Muhammad Yunus
Muhammad Yunus’ pioneering efforts in regards to the
burgeoning use of micro-loans in many parts of the world to help foster the
economic vitality of the underprivileged had won him the Nobel Peace Prize.
Muhammad Yunus is known as the “Banker to the Poor” and founder of the Grameen
Bank. Yunus was born on June 28, 1940 in Bangladesh during the beginning of the Second World
War. .
He grew up on Boxirhat Road in Chittagong, the largest port in
Bangladesh and a commercial city with a population of three million. Bangladesh is a densely populated country
with a total population of about 150 million people. His family was relatively prosperous; they
lived in a two story house with his father’s jewelry shop on the ground floor.
His family was Muslim by religion. His mother exerted a powerful influence on
the young Yunus; he was particularly influenced by her strong sense of
compassion and concern for the poor.
According to Yunus, his mother dominated his early years. She gave birth to fourteen children; five of
them died.
Early in Yunus’ life, the subcontinent was freeing itself
from British domination. In 1947, the
Pakistan movement
for partition reached its peak. The area
that is now the sovereignty of Bangladesh was expected to be subsumed by
Pakistan. His parents were deeply
committed to partition. On August 14,
1947, the Indian subcontinent was granted independence. This was a period of great turmoil and
uncertainty. In addition, when Yunus was
nine, his mother was stricken with mental illness - a disease that ran in her
family. She suffered for some
thirty-three years before her death. His father’s reaction to his wife’s
chronic and debilitating illness was a model of love, graciousness and
perseverance for all that time, and in 1982, his mother passed away.
As a young man, Yunus traveled to Canada, the U.S., the
Philippines and Japan. In 1957, he was a
student in the Department of Economics at Dhaka University and received his BA
in 1960 and MA in 1961. Following his
graduation, Yunus joined the Bureau of Economics at Dhaka University. Later he
accepted a faculty position as a lecturer in economics in Chittagong
College. Using his education, he also
set up a successful business; until, 1965 when he received a Fulbright
scholarship and went to the University of Colorado at Boulder. There he became a student of economics, and
was deeply influenced by Professor Georgescu-Roegen,
a Rumanian. Yunus described his mentor
in the following way, “He also taught me that things are never as complicated
as they seem. It is only our arrogance
that prompts us to find unnecessarily complicated answers to simple problems.’”
During his stay in the United States, he was married. At that time, Pakistan was unable to hold
firmly onto West Pakistan (now Bangladesh) and used repressive methods to
control the population. This helped
spawn a movement in his homeland to seek independence. As a consequence, the
Pakistani army was ordered by the central government to brutally suppress the organizations
responsible for the Bengali Declaration of Independence. Yunus was committed to the independence of
his homeland from continued Pakistani rule.
He became Secretary of the Bangladesh Citizen’s Committee and its chief
spokesperson. Finally, on December 16,
1971, Bangladesh won its war of independence – a conflict that resulted in
the catastrophic loss of three million Bengali lives. Ten million citizens fled the country during
this time of upheaval. Yunus felt
duty-bound to return home and participate in the immense task of rebuilding his
war-ravaged land.
He became head of the Economics Department at Chittagong
University. There he soon became disenchanted with
traditional economics, for he felt that economic theory did not coincide with
the needs of the majority of Bengalis living in dire poverty – a country where
the illiteracy rate was seventy-five percent.
In categorizing his feelings about the role of education, he stated
that, “A university must not be an island where academics reach out to higher
and higher levels of knowledge without sharing any of these findings. These economists spend all their talents
detailing the processes of development and prosperity, but rarely reflect on
the origin and development of poverty and hunger. As a result, poverty continues.” Furthermore he felt that, “Nothing in the
economic theories I taught reflected the life around me. How could I go on telling my students
make-believe stories in the name of economics?
I wanted to become a fugitive from academic life. I need to run away from these theories and
from my textbooks and discover the real-life economics of a poor person’s
existence.”
One of the historic factors that greatly influenced Yunus’
decision to encourage economic reform in his country was the famine that had
become pervasive throughout Bangladesh.
He, therefore, took it upon
himself to visit poor villages and discover firsthand the nature of their
living conditions and real causes for their poverty.
From this study, he came to realize that many Bengali households
attempted to increase their economic standing by creating their own small
businesses and provide products that are in local demand. He was to discover that one of the main
obstacles that faced these individuals was the common practice of usury, where
unscrupulous lenders would lend money with such exorbitant interest rates that
their clients could never free themselves from seemingly endless cycles of
indebtedness. The traditional banks
offered no relief in this regard.
Yunus summarized his findings in this way - “This is the
beginning for almost every Grameen borrower.
All her life she has been told that she is no good, that she brings only
misery to her family, and that they cannot afford to pay her dowry. Many times she hears her mother or her father
tell her she should have been killed at birth, aborted or starved. To her family, she has been another mouth to
feed, another dowry to pay. But today,
for the first time in her life, an institution has trusted her with a great sum
of money. She promises that she will
never let down the institution or herself.
She will struggle to make sure that every penny is paid back.”
These data inspired Yunus to organize an institution to lend
directly to these industrious entrepreneurs.
What started with humble beginnings ended with the state-sanctioned
Grameen Bank that has a presence all over the world, including Malaysia, the Philippines,
South Africa and even the United States. The Grameen Bank officially began operations
in January of 1977. The operating
assumption of the Grameen Bank is that every borrower is honest. Borrowers are required to adhere to a regular
repayment schedule. In addition,
borrowers are encouraged to enter into groups with the idea that as a member of
a group, they will have additional incentive to behave responsibly. Membership in a group also affords each
member additional support and encouragement.
As a result of implementing these practices, the bank suffers less than one
percent of bad debt. Prior to the creation
of the Grameen Bank, less than one percent of borrowers were women in a society
where women typically bear the brunt of the burden of poverty.
On October 2, 1983, the Grameen Bank was recognized by the
government as a separate bank that could also issue home loans. Currently, seventy-five percent of the shares
in the Grameen Bank are owned by the borrowers themselves. As of 1999, 190 million dollars has built
560,000 houses with near perfect repayment.
In the 1980s, one hundred branches were added each year. In 1985, a Grameen Branch was set up in the
state of Arkansas during the governorship of Bill Clinton - it is called the
Good Faith Fund. Branches have also been
set up in Oklahoma and Chicago, Illinois.
Today the Grameen Bank has about eight million members - some 40 million
individuals counting family members - and has loaned about eight billion
dollars to the poor in Bangladesh.
Grameen America is a growing organization in the U.S. that uses the
group lending and savings models pioneered by Yunus.
As a result of his monumental efforts, Yunus was awarded the
Nobel Prize for Peace in 2006. The
following is an excerpt taken from his acceptance speech -
“If we consider ourselves passengers on “Spaceship Earth,” we will find ourselves on a
pilotless journey with no discernible route to follow. If we can convince ourselves that we are
actually the crew of this spaceship, and that we must reach a specific
socioeconomic destination, then we will continue to approach that destination –
even if we make mistakes or take detours along the way.”
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