SA: Grameen Bank

Time Oct 23, 2006 v168 i17 p21
Q & A with Muhammad Yunus, Bangladeshi economist and founder of Grameen Bank
By: Ishaan Tharoor
In 1974, Bangladeshi economist Muhammad Yunus began making tiny loans to the rural poor. The success of his charity led him to found Grameen Bank, pioneering microcredit. Yunus spoke to TIME's Ishaan Tharoor last week, moments before learning he and Grameen had won the 2006 Nobel Peace Prize.
When did the microcredit idea dawn on you?
In 1974, there was a famine in the country. I felt empty because my knowledge in economics meant little to the people suffering. Villagers had to borrow from loan sharks on terrible conditions--some even becoming slave labor for the moneylenders. I made a list of 42 people most seriously in debt who, all together, owed no more than $27. I went around the village according to the list, giving each of them the money they owed with no conditions other than that they concentrate on their work and repay me when they could.
About 97% of Grameen members are women. Why?
The main challenge for a poor woman was overcoming the fear in her, which was holding her back. We found that, compared with men, who spent money more freely, women benefited their families much more.
In a heavily Muslim society, did this trigger opposition?
Of course. The first opposition came from the husbands, who thought we were insulting them. Second were the mullahs, who started preaching that taking money from Grameen Bank was against the religion. We told them that in Islamic history, women had been warriors and businessmen--look at the Prophet's first wife!
What singular achievement do you take most pride in?
I would say that I did something that challenged the banking world. Conventional banks look for the rich; we look for the absolutely poor. All people are entrepreneurs, but many don't have the opportunity to find that out.
You said a decade ago that our grandchildren will have to go to museums to see poverty. Do you still think that?
Absolutely--58% of the poor who borrowed from Grameen are now out of poverty. There are over 100 million people now involved with microcredit schemes. At the rate we're heading, we'll halve total poverty by 2015. We'll create a poverty museum in 2030.
Knight Ridder/Tribune Oct 18, 2006 pNA
Muhammad Yunus took the risk and came on top.
By: Boris Kaimakov
MOSCOW _ Nearly 170 individuals and 23 organizations vied for this year's Nobel Peace Prize. The prize, divided into two equal parts, went to Bangladeshi banker Muhammad Yunus and the Grameen Bank, which he founded, "for their efforts to create economic and social development from below."
Not a prophet or a saint, Yunus was merely the first to think that even very poor people who want to work should be allowed to borrow. He gave his first loan of $7 to the poor who were making bamboo chairs in the street. Muhammad took the money out of his pocket in 1974, and it was the modest beginning that has brought Yunus to his global triumph.
The Norwegian Nobel Committee said in a press release on granting the prize to Yunus: "Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty." It sounds fantastic, but it is true: not a sweet-talking politician or a courageous hero, but an ordinary banker can help preserve peace in society pushed to the edge by utter poverty.
"Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh but also in many other countries," the press release says. "Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty." When asked in a telephone interview about micro-credits, Yunus said: "People come out of poverty every day. So it's right in front of us what happens and it (micro-credits) can be done globally."
Is he a genius or just plain crazy? But Nobel Peace Prizes are not awarded to madmen. Yunus does not remember the name of the woman who was making bamboo chairs. He watched for a long time as she worked, and then mustered the courage to speak to her. She told him that she had borrowed money to buy the bamboo sticks for the chairs at a 10 percent interest, which would leave her with hardly any profit.
The idea came to the would-be Nobel Peace Prize winner in a flash. There are millions of such poor artisans, and lending money to them at a very low interest or even free would help them survive and give them jobs. But the artisans thought him crazy when he took $7 out of his pocket and said he would give the money to them if 42 people assumed mutual responsibility and pledged to guarantee repayment.
The group was soon formed and the artisans started working. Although they did not sell all of their output, they collected enough to repay Yunus' first loan. His former debtors saw that they were able to work, sell their output, repay loans and even earn a little profit. The spirit of enterprise descended not only on Yunus, but also on his new clients.
Later he convinced respected bankers and the government to help him establish the Grameen Bank. His main clients were "legal entities," as we say now, though this is not quite correct. They were groups of people who collectively signed for the loan and assumed responsibility for each other. They probably provided some collateral for the micro-credits.
Today the bank stands firmly on its feet and has about 1,000 branches. Two-thirds of its clients are women, and only 2 percent fail to repay loans. The experience of the Bangladeshi banker is being successfully applied in the United States, Canada, France, Norway and the Netherlands. Money can save or ruin people, and unlimited wealth is as dangerous as hopeless poverty. Banker Muhammad Yunus, who acted humanely, deserves the public respect and recognition represented by the Nobel Peace Prize.