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On October 13, economist and microfinancing pioneer Muhammad Yunus stood in front of a cheering capacity crowd at the John F. Kennedy Jr. Forum. One year earlier, to the day, he had received the 2006 Nobel Peace Prize — news that Yunus said “exploded with happiness all over Bangladesh.”
That tiny South Asian nation — one of the most densely populated in the world — is the home of Grameen Bank, an international Yunus creation that has 7.5 million borrowers in Bangladesh alone. All of them started out poor, and 97 percent of them are women.
In the 2007 Malcolm Wiener Lecture in Political Economy, Yunus shared the story of a bank that defies convention by lending small sums of money to the very poor. Microfinancing, he said, lifts the impoverished out of poverty by helping them become small-scale entrepreneurs.
Worldwide, Grameen has 120 million customers, 85 percent of them in Asia. The bank also has branches in Africa, Latin America — and even Queens, N.Y., where the poor seeking credit can sidestep pawn shops, high-interest moneylenders, and payday check cashing schemes.
In Bangladesh, Grameen Bank — with 24,000 employees and 2,500 branches — gives 80 percent of poor families access to micro-credit. But the idea started “very humbly, with no real plan behind it,” said Yunus.
In 1974, while Bangladesh was being ravaged by a terrible famine, Yunus was in a university classroom teaching “elegant theories” of economics, he said. But, he added, “You don’t know what good your theories are for people inching toward death day by day.”
To be helpful, “I did tiny little things,” said Yunus. For one, he investigated moneylending practices in the village next to campus, then eliminated the entire debt of its 42 poorest residents — for $27.
“If you can be an angel for $27,” he remembered thinking, why not do more?
That led to a series of personal campaigns: to persuade banks to lend to the poor. (They said no.) To persuade banks to lend to the poor, with Yunus as a guarantor. (They said yes, but only after months.) And finally to create a bank of his own.
In 1983, with years of experience in microfinance as a springboard out of poverty, Yunus founded Grameen Bank. It’s now the largest in Bangladesh, and has lent $6 billion since its founding.
Of borrowers who have been with Grameen five years or more, said Yunus, 64 percent “have crossed the borderline” out of poverty.
Traditional economic institutions, concepts, and theories fail to account for the universality of human enterprise, said Yunus. “Poverty is not created by poor people — it is artificially imposed on good, full-blooded human beings.”
But there’s good news about poverty, he added. “Because it’s artificial, it can be peeled off.”
The Nobel laureate called on Harvard and other universities to create a new kind of MBA — “social MBAs,” whose job it would be to run a new generation of “social businesses” that are not designed to make a profit “but to address a social cause.”
Yunus has already started social business joint ventures with large corporations. A Dannon-Grameen partnership has built a factory for vitamin-enriched yogurt in Bangladesh. Dannon will get back its investment, but not a profit.
Another joint venture is being planned with Intel Corporation. It will introduce communication and information technologies “that can change the life of poor people like magic,” he said.
Yunus argued that social businesses are “less crazy” than just giving away money, as philanthropists do. “A charity dollar has one life,” he said. “A social business dollar is an endless dollar. It never dies away.”
To watch a video of the event, visit the John F. Kennedy Jr. Forum archive.