Muhammad trained as an economist, and obtained a scholarship to study the subject further in the United States. After returning home with a doctorate, he began teaching at a local university. But he lived in one of the world’s poorest countries, and something was bothering him: he engaged in intellectual repartee with his fellow academics, but felt unable to do anything about the severe deprivation he saw everywhere around him. He started hating himself and the elegant theories he taught, for they were doing nothing to save the lives of those dying from hunger. Then, a moment of insight changed his life, and the world, forever.
Muhammad’s second name is Yunus, and he has just won the Nobel Peace Prize alongside Grameen Bank, the institution he founded in Bangladesh.
What was this insight? We all know the old adage: give a man a fish, and you feed him for a day; teach him to fish and you feed him for a lifetime. Dr. Yunus saw something very wrong with this. The poor, he realised, do not need to be taught how to fish (or plough, or keep livestock, or weave). They are better at it than the rest of us. So you can teach someone all the fancy fishing techniques you like, but if he can’t afford a boat or a net, he’ll still go hungry.
Wherever he looked, the professor saw skills: poor people were able to do many value-adding things; but crippled by a lack of capital, they often borrowed from money-lenders to finance their little ventures, and made nothing after paying the exorbitant interest. So, he conducted an experiment: he gathered 42 women together in 1976, and lent them $27 from his own pocket to make bamboo furniture. They repaid both his loan and his faith in them.
Dr. Yunus was now on a crusade: to give the poor credit to unlock their potential, and allow them to effect the skills they already have. But what about collateral? Dr. Yunus overcame this problem by embracing group lending: if one member of the group defaults, the others must repay the debt. He took his ideas to Bangladesh’s commercial banks, who promptly laughed him out of their offices, saying the poor were not “credit-worthy”. His response was to create a bank that was “people-worthy”.
Thus, after much struggle, the Grameen Bank came into being. Dr. Yunus was fortunate enough to persuade the Bangladeshi government of General Ershad (ironically, a military ruler) to take an interest and assume majority ownership of the bank. Today the government owns just 6 per cent of Grameen, whose success is now legendary: it has distributed as much as $6 billion in loans. The repayment rate is an amazing 98.85% – a rate that astonished those same commercial banks that refused to participate. Loans are very small – on average, less than $200 – and repayments are demanded very quickly – but in tiny instalments. That way, it is easy for the lender and the receiving group to keep track of the loan and signal any difficulty early on.
It is now believed that Dr. Yunus’s methods have been imitated in more than 50 countries (including America, where they benefit the poorest Americans). Similar loans may have reached up to 100 million of the poorest people on the planet. Grameen Bank makes a profit ($15 million in 2005 – all of which is placed in a special fund) – but remains a philanthropic enterprise, 94% owned by its borrowers.
So, what can we learn from this remarkable ‘mad professor’? Many, many things, I am sure; but allow me to pick out five lessons that may be apt for us in Kenya.
First: we must all beware of dependency and victimhood. Dr. Yunus has always had an aversion to begging – and refuses to give money to anyone doing it. But, unlike most of us, he set out to solve the problem rather than turn away from it. Grameen Bank attracted much interest and goodwill from well-wishers, but in the 1990s it made a decision to stop accepting funds from donors – and stuck to it. Lately, it has started a programme for beggars: 81,000 have been given tiny interest-free loans and free life insurance; they are encouraged to repay the loans by buying and selling low-cost items. Sixty per cent of the money disbursed has been repaid.
Second, Grameen uses the market mechanism to ensure its sustainability. It charges interest at competitive rates to most borrowers – it does not dole out charity. It has made a profit in most years of its existence. It has evolved in response to market needs, and started taking deposits (which today exceed loans). It owns a number of subsidiary companies, run for profit, including Bangladesh’s largest mobile-phone network. Capitalism has many avatars- not all of them elitist and exploitative.
Third, Grameen focuses on the gentler sex: 97 per cent of borrowers are women. This is because poor women are far more responsible and prudent when it comes to handling money than their menfolk are. They are careful about getting into debt, serious about making repayments, and are more likely to spend any profits on the well-being of their children. Grameen has lent money to millions of women, and this has had a transformative effect on Bangladeshi society. In a country as patriarchal as any, women were long considered a financial burden with little standing in society; they certainly stood little chance of obtaining commercial loans on their own. Grameen has given the women of its country opportunity, confidence and status. It is hard to think of a more meaningful achievement for the liberation of women.
Fourth: Dr. Yunus, for all his accomplishments, remains a man of modest material needs. The world is at his feet, but he lives in a small apartment. In this, he resembles our own recent Peace Prize winner, Wangari Maathai. This much-feted duo should teach us all something: in this country we tend to exhibit delusions of divine status if we so much as run a backstreet insurance company, or survive as a cabinet minister for a couple of years.
The final lesson is perhaps the most potent. It comes back to that tired excuse we all rely on when asked to do something about the poverty around us: “But what can I do, all alone, in the face of such an overwhelming problem?” Well, what could a mere lecturer in a backward country do? Change the way the world thinks about the poor, that’s what. He could have shrugged his shoulders and gone deep into academia to engage in pointless debates and churn out abstruse papers. Instead, he got his hands dirty and did something with real impact.
Those of us who have the means to effect change in society – money, brains, skills – often stay aloof, looking down from our towers of ivory and of gold. You, too, could bring change into the world. You could give the gift of livelihood and dignity to many – through modest schemes that may seem as frivolous and eccentric as those of Muhammad Yunus. You have plenty to offer. Surprise yourself.
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