I had the unique opportunity to meet Dr. Muhammad Yunus last week in NYC after the screening of a film called Bonsai People directed by Holly Mosher, the first film about the work of Dr. Yunus, the Grameen Bank and the wonderful world of micro-credit. The film brings one into the way Grameen Bank interacts with its members locally, on a day-to-day basis.
A Nobel Prize or two relatively recently seems to have been granted with more hope in hand than substance. Not so with Dr. Yunus. He has played a major role in overcoming poverty in some of the poorest countries in a creative, compassionate but no less profitable way, primarily lending to women who have consistently used the loans for the improvement of their families and villages worldwide.
Dr. Yunus initially made loans of $27 to 42 women and this has become an international bank that has loaned some 8 billion dollars in micro-loans to over 8 million women in 90 countries. He is known as the "Banker to the Poor".
On A Better World Radio & TV, I interview the sung and unsung heroes of society. What constitutes a hero? A man who has dedicated his life to service of humanity, Earth, sentient beings. In this case, Dr. Yunus has been helping the underprivileged, those without many resources, until, that is, they may have the good fortune to meet him or one of his now many bank managers of Grameen Bank, which, in BanglaDeshi, means "Village" Bank. I have interviewed his colleague, Sam Daley-Harris and we discussed the power of micro-credit for the effective economic transformation of society. It's working.
One of Yunus' books, Creating a World Without Poverty, Social Business & the Future of Capitalism, in effect, as CEO of Grameen Bank, he re-defines the role of a banker in society. He or she is not someone who is there to take advantage of a borrower by charging exorbitant fees and a loan full of subtle trickery, written in legalese in miniscule letters on lots of pages, insuring that few will take the time to read it from start to finish. A banker's role is to serve the People by extending loans and credit at fair rates and Dr. Yunus exemplifies that. One of the phrases used among Grameen bankers is: "These are not handouts, these are handups!"
By the way, the bank is very profitable. This is a business, providing an invaluable service and by so doing, gaining a handsome, reasonable profit.
Its success has been remarkable. I asked Dr. Yunus how Grameen Bank was able to achieve a virtually unprecedented 97% rate of loan payback, a rate that Americans banks would stand in awe and envy of. I queried, "Is it because about 97% of your clientele are women?" He answered by saying that it was because of "personal relationship" with their clients, who they refer to as "members" as though they were members of a club, and in fact, they really are. The women often form groups among themselves, counsel and support each other, encourage each other and even cover the loan payments at times for each another when one of them hits a hard time. A strong sense of community among many has developed world-wide as a result of Dr. Yunus and his, at this point, large team's efforts.
As a result of lending an initial loan anywhere from $20-75. (although now some loans are for considerably more and the system still works once scaled upward), the women of a village are able to buy chickens, a goat or even a cow. Others buy raw materials for making handicrafts or growing vegetables and hiring others to build their small business so employment increases on the local level and everyone benefits. This is working like a miracle across the world. Oftentimes all someone needs is a little help from outside and this is what Grameen Bank has provided: I call it "credit with kindness". Should America try this? In fact, Grameen is operating and serving communities here in the U.S.
The banker takes a personal interest in the well-being of his customer. If there's a problem and a payment cannot be made at some point, the customer isn't penalized or threatened with foreclosure, but contacted and not infrequently visited by the banker, the way doctors used to make house calls. Support, understanding, counsel and encouragement are the ways, not punitive attitudes, threats and late fees. It is banker as psychologist, minister and healer, all wrapped up in one. Can you imagine banker as community-builder instead of what we largely have here in the U.S. of banker as community destroyer?!
As a result of the extensive work of Grameen Bank, this Nobel Prize for Peace to Dr. Yunus was so overwhelmingly appropriate. If you want peace, they say, make sure there is justice. And part of justice is that people can have a vital livelihood and cultivate their own food so the families can eat: greater distribution of economic wealth across the land.
Interestingly, Grameen Bank is helping to support the greening of the businesses and houses for which they are lending money. In this way, they are building sustainable practices into village communities around the world, many steps ahead of first world economies such as ours.
If the small-business and mortgage departments of Bank of America, Morgan-Stanley, Citibank, Chase and Goldman Sachs were to take a few lessons about sound, effective and humane banking practices from the world's bank "for the poor" I daresay, we'd have a stronger economy here in the U.S., a kinder, society, more people living in their homes instead of being ousted and on the street due to foreclosure and an overall "happier, a more employed and prosperous America".
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Where in the World Bank's program is a place for truly local truly mico businesses with those entreprenuers who can pull themselves out of poverty?
Grameen does not mean bad, Grameen is pride to these women!
No program is perfect, but my God why attack something like Grameen, attack the money-lenders and wealthy foriegn corps which abuse cheap labor!
Sorry for the delay in replying--just a busy schedule.
I'm concerned that you didn't get the gist of my article--I was extolling the work of Grameen Bank, not attacking it. It is praise! You seemed to imply otherwise. But your other comments about cheap labor and all, I am in agreement with.
Thanks for commenting and reading.
I'd be wary of ism's altogether. These systems are just a means of getting people to interact and do trade and commerce together. Unfortunately, if you don't regulate, you'll find the worst in people coming out in the interest of maximizing profit. You have noticed that, haven't you? Forget the ism and the names--if we remain just practical about the desire for profit and the need for regulation, we'll be fine. To the extent that man can regulate himself, he won't need externally imposed regulation. Unfortunately, history shows us that too many people will go to any extent for personal gain. Grameen Bank is an example of how balance between profit and service can be achieved. Thanks for weighing in.
Here is a good video to explain it-the philosophies are different:
www.youtube.com/watch?v=nLrYe1JIk8A
In Masters of Illusion: The World Bank and the Poverty of Nations (1996), Catherine Caufield argued that the assumptions and structure of the World Bank harms southern nations. Caufield criticized its formulaic recipes of "development". To the World Bank, different nations and regions are indistinguishable and ready to receive the "uniform remedy of development". She argued that to attain even modest success, Western practices are adopted and traditional economic structures and values abandoned. A second assumption is that poor countries cannot modernize without money and advice from abroad.
One of the strongest criticisms of the World Bank has been the way in which it is governed. While the World Bank represents 186 countries, it is run by a small number of economically powerful countries. These countries choose the leadership and senior management of the World Bank, and so their interests dominate the bank.
Thanks for sharing these thoughts about the World Bank. I think it should be pretty evident by now that the World Bank is self-interested, and a tool in the hands of wealthy nations and corporations. They seek control, not to be of service, in general, unfortunately. Otherwise, they could be a powerful vehicle for change. I appreciate your points.
After its restructuration between 1998-2002, it became a universal retail bank. Since 2004 it has many more depositors and deposits (and savings) than it has borrowers and loans outstanding (please check its balance sheet on its website).
When will the Western public understand that poor people don't like being indebted, especially in the unstable unprotected environments they work and live in? They can only escape poverty when they can manage money safely and prudently to have more of it as assets, not as liabilities, with financial institutions whose re-/liability is ensured by central bank supervision.
Sam Daley has decided to quit the MicroCredit Summit; maybe a wise decision, especially four years before the counts are being made in 2015 whether indebting poor women helped halving world poverty (UN's Millennium Development Goals). And funny that three MicroCredit NGOs in the USA started using the Grameen name and symbol, helping putting more people in debt after SouthShore bank, a Chicago GB copy, went bankrupt last year.
Cheers, Peter van Dijk, Indonesia
Sam Daley-Harris did not quit the Microcredit Summit because he does not believe in Microcredit,...he will be attending their next summit in Nov in Spain!
Your comment is not only misleading but disrespectful of all of those women who have helped themselves and are the shareholders of the Grameen bank!!!
Financial Sector Development Legal specialist at World Bank, Financial & Private sector Development, Indonesia
In addition you live and work in Indonesia as did I and I can tell you that most families have some kind of family bank if they have any money to share at all in order to help their own family members start new businesses! I was in their homes and at these family meetings!
But the poorest of the poor don't have access to this kind of credit!
And Indonesia has the largest Microcredit program in the world and Obama's mother worked to help create it!
CREDIT as such does not ensure a poor person of being able to buy the basic goods and services needed for survival, improve stability and advancement. It is money that is owned, an asset, and that is deposited in an institution that ensures safety, liquidity and good re-investment (on-lending).
As I explained, GrameenBank has since 2004 MANY more depositors (and savers) and much more deposits than it has borrowers and loans outstanding. They have indeed become a retail bank.
Charitable Micro-Credit activities attract private and public funds by taking pictures of poor people who received money - not surprising to see them smile, but chances are low that these people have escaped poverty in a sustainable manner. If in Bangladesh Micro-Credit would have lifted 5% OUT of poverty every year, then after 20-30 years surely it would not be one of the poorest and most criminal countries it still is. But there are indeed individual success stories .....
Here in Indonesia there are huge Micro-Credit programs, which performance evaluations show a LOT of challenges saying that Credit-Focused Political programs don't produce sustained poverty reduction effects. Government now tests to exit 1 such program, transfer ownership of remaining funds to local communities and train them to transform into self-sustainable regulated financial institutions.