From Chicken Soup for the Soul at Work

Credit, Not Charity

Great things are done by people who think great thoughts and then go out into the world to make their dreams come true.

Ernest Holmes

The Grameen Bank began out of the pocket of one man, Dr. Mohammad Yunus. His story begins in 1972, the year after Bangladesh won its war of liberation from Pakistan. Dr. Yunus had recently completed his graduate studies at Vanderbilt University in the United States and was teaching at a college in Tennessee, when he was invited to take up the position of head of the economics department at Chittagong University in southeastern Bangladesh.

He arrived home full of the high hopes that followed independence. But to his surprise, the country was sliding downward very rapidly. By 1974, there was a terrible famine and people were dying in the streets. Dr. Yunus was teaching development economics and was becoming increasingly frustrated with the difference between what was described in the classroom and what was occurring in the real world. So he decided to learn economics the way the real world is, the economics that were real in people’s lives.

Because Chittagong University is located among villages, Dr. Yunus was able to walk out of the campus into real Bangladesh. He began going to the villages and talking to the poor people, trying to discover why they couldn’t change their lives or their living conditions. He did not approach them as a teacher or a researcher, but as a human being, a neighbor.

One day he came across a woman who earned only two pennies a day by making bamboo stools. He couldn’t believe how anyone could work so hard and make only two pennies a day. When he questioned her, he discovered that she didn’t have enough money to buy the bamboo from the bamboo store, so she had to borrow money from a trader—the same trader who bought the final product. When the trader bought her stools, he offered her a price that barely covered her materials. In essence, her labor was almost free; she worked like a slave.

“Well,” he thought, “this isn’t difficult to solve.” If the money was available for her to buy her own bamboo, she could sell the product wherever she could get a good price. Dr. Yunus and a student went around the village for several days to find out if there were other people like her who were borrowing from traders and missing out on what they should earn. In a week’s time they came up with a list of 42 such people. The total amount needed by all 42 of them was $30.

His first solution was to take the $30 out of his pocket. He asked the student to distribute the money to them as loans. But then he saw that this was not a real solution because when other villagers needed money, they wouldn’t come to him, since he was a teacher at the university. He was not in the money business. That’s when he thought of a bank.

He approached a bank manager, who thought it too funny an idea even to talk about. Loans of that amount weren’t even worth the paperwork, he said, plus the poor people didn’t have any collateral. Dr. Yunus went from bank to bank, receiving the same response. Finally he challenged the bank by offering himself as guarantor. After six months, they reluctantly agreed to a $300 loan.

He loaned the money and it was paid back. Again, he asked the bank to loan the money directly, and again they declined, saying it would never work in more than one village. Dr. Yunus persevered. He loaned money over several villages. It worked, but the bankers still weren’t satisfied. So he finally loaned money over a whole district. And still it worked, and still the bankers were not persuaded.

Finally Dr. Yunus said, “Why am I running after these bankers? Why don’t I set up my own bank and just settle this issue?” So in 1983, the government gave permission to set up a bank, and this bank is now called Grameen Bank. It lends money only to the poorest people in Bangladesh—landless, assetless people.

Today, Grameen Bank has 1,048 branches and over 2 million borrowers. They work in 35,000 villages. The bank has disbursed over a billion dollars, the average loan being about $150. The bank not only lends money to the poor people; it is owned by the poor people. The people that are lent money become shareholders in the bank. Out of the 2 million borrowers, 90 percent are women, something previously unheard of in Bangladesh.

The bank has been emulated around the world. Dr. Yunus stresses that at every point of the way, he was told that it could not be done and that there were very compelling reasons why it could not be done. But the reality of the situation is that it is being done, and in brilliant and unexpected ways.

Excerpted from a speech by and radio

interview with Mohammad Yunus in
Lapis Magazine

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