Muhammad Yunus Reflects on Working Toward Peace

My efforts to empower Third World poor began, appropriately enough, with an independence movement-the independence of Bangladesh. In 1971, my homeland was confronted with a war, bloodshed, and a tremendous amount of misery. During that war, I was teaching in the United States. But after nine months of fighting, Bangladesh became independent and I went back, thinking I would join the people in the rebuilding process and help create the nation of our dreams. As the days went by, however, the situation in Bangladesh did not improve. It started sliding down fast, and we ended up with a famine at the end of 1974.

By this time, I was teaching at Chittagong University on the outskirts of Chittagong City, Bangladesh, and I felt terrible. There, I taught economics in the classroom with all the enthusiasm of a brand-new Ph.D. from the United States. I felt as if I knew everything, that I had all the solutions. But then I would walk out of the classroom and see skeletons all around me, people waiting to die. There are many, many ways to die, but none is so cruel as to die of hunger; death inches toward you, you see it, and you feel helpless because you can't find one handful of food to put inside your mouth. And the world moves on.

I couldn't cope with this daily tragedy. It made me realize that, whatever I had learned, whatever I was teaching, was all make-believe; it had no meaning for people's lives. So I started trying to find out why the people in the village next door to the university were dying of hunger. Was there anything I could do as a human being to delay the process, to stop it, even for one person?

I traveled around the village and talked with its people. Soon, all my academic arrogance disappeared. I realized that, as an academic, I wasn't really solving global problems; I wasn't even solving national problems. I decided to abandon my bird's-eye view of the world, which allowed me to look at problems from above, from my ivory tower in the sky. I assumed, instead, the worm's-eye view and tried to probe whatever came right in front of me-smelling it, touching it, seeing if I could do something to improve it. Trying to involve myself in whatever capacity I could, I learned many things in my travels.

But it was one particular incident that pointed me in the right direction. I met a woman who was making bamboo stools. After a long discussion, I discovered that her profit for the stools averaged the equivalent of two American pennies a day. I could not believe anyone could work so hard, create such beautiful bamboo stools, and make so little. She explained that she didn't have the money to buy the bamboo that goes into the stools; she had to borrow from the trader, who required that she sell the product to him alone and at a price he decides. She was virtually bonded labor to that person. And how much did the bamboo cost? She said about twenty cents; if it was good bamboo, twenty-five cents. I said, "My god, people suffer for twenty cents and there's nothing anyone can do about it?"

Thinking it over, I wondered whether I should just give her the twenty cents. But then I came up with a better idea: I could make a list of people in the village who needed that kind of money to be self-employed. After several more days of traveling, a student of mine and I came up with a list of forty-two such people. When I added up the total dollars they needed, I experienced the biggest shock of my life: it added up to twenty-seven dollars! I felt ashamed to be a member of a society that could not provide twenty-seven dollars to forty-two hard-working, skilled human beings. To escape my shame, I took the twenty-seven dollars out of my pocket and gave it to my student and said, "Take this money. Give it to those forty-two people we met and tell them this is a loan, which they can pay back whenever they are ready. In the meantime, they can sell their product wherever they get a good price."

The people of the village were quite excited to receive the money; such a thing had never happened to them before. Seeing such excitement made me wonder what more I could do to help them. Should I continue providing them money or should I arrange for them to secure their own funds? I thought of the bank located on campus. In a meeting with the manager, I suggested that his bank lend the money to the forty-two people I had met.

"You're crazy!" he said. "It's impossible! How can you lend money to the poor people? They're not credit worthy." . . . The bankers had been trained to believe that poor people are not capable of running profitable businesses. Their minds were blind to the results they had been shown. Luckily, my mind had not been trained that way.

Finally I thought, why am I trying to convince them? I'm already convinced that poor people can be advanced business loans and will pay them back. So why don't I just set up a separate bank of my own?

I wrote up a proposal and went to the government for permission. It took two years of convincing. . . . At last, in 1983, Grameen Bank-a formal, independent financial institution-was opened. I founded it as an alternative to the current banking system, which I found to be biased against both the poor and women. . . .

Recognizing this bias, I wanted to make sure that women made up half of all Grameen's borrowers. But it wasn't easy to persuade the women in Bangladesh to join the bank. A man isn't even allowed to address a woman in her village.

The usual response I heard was, "No, I don't need money. Give it to my husband." We kept telling them that we understood their husband could take it but that we wanted to give the money to the women if they needed it for a business idea. Yet, they would say, "No, I don't have an idea." And that was repeated in village after village, by woman after woman. It took a lot of convincing before any woman could believe that she, herself, could use a loan to earn income. All we needed was patience. We asked that women borrow from Grameen in groups of five and, once we were able to convince one woman, our work was half done. She then was an example that convinced her friends and then her friends' families and so on. . . .

Many women couldn't believe someone trusted them enough to loan them such an amount of money. As tears rolled down their cheeks, they promised to work very hard and make sure they paid back every penny of it. And they did. Grameen requires tiny weekly payments so that, over the course of one year, business loans can be paid back with interest. By the time the loans are paid off, the women are completely different people. They have explored themselves, found themselves. Others may have told them they were no good, but on the day a loan is paid off, the women feel as though they can take care of themselves and their families.

We noticed so many good things happening in the families where the woman was the borrower instead of the man. So we focused more and more on the women, not just 50 percent. Today, Grameen Bank works in thirty-six thousand villages in Bangladesh; has 2.1 million borrowers, 94 percent of them women; and employs twelve thousand people. The bank completed its first billion dollars in loans four years ago, and we celebrated it. A bank that starts its journey giving twenty-seven dollars in loans to forty-two people and comes all the way to a billion dollars in loans is cause for celebration. We felt good to have proven all those banking officials wrong. . . .

I went back to the officials who are now my banking colleagues and admonished them: "You said poor people are not loan worthy. But for twenty years, they've been showing every day who is worthy and who isn't. It's been the rich people in Bangladesh who haven't paid back their loans because it's been only the rich people who were granted them. With Grameen Bank, it's the poor people who are paying back." Our recovery rate has remained more than 98 percent since we began. So my question now is, are the bank's people worthy?

Researchers say that there must be some trick to it-I can't be reporting the right figures, I'm hiding things. But when they investigate our records, they see the same numbers. They come in with hostility and leave as great admirers of our bank. Researchers now say that the income of all our borrowers is steadily increasing. The World Bank reports that one-third of our borrowers have clearly risen above the poverty line, another one-third are a matter of months or a couple of years away from this achievement, and the remaining one-third are at different levels below that. I say, if you can run a bank, lend money, get your money back, cover all your costs, make a profit, and get people out of poverty-what else do you want?

Are poor people loan worthy? Does the world still wait for evidence? Does it care? I keep saying that poverty is not created by poor people; poverty is created by the institutions we have built around us. We must go back to the drawing board to redesign those institutions so they do not discriminate against the poor as they do now. We have heard about apartheid and felt terrible about it, but we don't seem to feel anything about the apartheid practiced by financial institutions. Why should some potential entrepreneurs be rejected by a bank simply because they are thought to be unworthy of a loan? By the evidence, it is clear that the opposite is true.

It is the responsibility of all societies to ensure human dignity for every member of that society, but we haven't done very well in that endeavor. We talk about human rights, but we don't link human rights with poverty. Poverty is the denial of human rights. And it's not just the denial of one human right-put together all the many ways our society denies human rights and that spells poverty.

Grameen-type programs are now popping up in many countries. To my knowledge, fifty-six countries-including the United States-are involved in such endeavors. But the effort doesn't have the momentum it needs. There are 1.3 billion people on this planet who earn the equivalent of one American dollar or less a day, who suffer extreme poverty. If we create institutions capable of providing business loans to the poor for self-employment, they will see the same success we have seen in Bangladesh through Grameen Bank. I see no reason why anyone in the world should be poor.



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