Freeing people from money lenders

Those of us who have come across persons in the clutches of money lenders and gripped by poverty, know what a miserable and terror-stricken life they live. A very intelligent economist who was born 66 years ago to a well-to-do family in Chittagong, a business centre in Bangladesh, and who was an outstanding university student and had been granted the Fulbright Fellowship to do his doctorate in the United States, has dedicated most of his life to liberating people from the clutches of money lenders and poverty.

His education has given him the technical know-how in economics; from his father, a successful goldsmith, he inherited his business and entrepreneurial spirit. His mother, who always helped any poor person who knocked on their door, inspired him to commit himself to eradicate poverty. He is Dr Mohammed Yunus, who has just been awarded the Nobel Prize for Peace - not for Economics.

Dr Yunus believes he has used his skills as an economist to work for peace by attacking poverty. He sees poverty as a threat to peace. He recalls sadly that the new millennium began with a great dream when world leaders gathered at the United Nations in 2000 and set the historic goal to reduce poverty by half by 2015.

Dr Yunus said in his acceptance speech in Oslo last Sunday: "Never in human history had such a bold goal been adopted by the entire world in one voice, one that specified time and size. But then came September 11 and the Iraq war, and suddenly the world became derailed from the pursuit of this dream, with the attention of world leaders shifting from the war on poverty to the war on terrorism. Till now over $530 billion has been spent on the war in Iraq by the US alone."

Dr Yunus is convinced that terrorism cannot be defeated by military action: "Terrorism must be condemned in the strongest language. We must stand solidly against it, and find all the means to end it. We must address the root causes of terrorism to end it for all time to come. I believe that putting resources into improving the lives of the poor people is a better strategy than spending it on guns."

He reminds us that 94 per cent of the world income goes to 40 per cent of the population while 60 per cent of people live on only six per cent of world income. Half the world's population lives on $2 a day. Over one billion people live on less than $1 a day. "This is no formula for peace." He adds: "Peace is threatened by an unjust economic, social and political order, absence of democracy, environmental degradation and absence of human rights."

Going back 30 years, when he returned to Bangladesh from the US university where he studied, he says: "I found it difficult to teach elegant theories of economics in the university classroom, against the backdrop of a terrible famine in Bangladesh. Suddenly, I felt the emptiness of those theories in the face of crushing hunger and poverty."

He took the students on a tour of the poor in the neighbourhood of the university. They found them living in squalor, without any access to clean water, education and healthcare, and to have some money they had to give all their produce to the money lenders at the price these decided.

Dr Yunus hit on a simple idea to smash the chain that tied so many poor people to money lenders and poverty. He started lending them money to set up their own business. He tried to persuade the existing banks to set up loan schemes. But they did not agree. Eventually he set up a banking system to help the poor. He called his bank the Grameen Bank, which means the Village Bank.

In a speech last Sunday in Oslo he explained that "today, Grameen Bank gives loans to nearly seven million poor people, 97 per cent of whom are women, in 73,000 villages in Bangladesh. Grameen Bank gives collateral-free income generating housing, student and micro-enterprise loans to the poor families and offers a host of attractive savings, pension funds and insurance products for its members.

"Since it introduced them in 1984, housing loans have been used to construct 640,000 houses. The legal ownership of these houses belongs to the women themselves. We focused on women because we found giving loans to women always brought more benefits to the family.

"In a cumulative way the bank has given out loans totalling about $6 billion. The repayment rate is 99 per cent. Grameen Bank routinely makes profit. Financially, it is self-reliant and has not taken donor money since 1995. Deposits and own resources of Grameen Bank today amount to 143 per cent of all outstanding loans. According to Grameen Bank's internal survey, 58 per cent of our borrowers have crossed the poverty line."

A practical vision for a better future

The Nobel Prize Committee decided to award both Dr Yunus and his Grameen Bank for their commitment to eradicate poverty. Last Sunday he proudly recalled that "Grameen Bank was born as a tiny homegrown project run with the help of several of my students, all local girls and boys.

"Three of these students are still with me in Grameen Bank, after all these years, as its topmost executives. They are here today to receive this honour you give us. This idea, which began in Jobra, a small village in Bangladesh, has spread around the world and there are now Grameen type programmes in almost every country."

Grameen Bank has given new hope to the children of the poor. Millions of children started going to school. Dr Yunus is very glad that "many of these children made it to the top of their class. We wanted to celebrate that, so we introduced scholarships for talented students. Grameen Bank now gives 30,000 scholarships every year.

"Many of the children went on to higher education to become doctors, engineers, college teachers and other professionals. We introduced student loans to make it easy for Grameen students to complete higher education. Now some of them have Ph.Ds. There are 13,000 students on student loans. Over 7,000 students are now added to this number annually."

Dr Yunus believes that his practical work, his down-to-earth approach and fact-based mindset can inspire young people to dream and work hard to improve society without being imprisoned by crass and vulgar capitalism and its ideology. In his acceptance speech in Oslo he said:

"We have remained so impressed by the success of the free market that we never dared to express any doubt about our basic assumption. To make it worse, we worked extra hard to transform ourselves, as closely as possible, into the one-dimensional human beings as conceptualised in the theory, to allow the smooth functioning of the free market mechanism.

"By defining 'entrepreneur' in a broader way, we can change the character of capitalism radically, and solve many of the unresolved social and economic problems within the scope of the free market. Let us suppose an entrepreneur, instead of having a single source of motivation (such as maximising profit), now has two sources of motivation, which are mutually exclusive, but equally compelling - a) maximisation of profit and b) doing good to people and the world."

Dr Yunus thinks that almost all social and economic problems of the world can be addressed through social businesses. "The challenge is to innovate business models and apply them to produce desired social results cost-effectively and efficiently. Healthcare for the poor, financial services for the poor, information technology for the poor, education and training for the poor, marketing for the poor, renewable energy - these are all exciting areas for social businesses."

Dr Yunus is certainly not a backward-looking and insular economist: "I support globalisation and believe it can bring more benefits to the poor than its alternative. But it must be the right kind of globalisation. To me, globalisation is like a hundred-lane highway criss-crossing the world. If it is a free-for-all highway, its lanes will be taken over by the giant trucks from powerful economies. Bangladeshi rickshaws will be thrown off the highway.

"To have a win-win globalisation we must have traffic rules, traffic police and traffic authority for this global highway. Rule of 'strongest takes it all' must be replaced by rules that ensure that the poorest have a place and piece of the action, without being elbowed out by the strong. Globalisation must not become financial imperialism."

He does not hesitate to state: "We can create a poverty-free world because poverty is not created by poor people. It has been created and sustained by the economic and social system that we have designed for ourselves; the institutions and concepts that make up that system; the policies that we pursue.

"To me poor people are like bonsai trees. When you plant the best seed of the tallest tree in a flower-pot, you get a replica of the tallest tree, only inches tall. There is nothing wrong with the seed you planted; only the soil-base that is too inadequate.

"Poor people are bonsai people. There is nothing wrong in their seeds. Simply, society never gave them the base to grow on. All it needs to get the poor people out of poverty is for us to create an enabling environment for them. Once the poor can unleash their energy and creativity, poverty will disappear very quickly."

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