find this prospect terrible, installment, which is payable the following week, and this goes then you have an opportunity to choose among all the devils, on for fifty weeks in sequence, and every time that she repays the least evil.” People immediately got excited, and we had another installment she is braver! And when she finishes her almost 100 percent participation in that first election. fiftieth installment, the last one, and she has now paid in full, It was very well organized. All the Grameen families met the she can say, “I did it!” She wants to celebrate. It’s not just a morning of the elections, and went to the voting place together, monetary transaction that has been completed, it is nothing less so the politicians would take note of their large numbers, so that 88 | Speak Truth to Power

they were taken seriously. In the next elections we organized was the male ego speaking in religious terms. Grameen families to vote themselves and also to bring their Our best counterargument was just to give it time. It soon friends and neighbors to vote, particularly the women. became clear that our borrowers were still attending to their The result was that in the 1996 election in Bangladesh religious duties, at the same time earning money and becoming voter participation was 73 percent, the highest percentage confident. Women started confronting the religious people. ever. And what shocked everybody was that across the board They said, “You think taking money from Grameen Bank is more women voted than men. In fact, women waited for a bad idea? Okay, we won’t take any more—if you give the hours, because when the voting arrangements were made, the money yourself. We don’t care who gives it to us, but without authorities had expected only half the number to show up. money we cannot do anything.” And of course the religious The outcome changed the political landscape. In the advocates said, “No, no, we can’t give you money.” So that was previous parliament, the fundamentalist religious party had the end of that. seventeen seats; in the 1996 election, their number was We also received criticism from development professionals reduced to three, because women found nothing interesting who insisted that giving tiny loans to women who do not have in the fundamentalist party’s program. So that was very knowledge and skill does not bring about structural change in empowering, very empowering indeed. the country or the village and therefore is not true development Then, in last year’s local elections, we were shocked to see at all. They said development involves multimillion dollar loans that many Grameen members themselves got elected. So I for enormous infrastructure projects. We never expected went around and talked to those people, and asked why they opposition from the development quarter, but it happened, and chose to run for office. They said, “You told us to select the became controversial. Because what we do is not in their book. least of the devils, and we tried, but it was such an ugly job that They cannot categorize us, whether right, left, conservative, or we got fed up, and we started looking at each other, thinking, liberal. We talk free market, but at the same time we are pro- ’Why are we looking for the least devil, when we are good poor. They are totally confused. people here? Why don’t we run ourselves?” And that started But if you are in a classroom situation, you wander around the snowball effect which ended with more than four thousand your abstract world, and decide microcredit programs are Grameen members elected into local office. That’s amazing. silly because they don’t fit into your theoretical universe. And the way they talk is completely different. I never heard But I work with real people in the real world. So whenever women in Bangladesh talking like this. They are challenging academics or professionals try to draw those conclusions, I get the government. They say, “The government can’t tell us how upset and go back and work with my borrowers—and then I to vote. We made commitments to our electorate.” This is know who is right. the kind of thing that happens. So in health care, in political The biggest smile is from one of those women who has just participation, in the relationship between mother and child and changed her existence. The excitement she experienced with between husband and wife, there are transformations of society. her children, moving from one class to another, is so touching, Now you can open up, you can do things, you can discover so real that you forget what the debate was in the ballroom of your own talent and ability and look at the world in a very the hotel with all the international experts, telling you that this different way than you looked at before. Because Grameen is nothing. So that’s how I’ve got the strength—from people. offers a chance to become part of an institution, with some Grameen Bank is now all over Bangladesh, with 2.4 million financial support to do your own thing. Our customers are families. Even in hard times, like this year’s terrible flood, in a kind of business relationship, but one that makes such a people are willingly paying and we’re getting really good difference to their lives. loans. That demonstrated the basic ability of the people to Of course there is resistance. The first resistance came from do something that they believe in, no matter what others say. the husbands who felt insulted, humiliated, threatened that their People ask, what is the reason that we succeeded, that we wives were given a loan and they were not. The tension within could do it, when everybody said it couldn’t be done. I keep the family structure sometimes led to violence against the saying that I was stubborn. So when you ask if it took courage, women. So we paused for a while and then came up with an I would instead say it took stubbornness. No matter what kind idea. We started meeting with the husbands and explaining the of beautiful explanation you give, that’s what it takes to make program in a way where they could see it would be beneficial it happen. to their family. And we made sure to meet with husbands and wives together so everyone understood what was expected. So that reduced a lot of initial resistance by the husbands. Neighborhood men also raised objections, and cloaked the fact that they felt threatened by women’s empowerment in religious trappings. We carefully examined whether our program was in some way antireligious. But they were hiding behind religion instead of admitting that they felt bypassed. It COMBATING POVERTY LESSON GRADE LEVEL: 6 - 8 MUHAMMAD YUNUS HUMAN RIGHTS ISSUE: MICROCREDIT

UNIVERSAL DECLARATION OF CONCEPTS: VOCABULARY: HUMAN RIGHTS: • Economic systems • Poverty • Article 23: Right to Desirable Work • Values • Bank loans • Article 25: Right to Adequate Living • Choice • Credit Standard • Empathy • The 3 C’s • Needs and wants • Collateral TIME REQUIREMENT: 160 minutes • Factors of production • Microcredit • Justice • Grameen Bank OBJECTIVES: • Decision making After this lesson, students will be able to • Civic values TECHNOLOGY REQUIRED: • Describe “poverty” and its long- • Human rights • Internet for video clips reaching effects. • Identify factors contributing to the NEW YORK STATE MATERIALS: cycle of poverty. LEARNING STANDARDS: • Chart paper or interactive whiteboard • Understand banks’ traditional “3C’s” • Social Studies Standard 2: World • May I Have a Loan worksheet approach to lending money. History • Activity 1 Reflection Sheet PDF • Understand Muhammad Yunus’s {{Intermediate KI 1 PI 1; KI 4 PI 1, worksheet microcredit approach. 3, 4 • Video clip Pennies a Day • Analyze the benefits of microcredit as • Social Studies Standard 3: Economics http://www.YouTube.com/ well as the challenges it faces. {{Intermediate KI 1 PI 1, 2; KI 2 PI 4 watch?v=veaVikY3u98 • Social Studies Standard 5: Civics, • Activity 2 Reading for Information: GUIDING QUESTIONS: Citizenship, and Government taken from What is Microcredit? • What does it mean to live in poverty? {{Intermediate KI 1 PI 1; KI 3 PI 3: KI Grameen Bank -Banking for the Poor, • What are poverty’s far-reaching 4 PI 1, 3 July, 2010 effects? • English Language Arts Standard http://www.grameen-info.org/index. • How can we make poverty a thing of 1: Language for Information and php?option=com_content&task=view the past? Understanding &id=28&Itemid-108 {{Intermediate Reading PI 1, 2, 4; • Activity 2 Reading for Information: STUDENT SKILLS Writing PI 1, 2, 4 taken from Is Grameen Bank Different • Drawing conclusions • English Language Arts Standard 3: from Conventional Banks? Grameen • Comparing and contrasting Language for Critical Analysis and Bank Banking for the Poor, July, • Evaluating Evaluation http://www.grameen-info.org/ • Analyzing and applying information {{Intermediate Reading PI 1, 2; indexphp?option=com_content&task • Supporting a position Writing PI 1, 2 =view&id=16&Itemid=112 • Participating in group planning and • English Language Arts Standard 4: • STTP reading: Muhammad Yunus discussion Language for Social Interaction http://www.speaktruth.org/ {{Intermediate Reading PI 1, 2; • Video clip UNICEF: Microfinance Writing PI 2, 3 Promoting Women in Togo http://teachertube.com/ viewVideo.php?video_ id=181245&title=UNICEF__ Microfinance_Promoting_Women_ in_Togo

Speak Truth to Power | 89 STUDENT ACTIVITIES

ANTICIPATORY SET: ACTIVITY 1: HOMEWORK: • Introduce the following questions to the • Divide students in small groups. Each • Students should reflect upon their class, telling the students these are our group is to pretend they are a group of work in class by reviewing their initial guiding questions for the next lesson: bank managers in charge of giving out answers to the May I Have a Loan? {{What does it mean to live in loans. worksheet. Students should complete poverty? • Distribute copies of May I Have a Loan? the Activity 1 Reflection Sheet: What {{What are poverty’s far-reaching worksheets to each group. (link to doc) I’ve Learned by writing a paragraph in effects? • Review the indicators banks generally response to the following questions: {{How can we make poverty a look at in order to determine if a {{Why can’t the poor get bank loans? thing of the past? person qualifies for a loan, called the {{What other ideas or solutions • Conduct a short class discussion, 3C’s, or one’s Character, Capital [or can you think of to address this brainstorming a definition or Collateral], and Capacity. problem? description of “poverty” and how it • Instruct the groups to discuss the pros impacts people’s lives. and cons of giving the people described ACTIVITY 2: {{Record students’ answers on chart on the worksheet bank loans. • Review Activity 1 Reflection Sheet paper or interactive whiteboard to • When finished with the exercise ask answers in a class discussion, refer back to during the unit. the students to share with the class summarizing the main problem—how • Show the students the Web site their decision, identifying whether or the lack of credit given to the poor on poverty: not they would be approving the loan. continues the cycle of poverty. Discuss http://www.globalissues.org/ • The teacher will wrap up this class the students’ answers on how to break article/26/poverty-facts-and-stats discussion by going back to the earlier the cycle. • Ask students for ideas on possible discussion and the essential questions: • Show the class the video clip Pennies a ways to end poverty. Through this How can we make poverty a thing Day, introducing Muhammad Yunus and discussion, the teacher should lead the of the past if banks don’t give people the Grameen Bank. class to the conclusion that those in loans? Are there any other ideas or http://www.YouTube.com/ poverty need money to improve their solutions? watch?v=veaVikY3u98 lives. One place to borrow money is from a bank.

BECOME A DEFENDER

Students should choose one of the following activities. {{Kiva Loans that Change Lives • Students should reflect upon Muhammad Yunus’s new http://www.kiva.org/about/microfinance approach to combating the age-old problem of poverty. How {{Kick Start—A Poor Person’s Top Needs is a Way to will students let others know about what they have learned? Make Money Students can create a written or visual piece (artwork, http://www.kickstart.org/what-we-do/ PowerPoint, and movie) to share with family members. {{Students should be encouraged to “think outside • Students will apply the lessons learned from Muhammad the box” as Dr. Yunus did—how can they spread his Yunus’s work to a local poverty issue by researching current message in a unique and powerful way? Show students events. the video clip Human Rights Article 28 A Fair and Free • After finding statistics or information on local poverty, World as a model students should reflect on the questions: http://www.youthforhumanrights.org/what-are-human- {{How is poverty affecting your local community/state? rights/videos/fair-and-free-world.html {{Could microcredit be a solution to approach this problem? • Students can investigate microfinancing groups and then vote {{Students should write a letter to the editor or to a on an organization to support. They can then start a class local bank explaining what they have learned about fund raising project such as hosting a hunger banquet to earn microcredit and why they believe it can be beneficial to money to make a loan. ending local poverty. {{Women’s Trust, Pokuse, Ghana {{Background information for this project: 2010 New York http://www.womenstrust.org/ State Poverty Report {{The Microcredit Summit Campaign http://www.nyscommunityaction.org/MembersArea/ http://www.microcreditsummit.org/ login.aspx

90 | Speak Truth to Power • Ask students to reflect upon Yunus’s the students work together. banking is helping to end the cycle of approach to loaning money to the poor • After reading articles, students are to poverty as well as the unit’s guiding and their own approach in Activity1. complete the assignments described on questions. {{How is Yunus’s idea different from the Activity 2 Reading for Information • Show the video clip UNICEF: traditional lending practices? (symbol for link) worksheets including Microfinance Promoting Women in {{What were the benefits to the creation of a Venn diagram Togo to further help students see Yunus’s ideas? comparing and contrasting the two the benefits of microcredit on poor • Distribute Activity 2: Reading for banking systems. women’s lives. Information (symbol for link) on the • Students will able be asked to write http://teachertube.com/viewVideo. Grameen Bank. The teacher may a written response to the following php?video_id=181245&title=UNICEF__ differentiate the lesson based upon question: Microfinance_Promoting_Women_in_Togo reading levels: {{Do banks have a responsibility for • Ask students to revisit their initial {{Reading A (taken from What helping to end poverty? responses to the guiding questions: is Microcredit? Grameen Bank {{Should changes be made to loan {{What does it mean to live in -Banking for the Poor, July 2010 practices today? poverty? (symbol for link) is for lower level {{What are poverty’s far-reaching readers ACTIVITY 3: effects? {{Reading B (taken from Is • Review students’ Venn diagrams and • Ask students to respond to the Grameen Bank Different from written responses on the Activity 2 following questions in a class discussion: Conventional Banks? Grameen Reading for Information worksheet. • When economic problems are solved, Bank -Banking for the Poor, Allow for students from each reading what are the domino results? July 2010 (symbol for link) is for group to share information. • How might microcredit help make stronger readers. • Distribute Speak Truth to Power (symbol poverty a thing of the past? {{Students could read for link) reading on Muhammad Yunus independently, or the teacher to be read as a class. may create groups of students of • Review both the idea that microcredit mixed reading abilities and have

• Muhammad Yunus has helped Bangladesh combat poverty. EXPANDING OPPORTUNITIES However, microfinance alone cannot rid the world of poverty. • Ask the students: Do you think the microcredit concept What else can be done? would work in other places? Would it work in the U.S.? Why {{Have students research Dr. Yunus’s newest theory for or why not? ridding the world of poverty called “Social Businesses,” • Distribute the April 1, 2008, New York Times article “Lending which encourages businesses to reinvest profits in Plan Won Prize, but Will It Work Here?” for class reading. helping others. (The Conversation: Can Microloans • What special challenges does the Grameen system face in the Change the World? May 19, 2010 US? http://abcnews.go.com/WN/microcredit-changing- http://www.nytimes.com/2008/04/01/nyregion/01grameen. world-tiny-loan-time/story?id=10687817 . html?_r=2&pagewanted=2 {{After conducting research, students can write letters • Distribute the July 8, 2010, Newsweek article “The Poor to companies who have partnered with Grameen Bank Always Pay.” This includes an update on Grameen in the US. such as Intel, Adidas and Dannon, congratulating them on Discuss the question: Does the bank seem to be progressing? their efforts, or to other companies of their choice asking Why/why not? them to become part of the partnership. http://www.newsweek.com/2010/07/08/the-poor-always- pay.html

Speak Truth to Power | 91 TELL US ABOUT IT ADDITIONAL RESOURCES

The Robert F. Kennedy Center for Justice and Human Rights is The Grameen Bank sponsoring an annual contest honoring a student who submits http://www.grameen.com/ the best advocacy activity based upon the lesson studied. A The Grameen Bank’s website offers information about the goal of the lesson is to instill into each student that one voice, history of microcredit and explains, in a more in-depth fashion, one person can make monumental changes in the lives of many. the current function of the bank and how it continues to help Tell us how you “Became a Defender”! people with access to credit.

THE CRITERIA FOR THE CONTEST ARE: The Yunus Centre • A one-page summary of the advocacy activity http://www.muhammadyunus.org/ • Digitized copies of materials that can be sent electronically The Yunus Centre, Dr. Yunus’ personal organization, works • Photos of the activity (please include parental consent form) toward creating a poverty-free world. Their website works as • A one-page summary of how the activity made a change in a hub for information and opportunities related to Dr. Yunus’ the lives of one person or many work and other social business and micro-finance-related enterprises. THE PRIZES INCLUDE: • A week long “virtual” internship at RFK Center The Microcredit Summit • An opportunity to meet the defender through a SKYPE visit, http://www.microcreditsummit.org/ • A visit from Kerry Kennedy or a defender to your school The first Microcredit Summit was held in February 1997 in • A poster of a Speak Truth to Power Human Rights Defender Washington, D.C. They launched a nine-year campaign to • A donation of a signed copy of Speak Truth to Power for the reach 100 million of the world’s poorest families, especially the school library women in those families, with credit for self-employment and other financial and business services by the year 2005. They The application and instructions for entry can be downloaded almost reached that goal in 2005 and have since re-convened to here (link for materials) set out new goals. Their website provides extensive information about the summit and their ongoing campaigns. The deadline for all applications is the third week in November. MicroCredit-NH The winning student and teacher will be notified by the last http://www.microcreditnh.org/ week of January. A US-based Microcredit group that works specifically in New Hampshire to bring small loans to small businesses.

92 | Speak Truth to Power SPEAK TRUTH TO POWER Name: HUMAN RIGHTS DEFENDERS WHO ARE CHANGING OUR WORLD ACTIVITY 1 - A

MAY I HAVE A LOAN?

When people are in need of money, they often turn to a bank in order to receive a loan, or an amount of money given to somebody on the condition that it will be paid back later. When deciding to approve loans, banks often look at a person’s credit rating, or an estimate of one’s ability to repay money borrowed.

Imagine you are part of a bank management team in charge of approving loans to people. Below is a summary of the “Three C’s of Credit,” the indicators which banks use to determine a person’s credit rating.

Step 1: Read through the Three C’s described below:

THE THREE C’S OF CREDIT

Taken from Practical Money Skills ©2000-2010 Visa. http://www.practicalmoneyskills.com/personalfinance/creditdebt/history/3cs.php

A credit score is a measure of factors that may affect your ability to repay credit. It’s a complex formula that takes into account how you’ve repaid previous loans, any outstanding debt, and your current salary. A credit score…can change positively or negatively depending upon how much debt you [have] and how you manage your bills. The factors that determine your credit score are called The Three C’s of Credit - Character, Capital [or Collateral], and Capacity.

CHARACTER: From your credit history, a lender [the bank] may decide whether you possess the honesty and reliability to repay a debt. Considerations may include: • Do you pay your bills on time? • How long have you lived at your present address? • How long have you been at your present job?

CAPITAL [COLLATERAL]: A lender will want to know if you have…real estate, personal property, investments, or savings with which to repay debt if income [from a paycheck] is unavailable.

CAPACITY: This refers to your ability to repay the debt. The lender will look to see if you have been working regularly in an occupation that is likely to provide enough income to support your credit use. The following questions may help the lender determine this: • What is your current salary? • What are your current living expenses? • What are your current debts? • How many dependents [children or other family members you support financially] do you have?

When banks and other financial institutions make credit decisions, they consider a borrower’s ability and willingness to pay it back. The lender considers a borrower’s past loan payment history (character), his or her income (capacity), and what property can be used to cover the loan if it is not paid back as promised (collateral). It is extremely rare for the value of a relationship [such as a friendship or a relative] to outweigh considerations of risk in lending decisions. Borrowers increase their chances of getting a loan if they can show a lender they meet the 3 C’s of credit. -Taken from Giving Credit Council for Economic Education, 2010 http://www.econedlink.org/lessons/index.php?lesson=481&page=teacher SPEAK TRUTH TO POWER Name: HUMAN RIGHTS DEFENDERS WHO ARE CHANGING OUR WORLD ACTIVITY 1 - B:

Decide if you would give loans to the following people based upon the information shared. Be sure to write your answers on this sheet. Finally, share your answers with your group members and take a group vote as to whether or not the loans will be given.

APPLICANT #1

Karen is 23 years old with a 3 year old. She is expecting another baby, and her husband has recently lost his job. Karen and her family have had to move back in with her parents who are both on welfare. She wants a loan to help her start a clothing business.

Will you approve the loan? Why or why not? (Be specific.)

Groups’ decision:

APPLICANT #2

Lisa lives in a poor village and she wants to start a new business. She thinks if she can buy a mobile phone, then others in the village will pay her a fee when they need to use the phone. She wants to borrow money to buy the phone since she does not own one.

Will you approve the loan? Why or why not? (Be specific.)

Groups’ decision:

APPLICANT #3

Sandra wants to sell sandwiches and fresh bread to people working in offices. She worked in a bakery for five years, saving money to feed her three children and sick husband. She lost her job when the owner sold the business. Sandra knows how to make quality products although she has never run a business or kept accounts. She needs money to buy equipment and ingredients.

Will you approve the loan? Why or why not? (Be specific.)

Groups’ decision:

Be prepared to share your groups’ answers with the class. How many loans were approved by the class? SPEAK TRUTH TO POWER Name: HUMAN RIGHTS DEFENDERS WHO ARE CHANGING OUR WORLD ACTIVITY 1 - C: REFLECTION SHEET

Review your answers to the May I Have a Loan worksheet completed in class today.

How can we make poverty a thing of the past if banks don’t give people loans?

Are there any other ideas or solutions?

Write a paragraph responding to the following questions: Remember to use some of today’s vocabulary in your answer: Poverty, bank loans, credit rating, the 3 C’s, collateral

• Why can’t the poor get bank loans? • What other ideas or solutions can you think of to address this problem? SPEAK TRUTH TO POWER Name: HUMAN RIGHTS DEFENDERS WHO ARE CHANGING OUR WORLD ACTIVITY 2: READING A

In class today you learned about Dr. Muhammad Yunus and his microcredit lending approach to helping end poverty. Read the following selection taken from the article what is Microcredit? To help you further understand how the Grameen Bank is different from a traditional bank. Next, complete the activities which follow.

WHAT IS MICROCREDIT?

The general features of Grammencredit are:

• It promotes credit as a human right. • Its mission is to help the poor families to help themselves to overcome poverty. It is targeted to the poor, particularly poor women. • ...It is not based on any collateral or legally enforceable contracts. It is based on “trust”, not on legal procedures and system. • It was initiated as a challenge to conventional banking which rejected the poor by classifying them to be “not creditworthy”. • It was initiated as a challenge to conventional banking which rejected the poor by classifying them to be “not creditworthy”. • It provides service at the door-step of the poor based on the principle that the people should not go to the bank, bank should go to the people. • In order to obtain loans a borrower must join a group of borrowers. • All loans are to be paid back in installments (weekly, or bi-weekly).

Grameencredit is based on the premise that the poor have skills which remain [unused]. It is definitely not the lack of skills which make poor people poor. Grameen believes that the poverty is not created by the poor; it is created by the institutions and policies which surround them. In order to eliminate poverty all we need to do is to make appropriate changes in the institutions and policies, and/or create new ones. Grameen believes that charity is not an answer to poverty. It only helps poverty to continue. It creates dependency and takes away individual’s initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty. Grameen brought credit to the poor, women, the illiterate, and the people who pleaded that they did not know how to invest money and earn an income. Grameen created a methodology and an institution around the financial needs of the poor, and created access to credit on reasonable term enabling the poor to build on their existing skill to earn a better income in each cycle of loans. - Grameen Bank Banking for the Poor, July, 2010 http://www.grameen-info.org/index.php?option=com_content&task=view&id=28&Itemid=108

• How are the Grameen Bank and traditional banks similar and different? • Create a Venn diagram comparing and contrasting the two systems. • Next, write a written response to the following questions: Do banks have a responsibility for helping to end poverty? Should changes be made to loan practices today? Explain using details from our discussion and the reading. SPEAK TRUTH TO POWER Name: HUMAN RIGHTS DEFENDERS WHO ARE CHANGING OUR WORLD ACTIVITY 2: READING B

In class today you learned about Dr. Muhammad Yunus and his microcredit lending approach to helping end poverty. Read the following selection taken from the article “Is Grameen Bank Different from Conventional Banks?” Next, complete the activities which follow.

IS GRAMEEN BANK DIFFERENT FROM CONVENTIONAL BANKS?

July, 2010

Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that the more you have, the more you can get. In other words, if you have little or nothing, you get nothing. As a result, more than half the population of the world is deprived of the financial services of the conventional banks. Conventional banking is based on collateral, Grameen system is collateral- free. Grameen Bank starts with the belief that credit should be accepted as a human right, and builds a system where one who does not possess anything gets the highest priority in getting a loan. Grameen methodology is not based on assessing the material possession of a person; it is based on the potential of a person. Grameen believes that all human beings, including the poorest, are endowed with endless potential. Conventional banks look at what has already been acquired by a person. Grameen looks at the potential that is waiting to be unleashed in a person. Conventional banks are owned by the rich, generally men. Grameen Bank is owned by poor women…. Grameen Bank branches are located in the rural areas, unlike the branches of conventional banks which try to locate themselves as close as possible to the business districts and urban centers. First principle of Grameen banking is that the clients should not go to the bank; it is the bank which should go to the people instead. Grameen Bank’s 22,653 staff meet 8.29 million borrowers at their door-step in 81,367 villages spread out all over Bangladesh, every week, and deliver bank’s service. Repayment of Grameen loans is also made very easy by splitting the loan amount in tiny weekly installments. Doing business this way means a lot of work for the bank, but it is a lot convenient for the borrowers…. Conventional banks go into ‘punishment’ mode when a borrower is taking more time in repaying the loan than it was agreed upon. They call these borrowers “defaulters”. Grameen methodology allows such borrowers to reschedule their loans without making them feel that they have done anything wrong (indeed, they have not done anything wrong.) When a client gets into difficulty, conventional banks get worried about their money, and make all efforts to recover the money, including taking over the collateral. Grameen system, in such cases, works extra hard to assist the borrower in difficulty, and makes all efforts to help her regain her strength and overcome her difficulties. Conventional banks do not pay attention to what happens to the borrowers’ families as results of taking loans from the banks. Grameen system pays a lot of attention to monitoring the education of the children (Grameen Bank routinely gives them scholarships and student loans), housing, sanitation, access to clean drinking water, and their coping capacity for meeting disasters and emergency situations. Grameen system helps the borrowers to build their own pension funds, and other types of savings…. In case of death of a borrower, Grameen system does not require the family of the deceased to pay back the loan. There is a built-in insurance programme which pays off the entire outstanding amount with interest. No liability is transferred to the family…. Grameen system encourages the borrowers to adopt some goals in social, educational and health areas. These are knows as “Sixteen Decisions” (no dowry, education for children, sanitary latrine, planting trees, eating vegetables to combat night- blindness among children, arranging clean drinking water, etc.). Conventional banks do not see this as their business. In Grameen, we see the poor people as human “bonsai”. If a healthy seed of a giant tree is planted in a flower-pot, the tree that will grow will be a miniature version of the giant tree. It is not because of any fault in the seed, because there is no fault in the seed. It is only because the seed has been denied of the real base to grow on. People are poor because society has denied them the real social and economic base to grow on. They are given only the “flower-pots” to grow on. Grameen’s effort is to move them from the “flower-pot” to the real soil of the society. If we can succeed in doing that there will be no human “bonsai” in the world. We’ll have a poverty-free world.

How are the Grameen Bank and traditional banks similar and different? Create a Venn diagram comparing and contrasting the two systems. Next, write a written response to the following questions: Do banks have a responsibility for helping to end poverty? Should changes be made to loan practices today? Explain using details from our discussion and the reading.