Adapted from Give Us Credit:
How Muhammad Yunus' Micro-Lending Revolution is
Empowering Women from Bangladesh to Chicago
by Times Books/Random House, 1996
Giving America's poor "a hand up rather than a hand-out" is an approach that has
its roots in an unlikely place: a Third World country called Bangladesh. It began
as one stubborn man's desperate attempt to make sense of his life in a country
devastated by famine.
In his early 20's, Muhammad Yunus was an impatient young man brimming with self-confidence,
optimism and ambition. Before planning his trip to America, he had never heard of
Vanderbilt University in Tennessee, where he had received a Fulbright scholarship. Looking
at a globe, he realized it was almost exactly halfway around the world from Bangladesh.
After he graduated, he wanted to apply some of the lessons he had learned studying economics
and launch one of the many ideas he had toyed with during his student days.
Soon after his return, the famine of 1974 devastated his country. At the time, Henry
Kissinger called Bangladesh "the world's basket case." But for Yunus, it was home. He
got a job teaching economics at the University. On his way to class, he had to walk
past hundreds of his countrymen, dying from starvation. Yunus realized he had to do
something, even if it was only a small gesture. He didn't have grand illusions about
what one man could do, working alone. But he knew he had to act.
He started by talking with poor people on the street and in the villages. He immersed
himself in their world so he could best learn how to help. He came to believe that
the lack of investment capital was one of the root causes of the poverty that
plagued these people. In these villages, Yunus found poor folks who earned as
little as 2¢ a day making bamboo stools. They paid exorbitant interest
rates (as much as 10% a week) on the working capital they borrowed from
moneylenders. Yunus was appalled. "I felt ashamed to be part of a society
which could not make $21 available to 42 hardworking, skilled human beings so
they could make a decent living," he said.
So, he started lending tiny amounts of money--as little as $10--to destitute
people from his own pocket. They invested their money in building small businesses
like poultry farming, rickshaw pulling, manufacturing stools and other cottage
industries. He created the Grameen Bank, which means "village" to give these
people a strong foundation they could count on. Twenty years later, more than
two million people--mostly women--have received loans from the Grameen Bank. On
an average working day, Grameen disburses more than 60 million Bangladeshi taka,
or roughly $1.5 million. The return on Yunus' first investment has been astounding. An
unprecedented 99% have paid their loans back in full.
The bank's secret is that they get poor people to help themselves while
helping each other. People without credit are organized into borrowing support
groups. They meet every week to troubleshoot their challenges and celebrate their
successes. Each borrower also has a real financial stake in all the others in the
group; if anyone defaults on a loan, the other group members must repay it. With
the help of the Grameen Bank, millions of Bangledeshis are now working together to
escape poverty and build a life of promise, for themselves and their families.
Yunus is spreading this simple story--and its success-- to people around the
world. In 1986, then-Governor Bill Clinton invited him to come to rural
Arkansas to see if it was possible to start a similar program in the U.S. At
first, poor people couldn't believe that anyone would lend to them.
Yunus asked the welfare recipients and unemployed people he met to imagine what
they would do with the money if a bank agreed to give them a loan. Almost everybody
said that a bank would not give them money, so there was no point in talking about
it. So he asked them again, but he just got more blank stares. Then he decided to
take a more direct approach. "Look," he said, "I run a bank in Bangladesh that
lends money to poor people. Governor Clinton asked me to bring my bank to your
community. I am thinking of starting a bank right here. Now I am trying to find
out if somebody is interested in borrowing money from me. But if there is no
business, why should I come? He explained that they didn't need any collateral, or
anything else usually required for bank loans. All they needed was a good idea.
One woman who had been listening very carefully said, "I would like to borrow some
money from your bank!" When Yunus asked her how much money would you like, she
said $375. Yunus was surprised at the precise figure, so he asked her what she
wanted to do with it. She said that she was a beautician, and that her business
was limited because she did not have all the right supplies. If she could get a
box of supplies costing $375, she was sure she could pay him back with the extra income. She
also said she did not want to take a penny more than what the box cost.
Another woman, unemployed after the textile factory she had worked at closed and
moved to Taiwan, needed a few hundred dollars for a sewing machine. Another woman
wanted $600 to buy a pushcart to sell hot tamales.
For years Yunus had been saying that his program would thrive anywhere
poverty existed, but many experts had told him that America was different. "Poor
Americans are lazy Americans," they told him. After his trip to Arkansas, Yunus
thought otherwise. Convinced that his program would work in America, he charged
a handful of mavericks working for non-profit organizations with making it happen. Within
months, the Good Faith Fund was established in Pine Bluff, Arkansas. At about the
same time, the Women's Self-Employment Project started making loans to women in
Englewood, Chicago.
Since then, nearly 40 American non-profit organizations have started "peer lending"
programs based on the model of Yunus' Grameen Bank. They serve African-Americans
and Mexicans in South-Central Los Angeles, Native Americans in South Dakota, poor
whites in Arkansas, North Carolina and New England, and refugees from Southeast
Asia- the entire spectrum of the disadvantaged in the United States. Traditional
bankers dismiss the idea that poor people can start businesses. They think a
destitute village woman in Bangladesh or a welfare recipient in inner-city
Chicago should settle for a job. The conventional thinking is that banks
should give loans to wealthy people and companies to create employment. The
Grameen strategy turns this idea upside down. It gives the poor the
opportunity to create their own jobs rather than waiting around for someone
else to do it for them.
When Muhammad Yunus started lending two decades ago, he sought a fertile middle
ground between rugged capitalism and ragged socialism, between lending to
wealthy individuals and to mismanaged cooperatives. He found one, and today,
in addition to Grameen's two million borrowers in Bangladesh, another six million
poor people in fifty countries around the world--in the Philippines and South
Africa and in cities like Brooklyn and Paris--are part of a powerful group of
peers who are changing the entire banking industry.
Our goal for the year 2005 is to have 100 million of the world's poorest
families join them--with access to credit and the opportunity to create
their own livelihood. We hope it will be one of the greatest
humanitarian campaigns in history.
In 1988, I arrived in Bangladesh, having been invited by Yunus to come and work
at Grameen for a year. Within a few days of arriving, he took me to a huge
celebration that his borrowers had organized in one village to commemorate the
founding of their local branch office. I was surprised by how festive and
even outrageous the event was. Near the end, Yunus whispered to me, "These
events are times when the poor can show off, be heard, be loud, make a
stir. The slogans, the fanfare, it's all part of a process of overcoming
the shame and isolation of poverty. Society he always told the poor, 'Stay
in your crummy houses; you are neither to be seen nor heard.' Grameen
invites them to come together, hold their heads up high. "Be seen! Be heard."
Never doubt that a small group of thoughtful committed citizens can change the world.
Indeed it's the only thing that ever has.
Margaret Mead
Help end poverty in the world, one woman at a time. Join the campaign to
give 100,000 poor families access to microloans by 2005. To learn about
the campaign and about how you can develop partnerships with the Grameen Bank, contact
the Grameen Foundation at www.gfusa.org
Storyteller Alex Counts
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