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: My name is Muhummad Yunus. I’m the Managing Director of Grameen Bank. I’m from Bangladesh. That’s where I’m from, and I did my Masters degree in Bangladesh and then Fulbright fellowship to come to the States, and did my PhD in Vanderbilt University – Nashville, Tennessee. And then I was teaching in Middleton State Univsersity Tennessee State University in Tennessee. And then I went back in 1972 to Bangladesh and started teaching in one of the universities there.My work was not much related to income gap as such. It is more of utter poverty. I was not looking at the top – how to reach there. I was looking at how terrible the shape of people at the bottom. So I wanted to see how to adjust that because Bangladesh is one of the poorest countries in the world – at that time probably best described as the poorest country in the world in the ‘70s. So you cannot think of anything but poverty. If you want to reach out to people, do something meaningful to the people, this is one issue that you cannot avoid. So as an economic student; as young people from Bangladesh, we continued to think about it, talk about it, discuss about it. But I didn’t realize that it will end up in a famine kind of situation in our lifetime, and that’s what happened. So something pushed me in that direction. So poverty was everywhere. It’s a very frustrating situation how people couldn’t make a living in a day-to-day way because there is no income for them. There is no employment for them. Their housing conditions is extremely bad. Their food is very difficult to find. So those are the issues which kind of interested me – see what can be done.
Recorded on: 1/23/08