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Conversation
To give the readers of The Daily Star a comprehensive picture of the work of the Grameen Bank of its origin, current problems and prospects and indeed, of its future direction, there can be no one more qualified to do so than Dr Yunus himself. Last week, he found time from his busy schedule to sit down with a team from this paper for a two-hour long conversation to answer a whole range of questions not only about his institution but also on the development process in Bangladesh. A dedicated individual, he spoke with intense feelings, without mincing words, answering questions which were candid and often blunt. The team of the Star was led by its editor, S M ALI who was assisted by the Executive Editor, MAHFUZ ANAM and feature writers, S BARI and AASHA MEHREEN AMIN. We publish here the text of the conversation. (Reprinted from The Daily Star of December 11, 1992) Muhammad Yunus (MY): I guess it was frustration, frustration that came because of euphoria of the liberation that started eroding very quickly. Then in 1974, there was a famine and people died. You cannot cope with that kind of situation. You thought that we were free and now we could move on, but you saw a completely different picture in reality. In that frustration, I almost completely gave up formal economics, which I was teaching in Chittagong University. I came back from the United States in 1972, and joined Chittagong University and became head of the department. So I thought there is something wrong with economics because it does not solve the problem. People still die of starvation. What is the reality of these people? Why can't they over come their problem? I started going to the people, in the village next door, trying to understand how they live everyday. This is how the whole thing started. That village, Jobra, became my real university. Education had taken me away from the real cycle of life. DS: Which year was this? MY: This started in '74, and continued until '76. The story of Grameen Bank started in 1976. Among many things, I did in this period which are still around, is Nobojukti, the crop share programme. This later received the Rastrapati Puroshkar. Those ideas are being used in what is known as Grameen Krishi Foundation. Everything is there, yet people don't see that the solution is there. People organised themselves to solve their problems. The first spark for Grameen Bank came in 1976 when I was talking to a woman in that village, Jobra. She used to make bamboo stools. She was earning 10 annas. I was shocked that anybody could spend so long making such a beautiful stool and make less than three-quarters of a taka. The reason was that she didn't have the money to buy the bamboo. So she had to borrow from the trader. She had to sell the product to the trader. The trader always made sure that he pays her a price that only just covers the cost of raw materials. Her labour came almost free. I thought it was a form of bonded labour, of slavery. There was a very simple way to ease the situation, if only she had the money to buy the bamboo. So I thought of providing that money, but before that I checked whether there were other people in the village who needed that kind of money. I took a student of mine and went around. We had a list of 42 such people, men and women. The total amount they needed was 856 taka. That was another shock for me. Here we talk about big theories, but we don't have the capacity to solve the problem of only 856 taka for 42 able-bodied, eager, hard-working people. I gave this money out of my own pocket and told them that they had to pay me back, but they didn't have to pay me interest because I was not in the money business. But they could sell their product wherever they wanted. So that was the beginning,. Soon I realised this was not sufficient because this was a personal kind of solution. I was looking for an institutional solution -- so I went to a bank. And they said no. DS: When you face this kind of situation, there are many options. Why is it that you hit on the idea of the bank? MY: First of all, I was not thinking of anything at all, I came with a blank mind. When you teach at university, or you have a PhD degree, you get a feeling that you know it all. That's what most of our experts have, a kind of arrogance. You lend to see the world with a bird's eye view. Later I realised that what you think you see you are actually imagining, you don't see a thing. You are totally blinded by the height. What I was doing in Jobra was trying to get rid of that hang-up and trying to acquire what I described later on as the worm's eye view. You face a thing and try to overcome that tiny problem. Maybe that's much more effective because that's real. There's no scope for imagination. How do you get around, do you climb this wall, do you find a crack and go through? That's how it happened, I didn't plan anything. I didn't have a solution to this woman's problem. I simply saw why she suffered. The cost of the bamboo was five taka. She didn't have that cash. Her life was miserable because she could live only in that cycle; borrowing from the trader and selling to him. She couldn't get out of that circle. It's such a simple issue. All you can do is lend her five taka and it's solved. Before I did that I saw that this situation is common. Maybe some institution should be doing this. But the bank laughed at me. "You are crazy," they said. "This cannot be done."
DS: Was their question mainly of collateral, the ability to pay back the loan? MY: "Ten taka loans!" That's not even worth the papers they have to fill out," they said. When I insisted, to throw me off completely, bank official asked me, "What about collateral? These people cannot give collateral." DS: Would you say that availability of credit seemed at that time to you, the most important issue? MY: To me, nothing was most important. To me, at that time, that was what was needed. I was not thinking of Bangladesh. I promised to myself in 1974 that from now on I will not say anything about Bangladesh, because that's too big for me. If I can solve the problem of one person for one day, I'll be grateful that I have done something. If I can find something that benefits the person for a week or a month, then all the better. It was a person-to-person approach. I didn't think of 'most' or 'more' important. I don't even realise what I was doing. I certainly had no intention of starting a bank. DS: What happened after hitting a wall with the bank? MY: In the first week after this, I went to the bank. My struggle with the bank became so important in my mind I didn't go back to see what those 42 people were doing. After a lot of debate with the bank manager, he told me he could not solve the problem. He suggested I go to the regional manager. A couple of days later I went to the regional office. The manager was Mr. Howladar, I explained to him what I needed. He said, "Governments are here to help the poor. But the only way I can do this is for every loanee you have to find one well-to-do person in the village who will be a guarantor." I immediately rejected that because then the guarantor becomes a tyrant. DS: Would it be correct to say that you were not up against a bank but up against a system? MY: I'm not going beyond a bank. It's a banking system. I said I would accept a guarantor, but only if they made me the guarantor. The maximum I needed would be 10,000 taka. He agreed on condition that I would never exceed that amount. It took me another six months answering questions from the head office. At the end of '76 I succeeded to getting the loan. DS: At that time, there was no thought of a Grameen Bank? MY: None at all. When the bank said it could be done, and I did it, and people were paying me back, I kept reminding the bank that it worked. Their answer was, "One village is a very tiny place. One professor in one village can work any miracle. Unless it's a big operation, we wouldn't know how real this is." I went from one village to two, and still they were not impressed. Three, five, ten villages, still nothing. One day in 1978, I was attending a seminar at the Bangladesh Bank. The topic of the seminar was financing the rural poor. I picked up a quarrel, saying, "You talk about financing the rural poor, but you never come around to them. We are doing it, and this is the way it works." They said that in order to make a point I had to show the results over a whole district. I agreed, provided they give me support. Due to this controversy, I was invited to meet Mr. A. K. Gangopadhyay, the Deputy Governor of Bangladesh Bank. All the managing directors of all the commercial banks were there. It anyone asked me how Grameen Bank came into being if I had to mention one name, it's Mr. Gangopadhyay. He asked all the managing directors whether they would like to support me. When the deputy governor of Bangladesh Bank wants to support you, everyone else wants to support you. But they gave certain conditions: One was that I had to resign from my job at Chittagong University to become a full time banker; another was that I not do this in Chittagong, because I am from Chittagong and I enjoy the support of students. Away from Chittagong I would not be known as a teacher but as a banker. I took two year's leave. I did not want to be a banker, I enjoyed being a teacher. I told them I would go to any district of their choice and work as a full-time banker for two years. If it works then you pick it up and you carry it on for the rest of the country, and I go back to the university, because my point is made. If it doesn't work, I go back to the university and I will apologize to everybody. The banks agreed, I took leave in 1979, June. They selected the district of Tangail. I knew nobody there. For two years, it worked very well. But the bankers said to me, "You must have worked too hard. With hard work, anything is possible." Now hard work is a penalty! We then decided to work in far-flung districts, so that my presence was not a factor. We took Rangpur in the North, Patuakhali in the South, Chittagong in the south-east, and Dhaka and Tangail. For another year, people continued to take small loans, with no collateral, and paying very little interest. In about '81, I had the first feeling -- why am I running after all these banks? They are not going to be persuaded. They have made up their minds. What I should be doing, if I want to go back to the university, is to set up a separate bank. I wrote a paper giving the options: an NGO bank, a collaborating bank between government and an NGO. I presented this paper at a Commonwealth seminar in Comilla in 1982. The then Finance Secretary AMA Muhith was also attending this meeting. The second day of that meeting, martial law was declared. In a few days, Mr Muhith became the Finance Minister. I proposed to the Central Bank that we be allowed to set up a separate bank. I was rejected. I brought the matter to the notice of Muhith. He had visited Grameen projects earlier and had been impressed. He helped me get it through the government. And that's how we became a bank on the 2 October, 1983, through an ordinance. DS: The ordinance made it an NGO? MY: No, in fact I had a fight with Muhith over that. My proposal was to set up a bank which was 100% owned by the borrowers. But when Muhith finally got it approved by the cabinet, he had to turn it around. He kept 60% ownership for the government, 40% ownership for the borrowers. I was furious at this news. Muhith reassured me, "You can start. All I needed to do is to get it approved. Later, I'll disinvest the government shares." My colleagues advised me to go with it. But Muhith left before he could charge the ownership structure. Syeduzzaman became, the next Finance Minister. In '86, he changed the ordinances to bring the ownership to 75% borrowers and 25% government. It still retained elements of government control. I continued by struggle, and it went all the way to President Ershad. He convened a meeting, I was also present to argue our case: "Why do you want to poke your nose into a bank that you have not set up?" The president accepted the amendments I asked for, and now we are a private bank completely owned by the poor people. DS: In all these years, looking back at the success story, what is your own assessment of areas of success, areas of difficulties, and areas of failures?
We have shaken the banking system of the world. We are saying that banking can be done without collateral. The entire banking system has to be redesigned, not just in Bangladesh but throughout the world. That is the point which was made by Bill Clinton. The same thing happens all over the world: people will not be given credit without any collateral. Denying access to credit for a large section of the world's population is unfair. That point is at least being examined, not brushed off. That is a success. Credit is a human right. It's not just banking; this is a human rights issue. If food, shelter, and literacy are human rights, I don't see how you can pass up credit. Credit allows a person to take command of resources and get things done so that you can start getting good and shelter and the rest. Our miseries come because of wrong concepts. We go on merrily discussing development without blinking our eyes at the poverty situation. Some successes are on the conceptual side, then. And then, when you start in one village, you think the structure will collapse if it expands. We started in one village and now we work in 30,000 villages. People cannot say this is a freak case. We involve 1.4 million people. This conversation is well-timed, because we just set up our thousandth branch. This is a celebration. We lend out 60 crore taka a month. Nearly the same amount is paid back. We are recycling 60 crore taka and changing people's lives. And they pay 20% interest, Repayment is 98%. Grameen Bank has underscored one point: this country is not a basketcase. These 110 million people can change their lives. They are not waiting for charity. Another success; Bangladesh is known as a pool of corruption, but Grameen Bank is a corruption-free organization. A young employee walks miles carrying cash, because all our transactions are done at the doorstep of our 1.4 million borrowers. That cash is easy temptation. But even our most bitter critic will not say that Grameen Bank is corrupt. We have also proved that people can work hard. On the difficulties part, we have heard the village power structure is invincible. Nothing happened to us, not a single case where a Grameen worker was beaten up. And we have done a lot of audacious things, just by addressing the women. We didn't have difficulties with the power structure but with religion. People were suspicious that we were a Christian missionary organization. These are natural things to suspect about something unusual. But people became appreciative. People offered us their land if we would only start the programme in their village. While this is going on inside the country, there is tremendous interest outside the country. I am amazed that the political leadership of our country never paid much attention to what we did: whether good or bad. It could have tickled their curiosity a bit, but it was never taken seriously. No one asked, how can we integrate this into our policies. We have heard from politicians abroad wanting to know how they can learn the programme, and official delegations keep coming from countries like China, Vietnam, Malaysia. A Malaysian Minister, Anwar Ibrahim, wants to go to his constituency taking me with him. The lack of interest of our politicians is not an obstacle as such, but I feel something is missing. DS: Does the lack of interest of our political figures come from their ignorance of the whole situation or because they didn't do it and somebody else did? MY: I don't know. Probably they don't see any political angle to it. Politics in our country is based on rhetoric, not on concrete programmes. Grameen Bank is a concrete programme. If I convert it into rhetoric, I say, "I will have Grameen Bank in very village in Bangladesh," which is not possible. And I will not allow politicians to say that. Sometimes a politicians will say, "I'll ask Grameen Bank to do this or that," and I rush in and ask them not to say this kind of thing. Grameen Bank is a business. Leftists considered us a kind of imperialist, expansionist conspiracy. Giving tiny loans to poor people brings only cosmetic changes; we are stopping the Revolution. These are the accusations. My usual response to my leftist friends is that we are operating in 8000 villages. There are 60,000 villages still around. Go and have the Revolution quickly or we will reach there and you won't have any villages left. We also had a lot of difficulties with donors. They don't understand how to deal with us. They wanted to dictate. If you want to be of any help to us, we tell them, you have to accept the way we do it, not the way you want us to do it. DS: It was once reported that you had even refused a massive grant that was offered to you because you said, "We cannot absorb it at this moment," Is this correct? MY: Yes it is, and it was offered by the World Bank and it was a soft loan, not a grant. At that time, Grameen Bank was not capable of handling that sum of money. We wanted to expand at our own pace. DS: You are saying about the difficulty of having not enough political support -- now you can continue on that. And my question would be, would you find a lobby in the national parliament which would speak up for Grameen Bank and help you to move forward? MY: You see if we are talking about individuals in political parties there are lots of them who are very supportive of Grameen Bank. But as a party programme, they don't see how they can relate the bank to that party programme. What individual feeling is remains at one level, what the political platform is, remains completely on another. These two don't lie together. That's where the basic weakness of our politics lies. But if you say that we don't have support from a political party, I also want to clarify that we always felt that government as an institution should leave us alone. Maybe this is our feeling that the government in a country like ours, is more like a machine that can do more harm than good to you. We couldn't change that machine into something that we feel comfortable with. Because that machine either was created to 'rule' -- whatever that means, still that machine has the feeling of ruling, of telling you what we should be doing. It's not what is it that you're doing, how can I be helpful; that helpful mode is not in the government, and that's what we want to keep at a distance. DS: Let me interrupt you, you have people in the system like Gangopadhaya, Syeduzzaman and others, were also part of the system now. I don't dismiss the possibility of your being in the system one day as a member of the parliament. Can one say that the government system cannot change or can we not change it? MY: Sure we can change it. A story would narrate something. About three years back, an Indian, one Mr Jetli, Secretary of local government came to visit us along with a colleague from Madhya Pradesh. Neither of them came to talk to me; they wanted to see Grameen Bank. They visited a branch with out any of our aides. So they spent the whole day walking in the village talking to people. It was a very hot day. At the end of the day they came looking for me. They explained why they came. "In India," Jetli said, "wherever we have any discussion about rural development, we come to talk about is a big Indian programme, Integrated Rural Development Programme (IRDP). "Through IRDP, we credit billions of dollars worth rupees and their repayment is extremely low, less than 20%. So they are going nuts, they cannot handle this. But every time we talk about our problems, somebody in the group would say, we should learn from Grameen Bank of Bangladesh. We should adopt some of the instances." Jetli went on to say that from his experience in civil service, he knew how village folk behaved: they never return money after borrowing. So he thought he had to see it to believe it. "This is a beautiful programme". This was in 1987. So, he said we thought of asking you two questions. The first question was, "Can a government run a programme like this?" I replied with a counter question: If a government in India or Bangladesh cannot run a programme like this, then why do we need a government? If this government can't do it, then let's throw it out and find a new one that can. The second question was that if the government is completely incapable of doing such a thing, what would be the argument for divesting this responsibility to some one else? My answer was if the government is incapable of delivering the goods to the people, then there's something awfully wrong with the government. Well, one person cannot change the system even if he is an MP. This needs a political force. None of us is talking of changing the government in the political way. We are just talking of the frustration about the government. How we have squandered all the money internationally received and internally generated: While other nations are going ahead, we are going further down. But we have not asked what kind of government we want or how we have a government that works. So this is something that should be on the political agenda which is not the case. DS: Coming back to the problems, I looked through all the figures and I felt that even if you've achieved what you might call 100% success, you would be scratching only the surface of the problem in Bangladesh. Can Grameen Bank, change the face of the nation? It if doesn't what other options can we try in addition to what you're doing? MY: We never attempted to change the face of the nation. We are in the business of changing the face of the people individually, person to person. Our work is that if you join us, we'll try to make changes happen through the kind of programme we will bring to you. But if you've liked our methodology why need me, why don't you do it yourself? If you pick up one more, then we'll have two. If there is someone else who is impressed then he'll start another one too. Its just a question of methodology. Why does Grameen have to change the nation? If the message that this thing works is loud and clear, then why is everybody sitting around and sucking their thumbs? DS: This question is related to the operation of the bank itself. When it first started, you got a lot of foreign aid to capitalise the bank, so what the initial amount that we got and how are you still dependent, if you still are on this capitalisation funds from abroad.
IFAD was looking around for projects in Bangladesh, and when they are Bangladesh Bank for projects somebody suggested, that this guy working in Tangail is running a project, he could use some money. But after a looking around my project, they said this is not what we are looking for, this is not banking: we are looking for banking project. After three days I get a telephone call, they wanted to ask me questions about how I would expand, why I do things this way and not that way, etc. A younger member of the mission informed that when came back from Tangail they had already decided not to help this project. But he was asked to give a write-up why they won't support us. Their writings and explanation could not satisfy senior members. And someone suggested to give me a little amount of money and see what happens. If he grows than later on we will give him more. They wanted to participate with Bangladesh Bank in helping this project. Gangopadyay said with such nominal amount it's a big hassle, unless you give a decent amount it is not worth even talking about. But finally IFAD gave us 3.4 million dollars. Later on, as we grew we took more money from other sources, IFAD, NORAD, Swedish SIDA, that amount was 36 million dollars in '86 then we had 81 million dollars for a phase which takes us to 1993 from seven different donors. DS: Against this how much did you get from Bangladesh government? MY: We have never borrowed money from Bangladesh government. We borrowed from Bangladesh Bank a very small amount. Most funds came from international donors. DS: In terms of the operation, are you now a self-sustaining bank? MY: This is up to December 1993, phase three of our expansion programme. From January 1994, we begin our fourth phase. For our loan operation, we really have enough money to support our programme. The only area for which, we would be asking for money from outside is for our housing programme. We have given more than 150 thousand housing loans. We want to provide a housing loan for every single Grameen family which is 1.4 million families. Out of that, we have gone so far to 150,000. To support this we need extra money, we hope to complete everything with 38 million dollars between 1994 to 1997. So the drop is from 81 million dollars to 38 million dollars. We can do without it if we slow down our housing projects. The fifth phase will be an unusual situation, we have more money than we need. Problem will be how to go beyond Grameen Bank for investments. Financially Grameen is the strongest financial organization in Bangladesh. DS: One question is that sometimes you're being too cautious and that what you need is an expansion of Grameen Bank. How do you respond to that kind of observation? MY: Well, if you are treading on a new territory you tend to be cautious. You want to make sure -- that the qualitative aspect of Grameen doesn't deteriorate. As long as Grameen remains strong, qualitatively, financially, there's always the scope for expansion. If I were to redesign Grameen Bank today, I would go for a more independent Grameen Bank in each village rather than a branch of head office which dictates what should be done. So it would be a totally independent isolated organization with a support system like Grameen with central facilities providing certain services. If you want your bank to be audited every year you give us fee, we know how to do that. If you face problem, we give you advise to overcome problems. But local borrowers own the bank, so the question of massive trade unionism doesn't arise. So if we want to avoid this we would set up independent banks rather than branches. DS: Can we say that this is one of the things you're aiming at? MY: We are hoping, we cannot say we are aiming, at a network of banks. The Grameen Trust can help set up independent banks and put up the kind of support we are talking about. DS: Why has the Grameen experiment succeeded? In other words, why has your organizational structure succeeded? MY: I think the success comes because we always try to look at the members directly rather than same other external objects, to see whether this is helping the individual person and we try to design programme which suits them in general. Then we have a bigger group call the centre -- collection of smaller groups and again the same thing happens. We get a new chairman every year. DS: How do you elect the centre chief from the groups? MY: By popular vote, among the chairman of smaller groups. Then they create the network of support system. They try to help the ones in trouble. We tell our borrowers that if somebody is in trouble, it should not be the worry of the bank, you settle your problem. The problem should be settled, you just cannot recover the money by forcing him/her. Force is no solution. She is trapped either her husband took away the money, or she lost it, or may be her cow is dead, or her child is sick the money utilized otherwise. So no matter what you do to her she cannot give you the money. So you try to find out her current problem and solve it. If you cannot find a solution share it with the whole centre. Or you suggest the bank to give her another loan, because her cow is dead. So we go ahead and give her another loan to buy another cow. DS: And this usually works? MY: Yes, that's why we are still around. DS: Sometimes there has been a criticism that group pressure is an intense pressure, or that borrowers are harassed for not being able to pay back. Is this true? DS: While you're putting credit in the hands of the people, you are not in a situation of bringing in new technology. A women making bamboo chairs in the old way, without being able to bring in new technology. So is there any thinking going on about opening the door of our borrowers with new technology? In the housing side you've done something spectacular, but what about other areas. MY: We don't give advice to people. We feel people are much wiser than us. We encourage people to feel wiser than us. You've the idea, and as a dumb person we ask you dumb questions. We really feel that we cannot advise so many people in so many ways. People usually take responsibility when it is their own idea. We then feel the necessity of bringing in new ideas without us being directly identified as selling these ideas. We have set up a unit within Grameen Bank, we call it SIDE: Studies, Innovation, Development and Experimentation. They go to the borrowers directly. While the bank is giving you loan, they persuade them with better ideas. Ideas can come from different sources, then become the borrower's. We are trying to link up with other organizations which have ideas of training facilities, without us taking responsibility of pushing that idea. Another way is the annual workshop in each branch where the centre chiefs get together for once a week. They talk about their successes and failures -- they interact. This is another learning process. We try to bring in people who they request. They tell us they would like to talk to a family planing person or something. So if you can find something between yourselves that's fine. We cannot ensure that service will be available to you, because government machinery is very uncertain. DS: I would like to go to the sixteen decisions you once mentioned: what are those? I attended one of your workshops and I saw that they bow and salute. What are the meanings behind these rituals? MY: Rituals are rituals. Because we belong to a particular segment of society. We all live with rituals in everyday life. We deliberately wanted to be different. The Rotary club has many rituals you don't notice them. Grameen Bank, all said and done, is a lot of defiance. We defy things. To begin with, we defied the banking system. Then we defied the relationship between man and woman the way it existed in the village. Women are not supposed to speak loudly, but one of Grameen Bank's requirements is that you should shout slogans so that the whole village can hear you, slogans. Physical exercises are part of Grameen Bank rituals. Village women are shy and they are usually unable to talk to you in an audible voice they can not look you in the face. So we said we are like your brothers, look at us and talk person to person. Their salam has actually become a salute. Grameen members have to talk face to face and look straight into your eyes and talk. It gives you a distinction. If a little boy gives you a salute you know that he belongs to a Grameen Bank family. Self respect, a sense of identity, has been denied to poor people. We want to bring that back to them. That sense I belong to a community, that I am a success; because from very childhood a poor person is told that he is a failure, especially for the woman, who is brought up thinking herself as a bad woman or cause of misfortune for the family. We try to help her demonstrate that is some body. Sixteen decisions actually came from all those work shops. They go through lots of discussions and problems. The first time in '82 in Madhupur I was summarising all the issues or problems they were discussing, suggestions and ideas, throughout the week. Then we wrote them down and made copies gave each one a copy so that they remember. These became popularly known as 10 decisions of Madhupur workshop. Then in '84 when we were having national workshops in Joydevpur, they added more. There was a long list. People can not remember long lists. So I just stopped at sixteen. We always start with our slogan oikya, karma srinkhola aiy amader path chala. They were then known as the 16 decision adopted at Joydevpur workshop. This establishes solidarity. Gradually they became so popular that they memorised it. The list was getting longer and I said people won't read and remember them, so keep it short. They don't read and write, to read these we have to keep someone who can read and this is a big hassle. We have slogans like we will not line in broken huts, we will report them, we will not give dowry or ask for dowry etc. At first this became popularly known as the 10 decisions of Madhupur workshop. Later more were added and I said let's keep it at 16 since it will be easier to remember. DS: I would like to have your views on the development process in a developing country. We have seen the success story of Grameen Bank. You have seen the various phases of development in Bangladesh. Over the last 20 years, from state ownership, privatisation, how would you like to put your views about a development process that will help Bangladesh. First of all my feeling is that we do not understand what we mean by development process even though we liberally use the term. It means different things to different people. To me 'development' is changing the life of the bottom 50% in a positive way. So I try to evaluate any development project according to that yardstick. If you say we are building a huge highway from Dinajpur to Dhaka and this is our development project, my question will be does it positively impact the bottom 50%? If it does it is a development project; if it has zero contribution I would not call it a development project. If it has a negative impact on the bottom 50%, which it may, I will call it an anti development project. So if you are building a dam, a bridge, a power station whatever, my first test is does it change the lives of the bottom 50% in a positive way? The contribution to that would be the coefficient of my selecting or not selecting one project over the other. If I have two projects both of which fall under this definition but I can finance only one, I will see which one has a greater contribution to that section of the population. Most of the projects we see in Bangladesh do not do this. This is because from the very beginning we have not defined it that way. So this is are very important thing for a country like Bangladesh. If you look for example, just the foreign income component in the last 21 years we have received 25 billion dollars. With that 25 billion dollars we have not put any positive imprint on the faces of the bottom 50%. If there is an imprint it is a negative one. The question is then whey did we need that 25 billion dollars? For whose benefit? And then, if you really wanted to make use of this one simple and crude way perhaps, is just take the 2.2 billion dollars this year 1992. That's lot of money. If we just take that from Paris meetings and if we promise that it will reach the people and make sure it does that then the safest way is to write a cheek to every poor family of the bottom 50 per cent. I think every poor family can have a 500 taka cheek every month with 2.2 billion dollars. DS: But you wouldn't be building bridges and roads. MY: Well do we need that? You see, we have defined that 'whatever affects the poor people's lives in a positive way' is development. Building a bridge is not development, building roads is not development. We have to agree that changing the lives of the bottom 50% is development. Now say I have a case. I can build a bridge with say, 500 taka or I can give cash 500 taka. I will take the one that directly and immediately impacts peoples lives so I'll say I'll take the 500 taka. DS: So what will you do with the 500 taka? MY: I'll buy a goat, or a cow: I'll do something. This 500 taka could be a Grameen Bank loan. And who wants the bridge? Probably the bridge actually kills me because I used to ply the boat and be a boat man crossing people. Now the bridge has taken away may livelihood. So this is the way I would like to look at it. Maybe the bridge is good for me. But bridge per say does not make a development project. If say, you are building an international airport and call it a development project first you have to tell me why you are calling it that, how many people are being affected and who they are. You are familiar with the BIDS (Bangladesh Institute of Development Studies) study by Rehman Sobhan and Hashem. Where did all the 25 billion dollars go? Seventy five per cent of the money was never spent in this country. It was spent in the donor countries on the consultants, experts, all the missions they have sent and the products they have sold you. Only twenty five per cent of the money was spent in this country. It want to the local consultants, engineers, contractors and officials. So now, how are you going to say that this is the development we got with this 25 billion dollars? For whose benefit have you used this 25 billion? My first request is, let's sit down and find out what we are talking about, what is this development that we ought to change but we don't because it benefits me and you? We almost feel that if its good for me its good for the country. DS: Well, I might say that if you build a road and create the facility for the villagers to bring their goods from one place to another and a bridge over which they walk, then in the long run, I am also changing the bottom 50%, because the village will be bringing his chicken from Tongi and selling it in Dhaka at a better price. So it also relates to the question of productivity of land and when productivity of land is increased, would it not help the lives of the bottom 50%? MY: Well these are the sort of make belief stories we have been telling ourselves for years that somehow the bridge will do all these things. But that bridge never helped the lives of the poor people. The only thing it did to their lives is that they were pushed out of the land because somebody else found it attractive. They lose their jobs because other people will push their goods. So you are going back to the good old trickle down theory again which was rejected in the US. I am not against the bridge provided you can prove that this is a better way to improve the life of the people. The terms you used, 'in the long run', is a very critical expression. In the long run, as it is said by economists, you are dead. Now say you brought a power plant to generate electricity. You claim that if there is electricity there will be industrialisation. The more industrialisation, the more people will be absorbed in the industry. I say industrial jobs do not alleviate poverty. You created another Adamjee which I slaved for over a lifetime and remained poor. I cannot live on my land with my family. I have to live in your bustees in slums, in sickness, that's not poverty alleviation. Creating a job per se is not poverty alleviation. DS: A job per se is not. But when I set up a paper mill in Khulna and produce this paper I am able to give jobs to 15,000 people. Shall I do without it? And just give 500 taka per person and not have the Khulna paper mill?
You have two options: create Khulna paper mill industries and employ 5,000 people as staff. They earn their livelihood directly. And say another 5,000 indirectly, carrying things, supplying etc. So you have created 10,000 jobs. If you accept self employment under the category of jobs, Grameen Bank lends out 15 million dollars every month and creates one million jobs, one million families are reached. So if you have created a Grameen Bank in Khulna with 100 million you will probably be reaching out to millions. So you have a case of creating either 10,000 jobs for a 100 million dollars or one million jobs for the same amount. If job creation is your interest. DS: I am talking of creating jobs and productivity of the economy in the same branch. I must find a way of marrying two things or may be more than two things. Creating infrastructure in the country, creating jobs in the country, raising the productivity of the economy. If I have these three pre-requisites, then I believe I'm on the right track for development. MY: I agree. But the answer is different. Lets take productivity. With 100 million dollars (a false figure), you created a paper mill in Khulna, a sick industry. You have to go on giving subsidies to keep it alive, and you see productivity is a big zero. With 100 million dollars on the other hand, I have reached a million families, releasing the energy of this million. A tiny productivity increase in one million people added together is much larger than whatever sophisticated equipment you can put up with a 100 million dollars. That one million people, because of an increase in income, will want to have a second lungi each year. So they will be asking for another lungi each year. So the lungi producers will be producing one million extra lungis a year because of the increase in demand. In your case it was only 10,000 families. In this case it was one million families asking for more lungis -- one million families, each asking for one new saree every year. You want to build up the base of the economy? This is how to do it. Build buying power. Why are our industries sick today? Why is the inflation rate 4.5 today? Because the people are not buying anything. You have the Finance Minister saying this is good news. To me it is bad news. The economy is in a coma. If people had the purchasing power today, other people would be working to supply basic, simple things such as sarees, lungis, food etc. That is the basis of economy. DS: But if people have money to buy, what are they going to buy if the economy does not produce? MY: That's what I'm saying. Today half of the handlooms are dead. OK. Let's move to another area of difficulties and problems -- the problem of management, of honesty, of chain of command in every industry -- identifying why does an industry go sick. Once we have tackled those problems and the productivity goes up, then the money you are putting into hands of people -- they will be able to buy the goods that we are talking about. Improve on these things go might ahead. But the focus should be on self employment. People can do their own things and release their energy. DS: From your experience with Grameen Bank would you say the approach should be self employment and that should be the motor? MY: Yes. Because other things you have complicated, your financial sector is collapsing, your industrial sector is sitting idle. You have problems in management, labour problems, political problems. You have to fix all these things. But at the same time you must focus on addressing the vast human resource we have. They must release their energies and contribute to the economy rather than become a liability. Each tiny bit contributed by the millions becomes a large contribution. So coming back to resource allocation, if you are really serious about development and if you agree with the definition I gave you -- helping the bottom 50% -- if I am making any kind of economic plan, where will be my biggest allocation? The entire economic plan should be to change the lives of the bottom 50%. And whatever is needed to be done, if it is setting up a paper mill only then will I set up a paper mill. So the whole plan should be nothing but a poverty alleviation plan. First of all, no matter how you fulfill your long list of conditionalities and then you say industrialisation will deliver the goods, how many jobs will you create? Figure that out. For each job you have to invest at least a million taka. The more sophisticated it gets it will be even higher. But where is the number of people without jobs? Everyone now talks about poverty alleviation. But what item is alleviated? The question is at the end of December 1992, how many people will come out of this poverty. DS: It is very difficult to explain poverty alleviation. What if say I employ 5 people -- who had no jobs. Am I contributing to poverty alleviation? MY: It depends on who they are. Do they represent the bottom 50%? Landless population in the country is over 60%. These people you are talking of come from families who have 2-3 bighas of land. There are people poorer than them. So if you have drawn the line at 50% then no, you have not reached those 50%. DS: But there is the fact that unemployment at the mid level does put a pressure on the bottom 50% and the bottom 50% and mid level over lap. I do not believe that 70% of all the grants and loans over the past 20 years have been all spent on donor countries and we have not achieved anything other than the remaining 20%. So what is the yardstick? MY: I will reverse the question. Which one of the projects you have seen in Bangladesh for the last 21 years you think has contributed to the poverty alleviation? Just name one. DS: What about electricity in rural areas? It has helped your borrowers for example, to work at night. MY: These are all make believe stories. You cannot pinpoint anything. You say that it helps our borrowers work at night. You no idea about our borrowers. They don't even have homes. Forget about the electricity. You see we don't understand what poor people are, what poverty is. If you build up on that bottom 50 per cent all the sick industries will come to life again because people will be buying things. You know cosmetics has become such a big thing because of the garment industry. All these girls working in the factories wanted to wear lipstick so your had to produce a cheap lipstick and advertise it. DS: Would you like to tell us about your other projects such as your housing and fisheries project? MY: On the housing side we've recognised that it is very important for poor people to have houses. This is a new loan activity. First we proposed a loan of 5000 taka so that people can have a tinned roof over their heads. We were opposed by housing experts because they were saying that it does not add to the housing stock. Anyway, we succeeded in getting a loan from Bangladesh Bank for our borrowers. We made it to 7500 taka loan to complete a tin roof. Over time the price increased and we bought it to 12,000 taka for concrete-pillars, one tin roof, one sanitary latrine. We've given more than 150,000 loans. Initially we took the money from Bangladesh Bank. Later we also borrowed internationally. We borrowed from Bangladesh Bank at 2 per cent and lent it for 5 per cent. Now it is 8 per cent for housing loans, and people pay us back over time in weekly installments. Rate of return is over 98 per cent. Fisheries: We were requested by the government to take over some of them. One particular project of the government was Nilgachi fisheries project. We had no idea how to run that but since at that time we were told that the project was falling apart, we could help them and improve the quality of performance. In the beginning we were told that during the government operation it could produce about 50 tons of fish. We took over in 1986. Gradually we increased it from 200 to 400 tons. Last year we had 500 tons of fish from this project. This year we are hoping to get 1000 tons. This is a complex of about 800 ponds. We are trying to increase the yield per pond per acre. This is a flood free year. Last year there were three floods in succession. So our production could not reach the level we would have wanted it to. With that experience we see that throughout Bangladesh, all the water bodies we have can produce a tremendous amount of fish. So we are helping our borrowers to lease ponds to grow more fish. This is another aspect of our project. We are planning to create a new foundation -- Grameen Fisheries Foundation. This is different from Grameen's Krishi Foundation which works in the northern districts -- greater Dinajpur, greater Rangpur areas. This started as a project of Grameen Bank. We took deep tubewells which were installed by the government under Saudi grant and a loan from Asian Development Bank (ADB). This was done to increase agricultural production. We saw that no matter how much money was available to borrowers, the return to their loan became very small because the overall economy is at a dead stop or stagnating, and this is particularly visible in the northern districts. So we tried to add to the economic possibilities. By strengthening the agricultural sector which provided opportunities to people to participate in more income generation. Last year we had 30,000 acres under Grameen Krishi Foundation: This year we have 60,000 acres. We are also introducing maize in the area. Maize is not produced in Bangladesh but it is a good crop and can be produced here and earn cash returns for the farmers. A lot of this land remains empty most of the year unless the aman season comes which is the big season there. Even during the aman season a lot of land remains idle. So we re-encouraging the farmers to grow maize. Last year we did this on a trial basis with 190 acres of maize and it was a very good crop. So now we are moving to 2000 acres of maize which has already been planted. We are also introducing hybrid maize, the seeds of which we imported from Thailand -- we are planting 8.5 million tons of hybrid seeds this year. We are expecting 5000 tons of maize from this operation and if this goes well we can expand maize cultivation. Last year we had about 300 acres of sugarcane under Grameen Krishi Foundation. This year because of the good results we have received we have expanded to 5000 acres. And almost half of our acreage is under this new technique of raising sugarcane seedlings and planting it in a more systematic way. Grameen is still Grameen. The foundation is involved in different sorts of activities. There are lots of tiny pieces of land which are given as bandhak's to money lenders. Krishi Foundation comes forward and, if a Grameen member has such a tiny piece of land which he has given to a money lender, will release this land on behalf of the Grameen member and work out a deal that within 2 years of joint operation of the land between Krishi Foundation and the member the land will go back to the original owner. If that works out within Grameen membership we can expand it to beyond membership. Then we have introduced soyabean. Northern districts have done soyabean. We have already prepared ourselves for 15,000 tons of seed, of soyabean. DS: One impression is that the whole success of Grameen Bank is because of your personality which is the driving force. So it is too much linked with a person. Don't you think that it is an unhealthy sign that it should be identified with one person. What are you doing to neutralize this personality cult? MY: That's not really true people don't know other names in Grameen Bank. They just know one name. But Grameen Bank has 12,000 staff. This is almost like going to the banker's argument when we succeeded in Tangail, who said, you work too much, that's why it succeeded. We work in 30,000 isolated villages in Bangladesh and it works because the guy there works or the system works. No matter how smart this guy Doctor Yunus is it will be impossible for him to run the show alone. It is not like one person is sitting before a screen watching everybody. It is a system that functions. And then that question has lost all validity when you see a Grameen programme works in Malaysia without Dr Yunus, in Sabah without Dr Yunus, 20 odd programmes alone work in the Philippines. You don't see Dr Yunus' fingerprints overall these programmes. DS: Thank you very much Dr. Yunus, for your time. |
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MY: In the beginning, we appeared to be a bunch of crazy people. At the end of these 16 years, we don't look like crazy people. We look like people with new ideas. We are taken seriously. That is one success.
MY: First of all this is not true that we have got lot of money. I mentioned in the beginning we started with a small amount of money from my pocket. Then we linked it with the bank which was giving money. The question of money never really arose. We became a project supported by the Bangladesh Bank and all the participating commercial banks were supporting their own project area.
MY: I am glad you ask this question. Suppose Khulna newsprint factory costs 100 million dollars.© thedailystar.net, 2006. All Rights Reserved