He is Muhammad Yunus, the Bangladeshi national whose endeavours to help his poorer nationals started with the simple action of offering a poor woman a loan of $27. However, the fruits of his efforts resulted in offering over $5 billion in loans through his Grameen Bank specializing in microcredit, offering small loans to poor people usually considered a loan risk by other banks. His idea was for the poor to help themselves by supporting each other by being the guarantors of each others’ loans. This way, none of them needed a collateral.
Last year, Muhammad Yunus and his bank were awarded the Nobel Peace Prize for “for their efforts to create economic and social development from below.” While the prize is usually given to politicians, Yunus was chosen for his ability to drive peace through economic improvements for the poor. Yunus himself believes that better economic conditions are the best way to fight terrorism: “We must address the root causes of terrorism to end it for all time, I believe putting resources into improving the lives of poor people is a better strategy than spending it on guns,” he said during the official prize ceremony held in Oslo late 2006.
Born in 1940 in the village of Bathua in Bangladesh, Muhammad Yunus lived his early childhood there before his family moved to the city of Chittagong where his father had a jewellery business. There, he attended school and was a distinguished student. For his bachelor studies, he enrolled in Dhaka University where he got a degree in economics in 1960 and then a masters a year later. His career started as a research assistant at the Bureau of Economics. Then, he became an economics lecturer at Chittagong College. Yunus got an opportunity to continue his academic studies through a Fulbright scholarship and got a PhD in economics from Vanderbilt University in the United States in 1969. Upon his graduation, he stayed in the US for three years, working as an assistant professor of economics at Middle Tennessee State University. Then, he moved back to Bangladesh and became an economics professor at Chittagong University.
Soon after his return to Bangladesh, Yunus could not but notice the hardship his fellow but less fortunate countrymen were going through, especially because of the difficult economic conditions the country went through in the mid-1970’s. He saw the very poor trying to get loans to start a small business or to build on their existing humble businesses, but could not qualify because they had no means of securing a loan through traditional banks. In his genuine attempts to help, he made a loan himself to some women in one of the Bangladeshi villages who needed the money for their bamboo furniture business. These women could not get a loan through a traditional bank because of the low profit margin they would make on their product given the relatively high interest rate they had to pay to banks if they would even get the loan.
It was this dire need that drove Yunus to start a new banking concept by establishing the Grameen Bank to provide loans to the poorer Bangladeshis. To ensure repayment of the loan, the bank required no collateral and used a system called the “solidarity groups” instead. Each of these groups comprised a group of borrowers who would together act as guarantors of these loans. In addition to microcredit, the bank expanded into providing loans for education and housing purposes. The bank has served over five million borrowers to date and has been a huge success as well as serving as a model for microcredit banks that spread around the world. Most of the loans Grameen Bank provided were for women borrowers who were trying to provide for their families.
The man who seems to dedicate his life to a bigger mission beyond making money, has dedicated his prize money to noble causes. He will use part of the $1.4 million prize to create a food company that will target the poor by selling them food at a nominal price. The rest will go to opening an eye hospital for the poor.
Yunus is a leader and a trendsetter worldwide as well as in his home country. This is true beyond banking and finance. He started a trend of wearing simple locally made clothes called “Grameen Check.” Now the move to what is called “Grameen” clothes is expanding beyond Bangladesh, where many Grameen showrooms have been opened, to spread into other countries as well.
Sunday, March 11, 2007