In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of $27 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty.Against the advice of banks and government, Yunus carried on giving out 'micro-loans', and in 1983 formed the Grameen Bank, meaning 'village bank' founded on principles of trust and solidarity. In Bangladesh today, Grameen has 1,084 branches, with 12,500 staff serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 94% are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system. Grameen methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.In 2006, Yunus and the bank were jointly awarded the Nobel Peace Prize, "for their efforts to create economic and social development from below.
Muhammad Yunus: I criticized capitalism for what is lacking in it, but I’m not saying that abundant capitalism . . . There is an alternative here. That’s not what I said. I said capitalism can be improved. I am not asked in my argument that you closed on something as a profit maximizing business, or philanthropy, or free market. I said everything is very positive, but some things missing in the whole structure; and that missing piece has to be installed. That way capitalism will be complete, and it can be a balanced theory fitting to the human nature. And it will address all the problems which is left behind by the incomplete capitalism. So I’m kind of moving from incomplete capitalism to the complete capitalism, or towards completion. Maybe there are other pieces missing. Other people will find it out. But I’m saying a big piece missing because of which we created a lot of problems. We created problems. Not only we created, we don’t have the ability to solve them. So if we complete the capitalism, at least to this stage – the second stage of completion – I will say we will not create them. And existing ones can be addressed and removed.
Recorded on: 1/23/08