I was reminded yesterday of an episode of Charlie Rose (that I saw on one of the hurricane days when I was home and had electricity). He was interviewing Muhammad Yunus, founder of the Grameen Bank. I’ve added his book, _Banker to the Poor_, to my list for my next trip to the bookstore.

The following is from a profile on the Grameen web site:

Tbc terrible man-made famine of 1974, which by some estimates killed 1.5 million Bangladeshis, changed his life for ever. “While people were dying of hunger on the streets, I was teaching elegant theories of economics. I started hating myself for the arrogance of pretending I had answers. We university professors were all so intelligent, but we knew absolutely nothing about the poverty surrounding us. Why did people who worked 12 hours a day, seven days a week, not have enough food to eat? I decided that the poor themselves would be my teachers. I began to study them and question them on their lives.”

Yunus spent most of 1975 and 1976 leading his students on field trips to the nearby village of Jobra. It was easy to see the problem, but what was the solution? He introduced improved rice-farming techniques and established a farmers’ cooperative to irrigate during the dry season. Soon he realised that targeting farmers was not helping the truly destitute underclass — the landless, assetless, rural poor.

Then he made his big discovery. One day, interviewing a woman who made bamboo stools, he learnt that, because she had no capital of her own, she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, she kept only a lp profit margin. With the help of his graduate students, he discovered 42 other villagers in the same predicament.

“Their poverty was not a personal problem due to laziness or lack of intelligence, but a structural one: lack of capital. The existing system made it certain that the poor could not save a penny and could not invest in bettering themselves. Some money-lenders set interest rates as high as 10 per cent a month, some 10 per cent a week. So, no matter how hard these people worked, they would never raise themselves above subsistence level. What was needed was to link their work to capital to allow them to amass an economic cushion and earn a ready income.”

And so the idea of credit for the landless was born. Yunus’s first approach was to reach into his pocket and lend each of the 42 women the equivalent of A317 [about $27]. He set no interest rate and no repayment date: “I didn’t think of myself as a banker, but as the liberator of 42 families.”

That humble beginning grew the Grameen Bank that according to http://www.grameen-info.org/bank/index.html

As of July, 2004, it has 3.7 million borrowers, 96 percent of whom are women. With 1267 branches, GB provides services in 46,000 villages, covering more than 68 percent of the total villages in Bangladesh.

Posted by tvansant