Banking for a Better World

You know that mantra, "Give a man a fish, he'll eat for a day. Teach a man to fish, he'll eat for a lifetime"? … Cash and dignity, side by side. Part of Professor Yunus's brilliance was to lend the money to women, who are much more reliable at paying back loans. Maybe the mantra should be: "Give a man a fish, he'll eat for a day. Give a woman microcredit, she, her husband, her children and her extended family will eat for a lifetime."
    —Bono, New York Times, Sept 2005

November 7, 2006—Twenty-seven dollars can change the world. Muhammad Yunus, founder of the Grameen Bank and joint winner (along with his bank) of the 2006 Nobel Peace prize, is living proof of this.

In 1976 Yunus was a professor of economics at Chittagong University in Bangladesh. The country had recently suffered from a terrible famine, and Yunus was determined to find a way to curb the terrible poverty of rural Bangladesh. It was then that he came up with the concept of micro-credit and kick-started his revolutionary program with a $27 loan to a group of poor rural women.

Since then, the success of his program has defied belief.

The system works like this: The lender provides small loans (or micro-credit) to poor people, without requiring collateral. The idea is that poor people have unused skills, which make them credit-worthy. The bank loans them money on a group basis, so that peer pressure drives the borrowers to make their repayments on time.

Women, in particular, have benefited from Grameen's work. Traditionally financially under-privileged in Bangladesh, women comprise 97% percent of bank's 6.67 million borrowers. From farming, to handicrafts, to woodwork, they have drawn upon their skills to develop all manner of small businesses with Grameen's assistance.

Another unique feature of the bank is that it is mostly owned by the rural poor that it serves. Of the bank's total equity, 94% belongs to the borrowers, with the remaining 6% owned by the government of Bangladesh.

The incredible success of Grameen Bank has inspired both developing and developed countries to mirror its model to alleviate poverty everywhere. Microfinance organizations operate all over the world today.

Microfinance is also attracting the attention of some celebrities. Actor Matt Damon visited one such project in Zambia earlier this year, and footballer Zinedine Zidane is teaming up with Grameen to inaugurate Grameen Danone Foods, a project that will provide nutritious food to Bangladesh's poor.

We've Just Heard …

January 17, 2008—Muhammad Yunis has been interviewed on many US television programs. Watch his interview with Charlie Rose and find a listing of other interviews.

November 20, 2006—Inspired by Grameen? You too, can become banker to the poor. Kiva, a California-based nonprofit makes this easy by connecting people interested in loaning small amounts of money to entrepreneurs in developing countries around the world. An online journal allows you to follow the progress of the business you fund.

^ top