I was disappointed that Irena
Sendler didn’t win
this year’s Nobel Peace Prize, but since it wasn’t her I’m happy it was Professor Muhammad Yunus and the Grameen Bank
I first heard about the Grameen Bank about 15 years ago, on a radio program in which Yunus discussed how he came to set up the bank. He described seeing women in the poorest villages weaving baskets to sell, but at the end of each day the money they earned went back to the man who had lent them the money for the straw to weave the baskets. The next day they had to borrow again, and so they never ended up earning anything for themselves.
Regular banks, of course, wouldn’t lend these women money. They had no collateral, and furthermore the sums they wanted (as little as $20 or $30) were far too small to be considered by an ordinary financial institution. So Yunus came up with a new way of doing banking
: A group of five women would be approved for loans. Of that group, two would receive loans and would pay them back over the course of 50 weekly payments. Once those loans were repaid, the next two would be able to receive loans.
The assumption is that if individual borrowers are given access to credit, they will be able to identify and engage in viable income-generating activities - simple processing such as paddy husking, lime-making, manufacturing such as pottery, weaving, and garment sewing, storage and marketing and transport services. Women were initially given equal access to the schemes, and proved not only reliable borrowers but astute entrepreneurs. As a result, they have raised their status, lessened their dependency on their husbands and improved their homes and the nutritional standards of their children. Today over 90 percent of borrowers are women.
As you can imagine, there was considerable peer pressure on the borrowers to repay. Yunus pointed out that less than 3% of the loans are defaulted, which is a better percentage than for regular loans. He also stressed that the borrowers are charged interest, just like any other loan (although the interest is not compounded).
One of the things that most stuck in my mind from that radio program 15 years ago was him describing the dramatic improvement in living standard when a woman living at subsistence level could afford a second set of clothing; now she had clothes to change into so she could wash the first set. My mind boggled at the thought of never being able to wash my clothes because I had no others to wear. It reminds me forcefully of the comment that “the difference between a little money and a lot of money is far less than the difference between a little money and no money.”
Yunus has also campaigned vigorously for the elimination of the dowry system, which completely impoverishes the bride’s family (and naturally tends to make families unhappy when the new baby is a girl). Number 11 of the 16 decisions of the Grameen Bank
We shall not take any dowry at our sons’ weddings, neither shall we give any dowry at our daughters’ wedding. We shall keep our centre free from the curse of dowry. We shall not practice child marriage.
The Grameen Bank also promotes education, self-improvement, social responsibility, and hygienic practices such as “We shall build and use pit-latrines” (#9) and “We shall drink water from tubewells. If it is not available, we shall boil water or use alum” (#10).
Muhammad Yunus and the Grameen Bank have, with a stunningly simple idea implemented intelligently, made an enormous difference to the lives of millions of the world’s poorest people.
Take a look at the Grameen Bank’s own web site (try to overlook the poor design and rather idiosyncratic English) and read this Voice of America
article for more information. You’ll be glad you did.