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Cover Story

The Practical

As a man who started a bank to give out collateral-free loans to poor women, relying solely on their integrity, Nobel Laureate Professor Muhammad Yunus has taught the world the power of trust. When you show faith in people, no matter how disadvantaged they are, they will live up to the respect they have been shown, this is what Grameen Bank has shown through the close to 100 percent recovery rate of loans to women borrowers who are also the Bank's shareholders. Now about 80 lakh families have benefited from micro lending. Grameen Bank and replicas based on the Grameen model are operating in every corner of the world from India to the US. But this is just the tip of the iceberg when it comes to what Professor Yunus has started. From projects to boost fisheries and agriculture to solar power, healthcare, pure drinking water to villagers at a nominal price, software development, telecommunications and even textiles, there are very few areas where the Grameen initiative has not reached and succeeded. It is an endless list of endeavours to bring people out of poverty and improve their wellbeing that will leave even the most stubborn sceptic a little breathless at the combination of ingenuity and empathy behind it all.

"Professor Muhammad Yunus wanted to help a village but managed to change the world." - President Obama during the Presidential Medal of Freedom award ceremony in Washington DC.

The notion of 'social business' is the most innovative model that Professor Yunus has been promoting in Bangladesh and all over the world. It is a viable business that may break even or even make profits but with the sole purpose of benefiting people; any profit will be ploughed back into the business to expand or improve it.

This is the leap forward that the world has been waiting for. His target is to motivate the young generation to develop an altruistic approach to entrepreneurship, starting with the children of Grameen borrowers who now own the bank. Apart from giving student loans for higher education, these young men and women are provided the funds to set up businesses that will eventually create jobs for other young people.

Receiving the Nobel Peace Prize in 2006.

Despite harsh criticism and his recent political misadventure the success of Professor Yunus in developing new formulae to pull people out of various stages of poverty remains undeterred. It is a process he has started based on his belief that 'poverty in the world is an artificial creation' and to change that 'we have to redesign our institutions and policies, and there will be no people who will be suffering from poverty.'

Winner of countless international awards including the Nobel Peace Prize of 2006 and the most recent Freedom Prize handed over by US President Barak Obama, Professor Yunus's is an awe-inspiring story, one that brings tremendous strength and hope, not just for Bangladesh but the entire world.

In an exclusive conversation with The Daily Star's Editor and Publisher MAHFUZ ANAM and Magazine Editor AASHA MEHREEN AMIN, Professor Yunus elaborates on the thought process behind his innovative projects to bring the world's poor out of poverty.

You just came back from the US after receiving the Freedom Prize from President Obama. So how did your meeting with him go?
Prof. Muhammad Yunus (MY):
When we shook hands he said 'you know my mother too use to do micro-credit'. I told him that I knew that very well as in 1995 at the Women's Summit in Beijing, she was supposed to be part of the panel along with Hilary (Clinton) and myself. But she could not make it as she was ill, later I heard that she had passed away. He also asked me how micro-credit was going and I said it was going well although there were some legal issues that needed to be sorted out.

He then asked 'how is it being spread'. I said that there was a confusion regarding micro-credit. Some are thinking that it is to make profit but I say that it is to make money for others, that is social business. I explained to him what it meant, that it was a business that will positively impact on the lives of people. Health care would be a good area for social business, I said knowing that this was something he was having difficulty with.

Later I told the First Lady that she should take up the cause of health care, but 'you should do it internationally' I said. At this time Nancy Brinker another recipient of the award came up to us. I had been talking to her before. Nancy, a doctor by profession, has dedicated herself to breast cancer research, her sister died of the disease. I told her that breast cancer was a major problem in our country many poor women in rural areas get breast cancer and do not even know about it and die because there is no early detection or awareness...Nancy said, 'let's do something and I would like to work with you'.

The beginnings of the Grameen Dream.

Then when I was talking to Michelle (Obama) she ran up to us and said 'we will work together'. I told Michelle that lack of proper healthcare for women was a major problem in Bangladesh. This is an issue you can take up. I pointed out to her that of the 16 awardees three were working in healthcare, two dedicated to cancer research and one provided healthcare to the homeless. So you can take this up and we can develop this as a social business.

You have met many world leaders, who has shown the most interest in Bangladesh?
MY: Queen Sophia for example, came five times to Bangladesh and is very interested in the country. Venezuelan President Hugo Chavez, was also very eager to see Grameen Bank and came with four cabinet ministers in his own plane in '95 or '96.

China has shown a lot of interest in Grameen Bank. How do you see this?
MY: In 2006 during the National Micro credit Conference in Beijing I was invited as the chief guest. We had been involved with China for 15 years. We started with money from Grameen Trust Fund in 1990, 91. At the conference there were 17 organisations, mainly foreign NGOs, working in micro-credit. I gave a speech on micro credit and how it was working. The next day the headlines in the Chinese papers read: Nobel Laureate says 'the government ignores the poor'. I was a little taken aback as I had said that the government was not showing much eagerness. The next day the Deputy Governor of the Central Bank of China asked me to meet her. Madam Hu who was practically running the Central Bank started telling me how China helps the poor through giving loans. How rural credit cooperatives all over the country were operating and was successful, so many families were being reached. This took about 40 minutes as it had to be translated for me. She then told me to speak. I said I was happy that it was working in China but that I was not very encouraged to do this in Bangladesh as cooperatives usually were inefficient and corruption-ridden. I told her that I did not believe in trying to fix something that was faulty to begin with, I prefer to come up with something new. If it doesn't work I abandon it and try something else...So when I saw that this (micro credit) works for giving loans to women, this is what I have been working with.

Madam Hu and the other officials started talking and I learnt from the translator that she had said to them: 'I will abandon this. I have wasted enough time on this, it cannot be fixed so let's see how to do something different.'

During lunch she said : 'Why don't we invite you to levy Grameen Bank here?' She asked me 'Where should we start?' I said that it should be in the most difficult areas as if you could be successful in the most difficult area then there is no controversy and it means it can be done anywhere.

After some discussion it was decided that there were three most difficult areas, one of them was Sichuan province as it was a mountainous region with multi-ethnic population, no leadership.

From that time we have been waiting for permission. Now hopefully it will happen this year with Grameen Sichuan and Grameen Inner Mongolia.

So how many Grameen Banks are there abroad?
MY: Now every country, both poor and rich, has the model. We are directly involved in Kosovo, Turkey, India, Mexico, Columbia, Guatamala, Costa Rica, the US, Zambia and now Tanzania and China. Whether it is a Grameen replication project or direct implementation we send our people the place.

Where has it been the most successful?
The project in Guatamala is working very well with 100 per cent return and 14000 borrowers. Also the ones in New York's Jackson Heights where there is 99.3 loan recovery rate (we give an average of $2200 in loan in New York).

What about the most successful model?
Well, India is doing very well through it's Self Help Group which is government sponsored, through which disadvantaged groups are given loans at very low interest. It is not identical to Grameen Bank but follows the spirit of it.

With a small loan she gave up begging to a travelling sales woman.
Studying and becoming a new entrepreneur.

There have been allegations of coercing borrowers and using harsh methods to ensure the recovery of loans. Is there any basis to such allegations?
MY: We go from house to house to give loans. People don't come to the bank. They pay in installments, if they can't we reschedule the payment and extend the time for loan payment. They have to pay interest. There is no need for coercion. There is nothing in our rules that would allow this. If we did, we reach 80 lakh families, then they would just beat us up. Our staff who collect the money sometimes carry as much as 30,000 to 40,000 taka around the village. If these allegations were true do you think they could roam around so freely? So they are mostly made up, these allegations.

When intellectuals scathingly criticise you, do you feel hurt?
MY: They are usually uninformed and make sweeping statements. For instance, they say that our interest rates are very high but what they don't know is that we have the lowest interest rate in micro loans with a maximum of 20 per cent. Others charge 30 per cent. Our housing loans are 8 per cent and beggars get zero percent interest loans.

An innovator and visionary

Can you talk about these loans to beggars? How does this work?
MY: This is a separate programme. We tell the beggars who usually go from house to house to beg that instead of begging why don't you sell something. So we give them loans say 500 to 700 taka initially and with this they may procure household items, say matches or candy or vegetables, and start selling them. There is no interest on these loans and they are not given any time limit about repayment. It is just that the idea that this is a loan is in their heads. We now have 1 lakh 20,000 beggars in this programme. Some of them beg in some houses while they sell goods in others, so they are like 'part time beggars'.Now they know what people want and bring those items accordingly, it's like a distribution network. But more than the money they earn, what they really appreciate is the dignity they get. They say 'before people would turn us away or at most give money through the window. Now they actually let us inside their house, give us a <>piri<> to sit on and talk to us.'

About 5000 have now come out of that programme to become fulltime Grameen Bank members, paying the required interests, adhering to all the rules and regulations.

Once one of my staff came and told me that he wanted to be in charge of a beggar. This was on a voluntary basis and not required, then more staff members started to do the same. Now all our 28000 employees have joined this endeavour; they are quite attached to these people, sometimes paying for their treatment with their own money.

So where is the micro credit movement now in Bangladesh? Where will it go from here?
MY: Well whatever amount NGO MFIs want they can get from PKSF (Palli Karma-Sahayak Foundation). They get it it very easily so there is no lack of funds. Now the World Bank is giving 100 million dollars and later 150 million. Before World Bank wanted to give but we didn't want this as there were conditions attached. Now we have said you will give according to our conditions. Now there is quite a lot of money and this money is being revolved and recovered. Micro credit has reached 80 per cent of families. No other country has had this reach.

But how do you assess the impact in real terms?
MY: Well now for example, the people are not harassed by the <>mohajons<>, the money lenders; women are more involved in handling money which empowers them, their children are going to school. So this is bringing up the second generation out of the repetitive cycle that says that 'the poor will always be poor'. At Grameen we tell these young people who are eager about what jobs they will get after their graduation : forget about finding a job, make a vow that you will never ask for a job; because you are the one who will give jobs to people. People who have nothing ask for jobs, we tell them. But your mother owns a bank. So you can take a loan and start a small business. Your mother could buy five cows with her loan, you can go for 5000 cows.

Many young people have started such small businesses - setting up a computer centre, starting a vegetable business or trading in cattle. Both girls and boys are doing this. To get a job you need a certificate. For business you don't need a certificate. So we tell them to study as well as do business.

We give them student loans which they can pay off after one year of their graduation but even then we negotiate and discuss how they will pay. There is no interest.

When one of them became successful, others got encouraged and also started. Now we have about 303 successful young entreprenuers who take the New Entreprenuers Loan.

The concept of social enterprise or social business seems to be catching on. Even Forbes magazine is listening to you. So in a capitalist system, are you making an impact on it?
Before the concepts of social enterprise or something like CSR (Corporate Social Responsibility), these are half way done. What I think is that the capitalist system is a half done structure and ridden with problems. The basic concept is that business is to make money, with profit maximisation being the goal. so everyone is doing that. But this model is based on people's selfishness ignoring the fact that every human being also has a selfless side. Economists have left this out. Instead they say, if you have extra then donate it as charity. But this leaves you out of economic life. My point is why not stay inside it. If selflessness can be incorporated in (the capitalist structure) then we have social businesses which is solely for other people's benefit. This kind of business can go hand in hand with profitmaking businesses. So we have to create this space. We have to create that door and keep it open for people.

Those who would have donated in charity can invest in a social business which will be able to recover its costs; if profits are made it will be reinvested into the business. as an investor I will hope that one day I will get back the capital invested.

If in our textbooks it is written that there are two types of businesses - profit-making business and social business and if both will give the same salary then many graduating students may actually choose to join the social business enterprise.

Now many young people are doing this. People are losing jobs all the time so a young person may think: If I start a business I may be giving 10 people jobs. Of course costs have to be covered. And when they need to expand they can get a loan.

Now there is the concept of a Social Business Fund. Prince Albert of Monaco has shown interest. The global crisis has made people take this more seriously. The Islamic Development Bank have shown interest in forming a Grameen Social Business Islamic Development Fund.

Grameen Danone Foods Ltd produces a low-priced, nutritious yogurt for mainly, underprivileged children.
Grameen Bank borrowers, Zambia.

How long do you think it will take for Bangladesh to come out of poverty?
MY: Not long. We are steadily going forward. Think about how it was 25 years ago. There were people who didn't wear sandals. Now everyone does. I remember seeing men in the northern areas wearing only a loincloth because that is all the clothes they had. You will not see anyone wearing that now. More children are going to school.

There is a significant qualitative improvement despite all the upheavals.

Of course it could have been much better. We are so proud of the 9 billion dollars of remittances we get, this all goes to the villages.

Every month we give 700 crore taka in loans so yearly about 8000 crore plus we are using it productively and recovering it with 20 per cent interest. This financial discipline has been achieved which defies the myth that Bangladeshis are not disciplined.

There is also a change in their children. When visitors come they first meet the mothers and then they meet the children and are astonished. These are university students who can speak in English, they can argue about policy, make suggestions etc. So in one generation you can see so much change.

Do you feel frustrated that we are not moving ahead as fast as we should be?
MY: Yes I do feel frustrated because we are not being able to materialise the potentials that we have, not utilising our opportunities. There are so many issues- migrant workers who get stranded at airports or are tricked by agents. This should be done at the official level. Every odd is aginst the migrant worker- government, the country they go to, agents... They gamble their lives just to get there.

Investment is going down because of lack of basic facilities like power and gas. These basic things have to be ensured by the government, if not they should give it to the private sector with certain stipulations of course.

What is the philosophy that you live by and how does it relate to your work and lifestyle?
MY: There is no difference between my life and work. I enjoy working and am happy when there is success. I feel bad when it doesn't work out but then I think of another way to do it.

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