ZCZB 6523 Strategic Management

Name Noor Balkhis Omar Dwinta Marthasari Nur Farhana Dahalan Roslina Hashim

Matric no ZP00687 ZP00892 ZP00891 ZP00871

Banker to Poorer

What do you do if you want to set up a business but you do not have the capital? Sell your assets? Or borrow money? Most people will choose to make a loan to the bank. Luckily for those who have any assets that may be pledged as collateral, or people who have a high enough income to pay their loans in the future. But, what about those who do not have any assets and do not have a high income? Let me tell you a story about a good-hearted man. He is Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University. He was born in 28 June 1940 in the seaport city of Chittagong. He was a son of a successful goldsmith. His father always encouraged his sons to seek higher education. However, his greatest influence came from his mother, Sufia Khatun, who always helped any poor that knocked on their door. This inspired him to involve himself to fight against poverty. His early childhood years were spent in the village. In 1947, his family moved to the city of Chittagong, where his father had the jewelry business. In 1974, Professor Muhammad Yunus led his students on a field trip to the nearby village of Jobra where he learned the economic realities of the poor. There, they interviewed a woman who

made bamboo stools. From the interview, they learnt that she had to borrow the equivalent of 15 pence to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level. Realizing that there must be something terribly wrong with the economics he was teaching, Professor Muhammad Yunus took matters into his own hands. He lent the equivalent of $27 out of his own pocket to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty. Moreover, to boost the impact of that small sum, Professor Muhammad Yunus volunteered to serve as guarantor on a larger loan from a traditional bank, kindling the idea for a village-based enterprise called the Grameen Project. It never occurred to the professor that his attitude would inspire a whole category of lending and push him to the top of a powerful financial institution. In 1983, Professor Muhammad Yunus formed the Grameen Bank, meaning 'village bank'. It founded on principles of trust and solidarity. Grameen Bank has reversed conventional banking wisdom by focusing on women borrowers, dispensing of the requirement of collateral and extending loans only to the very poorest borrowers. In Bangladesh today, Grameen has 2,564 branches, with 19,800 staff serving 8.29 million borrowers in 81,367 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 97% are women and over 97% of the loans are paid back, a recovery rate higher than any other banking system. Professor Muhammad Yunus is the recipient of numerous international awards for his ideas and endeavors including Nobel Peace Prize. He won the Nobel Peace Prize in 2006 along with his Grameen Bank for their efforts to create economic and social development from below.

Today, more than 250 institutions in nearly 100 countries operate micro-credit programs based on the Grameen Bank model, while thousands of other micro-credit programs have emulated, adapted or been inspired by the Grameen Bank. According to one expert in innovative government, the program established by Yunus at the Grameen Bank "is the single most important development in the third world in the last 100 years, and I don't think any two people will disagree." In a nutshell, by giving poor people the power to help themselves, Muhammad Yunus is a practical visionary who has improved the lives of millions of people in his native Bangladesh and elsewhere in the world. His ideas have already had a great impact on the Third World. He had successfully extended banking facilities to poor men and women and eliminates the

exploitation of the poor by money lenders. Moreover he also create opportunities for selfemployment for the vast multitude of unemployed people in rural Bangladesh. He also has introduced new and reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income". >> Font xsame