Bangladesh:

Towards Economic and Women’s Liberation

Via Grameen Bank
By Garda Ghista

Introduction
The ‘paradox’ of Bengal, or Bangladesh, is that on the one hand it has immense
geographical, geological, agricultural resources and hence potentiality for
development into a (so-called) first world nation. However, despite these abundant
resources, it has remained in abject poverty, or to use the term of Paul Farmer, ‘dire
affliction.’ Bangladesh has a population of 133 million people, but the plight of the
majority is heart-rending. Ten percent of the people own more than 60 percent of the
land. Sixty percent of the people own less than ten percent of the land. Illiteracy is
nearly 40 percent. Infant mortality is 80/1000. More than 50 percent of the people
are landless. These landless people survive as sharecroppers or worse, as daily wage
laborers, with men earning 33 cents daily and women 20 cents. Hence for the
majority, at least one of the five necessities of life (food, clothing, shelter, health care
and education) are missing. In macro-economics, this is defined as absolute poverty.

At the local level, the wealthy rural landowners have control because they own most
of the land. The worst legacy of the British in Bangladesh/greater Bengal was to
privatize the land and create a class of wealth landowners (zamindars) who would
give the British blind support. To survive, the landless laborers are compelled to take
loan from moneylenders at an annual interest rate of 150 percent! At the national
level, the government cooperates and colludes with the rural landowners. Hence the
poorest of the poor have no solution. They cannot turn to any authority for redress of
their grievances. Perhaps most damaging of all is the foreign aid. USAID provides
unilateral aid which means, we give you money, you buy our goods. Hence it is aid
with a selfish motive. Multilateral agencies like UN, UNESCO, WB and IMF give
 money. But WB and IMF give with heavy strings attached,
that read: “We give you loans, you implement ‘structural
adjustment,’ a euphemism to give TNCs and MNCs free
reign to exploit, plunder and transfer profits back to their
home base. Structural adjustment says, drop tariffs, allow
free trade, allow foreign ownership of land/resources, and
plant single cash crops for export – so we make money
regardless of collateral damage, i.e., you landless people
starving on the roadside. Structural adjustment has been
devastating by increasing the poverty, increasing the gap
between the rich and the poor, and destroying traditional
family life. The foreign aid coming in the form of cash
goes into government pockets and is used to strengthen
the military so as to consolidate and maintain political
power. The question looms large: how to raise the masses
out of abject poverty?

There is hope. Professor Mohammad Yunus, founder of

Grameen Bank, along with a handful of other sincere
NGOs are leading the way in bringing relief to millions of
impoverished, landless women and their families.
Proshika has worked for years expressly to raise social
and political consciousness among the poorest of the
poor, so that they begin to use the strategy of civil disobedience to demand their
human rights. What follows is a detailed study of the Grameen Bank, its effects,
limitations and summary of its results for the people of Bangladesh in being able to
alleviate poverty, remove corruption, break the grip of fundamentalism and herald a
new dawn for the people of this sweet, simple, magnificent land.

Birth of Grameen Bank

The cause, the impetus that created the Grameen Bank Project was the famine of
Bangladesh in 1974. At that time, Muhammad Yunus was Professor and Head of the
Economics Department at Chittagong University, located at the southeastern
extremity of the country. Skeleton-like people began filling the train platforms and
bus stations, and then the roads. They were everywhere. Old people looked like
children and the children looked like old people. Muhammad Yunus writes:

The starving people did not chant any slogans. They did not demand
anything from us well-fed city folk. They simply lay down very quietly on
our doorsteps and waited to die.[1]

Death by starvation happened so quietly, so inexorably, Yunus wrote, and all for lack
of a handful of rice! Seeing the mass starvation everywhere around him, Yunus
began to question himself, and began to dread his own lectures. What was the use of
all his complex economic theories if right outside the classroom people lay on the
ground waiting to die? Thus developed in him the desire to understand the practical
economics of the poor person’s existence.

Next to Chittagong University was a village called Jobra. Jobra became his laboratory.
He and his students went there almost daily to learn about the people in the village.
What he learned in the village of Jobra became the foundation for the concept of
micro-lending, later known as the Grameen Bank. Little did he realize that the seed
had been planted for the “bank for the poor,” today serving 2.5 million people.
Earlier in 1964 Yunus had gone to Vanderbilt University, USA, where he completed
his Ph.D. in economics under the guidance of Nicholas Georgescu-Roegen. The
lessons he learned from his adviser were to remain with him his entire life.
Georgescu-Roegen taught him simple, precise economic models that would later help
him develop Grameen. He also taught Yunus that there is no need to memorize
economic formulas. Rather, the important thing is to understand the underlying
concepts driving the formulas and making them work. He also impressed Yunus that
things are not complicated, and economics is not complicated. It is only human
arrogance that leads people to give complicated answers to simple problems.
Georgescu-Roegen further made Yunus understand that without the human side,
“economics is just as hard and dry as stone.”[2]

On December 16, 1971 Bangladesh won its independence, but during the war three
million Bangladeshis died and another ten million left the country as refugees.
Millions more were victims of rape and other atrocities committed by the Pakistani
army. Bangladesh was destroyed economically and socially. Millions of people needed
social, moral and spiritual rehabilitation. Yunus knew he had to go back and
participate in the process of rebuilding his country. On his return he was invited to
head the Economics Department at Chittagong University. And thus, after the famine
of 1974, he began his research into the lives of the poor. He and his students went
time and again to Jobra, asking the villagers questions: What crops did they grow?
Did they own cultivable land? How did the people without land survive? What skills
did the villagers have? What did they want to do to improve their lives? How many
families could feed themselves and how many could not? Who were the poor, and
who were the poorest of the poor? Dr. Yunus also became angry. He realized that the
brilliant economists of the world do not spend time discussing poverty and hunger,
because they believe that if the right economic model is implemented, poverty and
hunger will be automatically alleviated. Economists spend all their time analyzing
development and prosperity but hardly any time on the development of poverty and
hunger.[3]

The first experience Yunus undertook was growing more food for the villagers of
Jobra. He began studying rice – low-yielding local varieties and high-yielding
varieties developed in the Philippines. He and his students personally went into the
fields and taught the farmers the importance of planting the seedlings at regular
intervals and in a straight line, to maximize crop yields. Many local people laughed
contemptuously at his efforts. But, it only made Yunus more determined in his
passion to uplift the lives of the poor. This was his singular most powerful
characteristic – his endless drive to bring a better life to those living in dire affliction.
In the winter of 1975 he began studying the problem of irrigation and found unused
deep tube wells that lay idle and abandoned by the farmers. He formed an
agricultural cooperative with the farmers, saying he would contribute the cost of fuel
to run the deep tube well, the seeds, fertilizer, insecticide and technical know-how.
The sharecroppers and farmers would contribute their labor. With great difficulty he
convinced them to try growing rice in the winter season, and the project ended in
success, with a bumper crop of rice for all. As Yunus writes, there is nothing so
beautiful as farmers harvesting their crop of emerald green standing rice![4]

Dr. Yunus continued his research on the poor of Jobra. He learned that it was
essential to differentiate between the poor and the very poor, the very poor and the
poorest of the poor. A ‘poor person’ could mean a lot of things. Furthermore, when
talking about poor people, reference to women and children was not mentioned.
Yunus developed three categories of poor to apply to the entire country:

P1 – The bottom 20 percent of the population – “hard-core poor” / absolute poor.

P2 - The bottom 35 percent of the population.
P3 - The bottom 50 percent of the population.

Yunus made many additional subcategories of these three categories, recognizing

that definitions of the poor had to be clear and without ambiguity. He analyzed:

In the world of development, if one mixes the poor and the non-poor in a
program, the non-poor will always drive out the poor, and the less poor will
drive out the more poor, unless protective measures are instituted right at
the beginning. In such cases, the non-poor reap the benefits of all that is
done in the name of the poor.[5]

He began concentrating on the poorest of the poor – generally women – who were
trapped in their economic category without any chance of exit, because of the
moneylenders. These women were dependent on the moneylenders for survival,
hence in reality they functioned as bonded laborers or slaves. Usurious rates had
been in place for so long that nobody questioned them or how oppressive they were.
It was exploitation unnamed, not talked about. Dr. Yunus asked his students to make
a list of the poorest people in Jobra and they came back with 42 names who all
together needed to borrow a total of less than US $27.00. Yunus was astounded that
only US $27 was required to lift 42 women out of abject poverty. He could not sleep.
The next morning he went to his bank to ask for a loan for these women. The bank
refused, saying they would have to fill out so many forms. Dr. Yunus replied, where is
the question of filling out forms when the villagers are illiterate? After more arguing
the bank manager told him, we simply cannot lend to the destitute. Finally Yunus
took out a loan in his own name, so that he could in turn provide micro-loans to the
villagers – whom he now referred to as the “banking untouchables.”[6] He made it
his personal goal to prove to the bankers and the community at large that not only
were the villagers touchable but they were also huggable! The village women also
understood quickly that this micro-credit was the only way for them to break out of
the vicious cycle of poverty that chained them. How do the women feel when they
receive their first loan from Grameen? Yunus writes:

When she finally receives the twenty-five dollars, she is trembling. The
money burns her fingers. Tears roll down her face. She has never seen so
much money in her life. She never imagined it in her hands. She carries the
bills as she would a delicate bird or a rabbit, until someone advises her to
put the money away in a safe place lest it be stolen.

This is the beginning for almost every Grameen borrower. All her life she
has been told that she is no good, that she brings only misery to her family,
and that they cannot afford to pay her dowry. Many times she hears her
mother or her father tell her she should have been killed at birth, aborted,
or starved. To her family she has been nothing but another mouth to feed,
another dowry to pay. But today, for the first time in her life, an institution
has trusted her with a great sum of money. She promises that she will never
let down the institution or herself. She will struggle to make sure that every
penny is paid back.[7]

Professor Yunus became more convinced than ever that micro-credit for the poor was
a powerful tool to bring positive change in the lives of the poorest – moving them, to
start with, from the category of poorest of the poor to marginally poor. One may also
wonder why he directed so much of his attention to the women and oriented his
entire project and Grameen Bank towards the women. It all started with the famine
of 1974 when he saw skeletal human beings outside his classroom door. He could not
bear it. His heart bled and his eyes shed tears at such suffering. His compassion for
the suffering was unbounded. The more he studied and researched, the more he
understood that the group of people who suffer more than anyone else are the
women. If there is shortage of food in the house, it is the women who will go
without. It is the women who suffer maximally from malnutrition and anemia. If
anyone is being abused in the home, it is the woman – either by husband or by
mother-in-law. It took Yunus more than six years to convince the village women to
take loans. Yunus points out the rampant financial apartheid towards women in
Bangladesh. If a woman wants to borrow from the bank, the manager will ask her,
did you ask your husband? Did he consent? Would you please bring your husband
with you so that we can discuss this with him? In contrast, when a man wants to
take a loan, nobody asks him: Did you ask your wife? Did she consent? Would you
please bring your wife with you so that we can discuss this with her? The banking
system in Bangladesh (and India) was created for men alone. Yunus turned this
practice upside down in the Grameen Bank by giving loans almost solely to women.
He further saw that in the family, the woman always wants to help the entire family.
She will buy things for the house, for the children, she will buy utensils or a bed. But,
when a poor father gets money he will generally spend the money on himself.[8]
Thus, Dr. Yunus saw that giving loans to women benefited not just one person but
the entire family. Second, giving loans to the women helped to break down the stark
inequalities between men and women and made the lives of women dignified. It was
not easy in the beginning. Many husbands were furious, and demanded the loans for
themselves. The religious clergy were also angry – why? They could not tolerate for
women to get a little power and control! And the moneylenders were directly
threatened financially. It meant they would lose the business of those formerly
destitute women. It is a rare man who will bend over backwards to find ways to
better the lives of women. Muhammad Yunus is such a rare man.

In 1983, the project that began in the village of Jobra in 1976 became a formal bank
under a special law passed for its creation by the government. It was called the
Grameen Bank. “Gram” means “village,” and the adjective “Grameen” means “rural”
or “of the village.” Yunus also understood that if the rural poor are lifted out of
poverty, they will no longer clog the streets of Dhaka looking for a way to survive. In
1979 Chittagong University gave him a two-year leave of absence upon which he
officially joined the Grameen Bank in Tangail District. He never looked back.

Grameen Bank does not train the poor. Instead it trains their staff to become an
“elite brigade of poverty fighters.”[9] The new staff are told to go into the villages
and find out the unexplored potential of the destitute. The villages of Bangladesh
teach the bank staff more than any book could teach them. They are trained to be
teachers and problem-solvers and to use their own ingenuity in their work. The
potential and ingenuity of the villagers is unbounded, as reflected in the variety of
businesses undertaken: husking rice, making ice cream sticks, trading in brass,
trading in mustard oil, repairing radios, cultivating and selling jackfruit, selling knick
knacks door to door instead of begging, selling milk from the purchase of a cow, fish
cultivation, fabric making, rope making, cotton dying, cotton spinning, weaving,
embroidery work and livestock raising (cows, buffaloes and goats) . Nowadays there
are hundreds of ‘telephone ladies’ in the villages. They are given a Grameen cellular
phone and become the hub of the village with residents coming to them to make
their phone calls. The list and variety of businesses is endless.

The positive side effects of the Grameen Bank are astounding. An example would be
that Grameen Bank borrowers have a birth rate that is half the national average.
Once the women get some education, and financial independence, they themselves
come forward to learn about family planning. The women become determined to
have fewer children and educate the children they do have, so that the children can
become full members of the country’s democratic structures. Another positive side
effect happened in 1984 at the annual national meeting of Grameen Bank workers
who devised initially the Ten Decisions which later expanded to Sixteen Decisions.
Today, at every branch of Grameen Bank these Decisions are recited by the members
and have had a huge effect on the borrowers. The Decisions are as follows:

1. We shall follow and advance the four principles of the Grameen Bank – discipline,
unity, courage, and hard work – in all walks of our lives.
2. Prosperity we shall bring to our families.
3. We shall not live in a dilapidated house. We shall repair our houses and work
toward constructing new houses at the earlier opportunity.
4. We shall grow vegetables all the year round. We shall eat plenty of them and sell
the surplus.
5. During the plantation seasons, we shall plant as many seedlings as possible.
6. We shall plan to keep our families small. We shall minimize our expenditures. We
shall look after our health.
7. We shall educate our children and ensure that they can earn to pay for their
education.
8. We shall always keep our children and the environment clean.
9. We shall build and use pit latrines.
10. We shall drink water from tube wells. If they are not available, we shall boil
water or use alum to purify it.
11. We shall not take any dowry at our son’s weddings; neither shall we give any
dowry at our daughters’ wedding. We shall keep the center free from the curse of
dowry. We shall not practice child marriage.
12. We shall not commit any injustice, and we will oppose anyone who tries to do so.
13. We shall collectively undertake larger investments for higher incomes.
14. We shall always be ready to help each other. If anyone is in difficulty, we shall
always help him or her.
15. If we come to know of any breach of discipline in any center, we shall all go there
and help restore discipline.
16. We shall introduce physical exercises in all our centers. We shall take part in all
social activities collectively.[10]

The women of the villages, most likely because of their simplicity, take these
decisions very seriously. While other organizations such as BRAC and Proshika also
undertake various kinds of consciousness-raising activities for the poor, the Sixteen
Decisions of Grameen Bank involve huge consciousness-raising. They involve a social
revolution for the women! The poor always live in dilapidated houses. Point 3 says,
don’t live like this. Live in a neat and clean house. Keep it repaired and tidy. Save to
build a better house. It is a new thought for the poorest of the poor! Point 6
emphasizes to keep families small. It is another idea that is now embedded in
borrowers’ minds. There is no need to force family-planning on the poor. The poor
need only understand the simple economic repercussions of bringing more and more
children into the world. Point 7 makes the women understand that education of their
children is the key to escape from poverty. Education leads to much better jobs and
then much better income. Point 8 mentions keeping the environment clean. This has
never been a priority in Bangladesh or India. Thousands of tourists have visited and
left, unable to bear the dirty physical surroundings - mildewed unpainted buildings,
garbage and sewer residue on the roads, small plastic bags littering the entire
surface of a town. In making this one of the 16 Decisions, Grameen is changing the
entire culture of the people. It is changing their mindset in a super positive direction!
Point 9 highlights another big problem in both Bangladesh and India. No bathrooms!
In these two countries there are three kinds of bathrooms – western style toilet, a
hole in the floor, and no toilet – going in the field or the woods. In the villages it is
the third option that is prevalent. Pit latrines are something brand new for the
villagers. It is about teaching hygiene and freedom from disease. Point 10 may need
amendment in view of the heavy arsenic contamination of deep tube wells. Every
sentence in Point 11 is starting a social/cultural revolution. To refuse dowry at their
son’s marriage is the beginning of a revolution. It is completely contrary to existing
village life and practices. To refuse to GIVE dowry at the daughter’s wedding is still
more revolutionary. One also wonders, does this lessen the chance for the daughter’s
marriage? By this one Point 11, Dr. Yunus is trying to eliminate the curse of dowry
from the country. How much suffering, how many wives and daughter-in-laws have
been slaughtered only because they did not bring enough dowry to the marriage!!
The final sentence reads, we shall not practice child marriage. This is also breaking
an age-old practice. As mentioned earlier, even though mothers suffered heavily
when married off at the age of 12 or 13, in spite of this they inflicted the same
torture on their daughters, marrying them also at this tender age. It is a custom that
badly needs to be broken. Point 11 of the Sixteen Decisions is mind-boggling in
terms of the change it can create in the countryside of Bangladesh. Point 12 is
critical for getting the villagers involved. Hitherto, villagers and especially the women
would have tolerated any kind of injustice or corruption. Point 12 tells them, it is no
longer their right to be indifferent. They have to care! Point 13 and 14 are more of
the same. Point 15 means, it is everyone’s individual and collective responsibility to
maintain strict morality everywhere. If there is a moral breakdown anywhere,
everyone is responsible for its correction and rehabilitation. Point 16 means, women
are to take care of themselves physically, because they cannot take care of the rest
of society if they do not take care of themselves. And where before one woman
would neither know nor speak to a single soul outside of her own husband and
children, Grameen Bank opened hundreds of doors, and today women know every
other woman in the village. There is open dialogue and close friendships and bonds.
This is another major part of the social revolution that is taking place in the villages
of Bangladesh. In these simple Decisions, the contribution of Muhammad Yunus to
the women of Bangladesh is simply mind-boggling if not unparalleled.

While Dr. Yunus insists that the number of decisions remain at sixteen, he realizes
that local branches may add decisions that are particularly relevant to that location.
He writes:

These decisions are a demonstration that the poor, once economically

empowered, are the most determined fighters in the battle to solve the
population problem, end illiteracy, and live healthier, better lives. When
policy makers finally realize that the poor are their partners, rather than
bystanders or enemies, we will progress much faster than we do today.[11]
The beautiful river Brahmaputra crosses the
city of Mymensing, Bangladesh

Today
Initially the government held 60 shares of Grameen Bank and the borrowers held 40
shares. Gradually this was reversed. Today the borrowers own 93 percent of the
bank and the remaining 7 percent continues to be owned by the government.[12] 96
percent of the bank’s borrowers are women. The bank exists to serve the poorest of
the poor women of Bangladesh. As of April 2004, the total number of borrowers from
Grameen Bank was 3.36 million, and 96 percent of these are women. Since its
inception, Grameen Bank has seen phenomenal growth, now having 1,229 branches
throughout Bangladesh and providing loans to women in 44,636 villages – nearly half
the total number of villages in Bangladesh. The total staff employed by Grameen
Bank is 11,988.

The Grameen Bank does not require any collateral against its micro-loans. It also
does not require borrowers to sign any papers for the loan, since in most cases the
borrowers are illiterate. Furthermore, it is against the principles of the Grameen Bank
to take poor people to court for non-payment.[13]

While each borrower must belong to a five-member group, the group is not required
to give any guarantee for a loan to its member. Repayment responsibility rests on the
individual borrower. The five-member group and the Grameen Bank local office
oversee that all members of the group behave responsibly so that no one incurs
repayment problems.

Loans Disbursed
Total amount of loans disbursed by Grameen Bank since its inception, is Tk (Taka)
197.00 billion (US$ 4.27 billion). Of this amount, Tk 180.32 billion (US$ 3.87 billion)
has been repaid. Present outstanding loans are Tk 16.68 billion (US$ 283.26 million).
From April 2003 to March 2004, the Grameen Bank provided loans in the amount of
Tk. 22.22 billion (US $ 377.19 million). The amount of loans provided during the
same period averaged monthly to Tk 1.85 billion (US $ 31.40 million).[14] The
payback of loans by the poorest of the poor – who otherwise would have never
received such micro-loans – is 98.69 percent – a phenomenal statistic even
compared to regular banks that cater to the middle and upper classes only.

Financial Transparency
Another factor that makes the Grameen Bank so highly successful is that it practices
100 percent financial transparency. On its website can be found all kinds of financial
data, including the Annual Reports as prepared by outside auditors. As an example,
it states that while the Grameen Bank borrowed Taka 3.0 billion (US $61.12 million)
from the Bangladesh central bank as well as from commercial banks after the
disastrous flood of 1998, in order to be able to provide new loans to borrowers
whose meager possessions had been destroyed or swept away by flood waters, all
these post-flood loans have already been fully paid off.[15] According to Muhammad
Yunus:

Ever since Grameen Bank came into being, it has made profit every year
except in 1983, 1991, and 1992. It has published its audited balance-sheet
every year, audited by two internationally reputed audit firms of the
country.[16]

This total financial transparency, in all its dealings, in its village meetings together
with the borrowers, on its website, in its publicized Annual Reports, are the very
reason for its success – because all this transparency has had, from the very
beginning of its founding, the effect of crushing corruption – not allowing corruption
to even come near the Bank. In 1995, the Grameen Bank decided to stop acceptance
of any and all donations. While it was necessary in its founding years, the Bank no
longer feels the need to take such donations, since the growing deposits are proving
to be ample and enough to run and continue regular expansion of its micro-credit
program.[17]

Dr. Yunus is skeptical if not cynical regarding donor agencies whose represenetatives
come to Bangladesh to give away money. According to him, it is the donors
themselves, the consultants, suppliers and potential contractors who benefit the
most financially from projects funded by donors. Of the more than $30 billion in
foreign aid received in the past 26 years, 75 percent was not spent in Bangladesh. It
was spent on equipment, commodities and consultants from the donor countries. In
the words of Yunus, “Most rich nations use their foreign aid budget mainly to employ
their own people and to sell their own goods, with poverty reduction as an
afterthought.” The 25 percent used inside Bangladesh usually goes straight to a tiny
elite of local suppliers, contractors, consultants, and experts. The elites use the
money to buy foreign-made consumer goods. And much of the money is also used as
kickbacks to officials and politicians who have helped them along in their ‘work.’[18]
Yunus also says that the high salaries and cushy benefits that mark many NGO
employees tend to “dull one’s compassion for the poor!”

According to Dr. Yunus, development should not be encouraged to raise the GDP of a
country. Development is directly a human rights issue, and development funds
should be used directly to help the poor. Development, according to him, needs to be
redefined to refer only to “a positive measurable change in per capita income of the
bottom 30 percent of the population.”[19] When once asked by a journalist what he
would do if he were president of the World Bank, he replied:

The overarching objective of the World Bank is to combat world poverty. [It
means] the headquarters should be moved to where poverty is at its worst.
In Dhaka, the World Bank would be surrounded by human suffering and
destitution. By living in close proximity to the problem, bank officials might
be able to solve it faster and more realistically.[20]

Revenues and Expenditures

The total revenue generated by Grameen Bank in 2003 was Tk 3.58 billion (US $
61.25 million). Seventy-five percent of the revenue came from interest on loans.
Total expenditure was Tk 3.23 billion (US $ 55.26 million). Salary, allowances and
pension benefits accounted for 38 percent, or Tk 1.23 billion (US $ 21.04 million).
Interest payment on deposits of Tk 1.10 billion (US $ 18.82 million) was the second
largest expenditure (34 per cent). The Grameen Bank had profits of Tk 351 million
(US $ 5.99 million) in 2003. Every year the entire profits are transferred to a
Rehabilitation Fund created to cope with disaster situations. This is done as a
condition of the Bangladesh government in exchange for exempting Grameen Bank
from paying corporate income tax. This action also appears to nullify any and all
criticisms by some that the Grameen Bank is exploitative in its interest rates.
Whatever profits accrue are going straight back to serve the poorest of the poor.
Where is the scope for criticism?

Low Interest Rates

The government of Bangladesh has a fixed interest rate for government-run micro-
credit programs, which are a flat rate of 11 percent. This comes to approximately 22
percent on a declining basis. Interest rates at the Grameen Bank's are lower than the
government rate. There are four interest rates for loans from Grameen Bank : 20%
(on a declining basis) for income-generating loans, 8% for housing loans, 5% for
student loans, and 0% (interest-free) loans for Struggling Members (beggars). All
interests are simple interest, calculated on a declining balance method. This means,
if a borrower takes an income-generating loan of say, Tk 1,000, and pays back the
entire amount within a year in weekly installments, that borrower will pay a total
amount of Tk 1,100, that is, Tk 1,000 as the principal plus Tk 100 as the interest for
the year, which is equivalent to a 10% flat rate.[21]

High Interest Rates on Savings

The Grameen Bank offers very high rates for deposits and savings accounts. The
minimum interest offered is 8.5 per cent while the maximum rate is 12 per cent. It is
a windfall as compared to the near zero interest rates offered on savings accounts in
the USA. Really speaking, every NGO working in India and Bangladesh and even
elsewhere can learn from the remarkable financial transparency and carefully crafted
financial structure of this unique, cooperatively run bank.

Struggling Members Program

One more remarkable program created by Dr. Yunus is the Struggling Members
Program. This is for the benefit of all those persons who are completely helpless –
the old and disabled, the blind, retarded, the sick and the dying, and others having
such an affliction that it becomes impossible for them to earn an income. The
program also includes beggars. Presently there are more than 9,000 beggars who
are part of the Struggling Members Program. In 2004 Dr. Yunus expects another
25,000 to join.[22] For the beggars, there are special rules or rather lack of rules.
For beggars, the normal rules of the Grameen Bank do not apply. The beggars make
up their own rules. Loans to beggars are interest-free. If required, the loans are
given on a long-term basis. Beggars may take out a small loan to purchase a blanket
for the winter months, or a mosquito-net to help them to sleep better at night. They
will repay such loans at the rate of perhaps Tk 2.00 or 3.4 cents per week. In
addition, beggars are given free life insurance and loan insurance. Through such
programs, created by Grameen Bank founder, Dr. Muhammad Yunus, we witness his
never-ending determination to help the lowest of the low, the poorest of the poor.
More stable five-member groups are asked to take care of beggars living close by in
their villages. Every member of the Struggling Members Program is given a badge
with her name and photo identification, showing everyone that she is a proud
member of the Grameen Bank and is under its protection and care. While the old and
disabled are served for life by the Bank, the beggars are encouraged (but not
compelled) to take up some kind of occupation, for example, selling consumer items
from door to door, so that their life attains more dignity. Meanwhile, the Bank makes
sure that the children of beggars attend school and grow up to become Grameen
Bank members so that they can lead more dignified and self-sufficient lives and do
not have to beg as their parents did.

When Muhammad Yunus talked to others about poverty reduction and micro-credit,
World Bank economists as well as journalists assumed that Grameen Bank alleviated
poverty by giving loans to small businesses, which allowed them to expand and thus
hire more people. This is not what Grameen is about. Grameen is about giving the
small loans directly to the poor. This model does not fit the normal theories of
development economics, hence it continues to confuse many an intellectual. The
worst mistake, however, made by economists is regarding the social power of credit.
When credit institutions favor the rich alone, they pronounce a death sentence on the
poor people. Yunus calls it financial apartheid. He says, banks should never have
gotten away with it. Credit is a human right. Nobody can live without credit,
especially the poor. Microeconomic theory looks upon human beings as either
consumers or as laborers. It ignores the entrepreneurial potential of the poor.
Economists consider large-scale self-employment (such as encouraged by Grameen
Bank) to be a sign of underdevelopment. However, Grameen Bank allows people to
create their own employment, their own jobs, and hence their own economy. Dr.
Yunus calls it “people’s economy.” He states emphatically:

Any economist with a real understanding of society would have come

forward to increase the efficiency of this people’s economy rather than
undermine it. In the absence of economists’ support, organizations like
Grameen Bank must step into the breach.

Housing Loans
In 1984 Dr. Yunus began giving housing loans to the poor. It cost just $125 to build a
house in the village – to purchase leak-proof roofing material and dry space for a
family to live in. Previously, without a proper shelter, the village women were
severely hampered during the five- month monsoon season, often having to stop
work entirely due to rains, floods and no dry place to do their business. While the
rich often do not repay their bank loans, the poor invariably repay their loans. They
know it is the only chance they have to escape poverty. The housing loan program
was a huge success. Conventional banks in Bangladesh tried giving loans to the rich
to construct houses, but found the repayment rate so poor that after three years
they stopped the practice. Grameen Bank, in contrast, had enormous success with a
nearly 100 percent repayment rate of the housing loans. The maximum amount
given for a housing loan is Tk 25,000 (US $428), which is repaid over a ten-year
period in the normal weekly installments. Interest rate on housing loans is 8 percent.
From April 2003 to March 2004, 20,326 houses were built with housing loans from
the Grameen Bank.

In 1989 the Grameen Bank housing program was chosen by a group of some of the
world’s top architects to receive the Aga Khan international Award for Architecture.
At the awards ceremony, renowned architects kept asking Dr. Yunus who was the
architect who designed the $300 houses for the villagers. Yunus replied that no
architect designed the homes of the poor. The borrowers designed their own homes.
They are “the architects of their own fate,” he said.[23]

Micro-Enterprise Loans
For those borrowers who are adept in business and who may have other positive
factors like a husband as business partner or proximity to the market, micro-
enterprise loans are available. These are larger loans averaging Tk 2.,323 (US $379).
These loans are used for purchasing larger items such as trucks, power-tillers,
irrigation pumps, transport vehicles and riverboats for transporting goods for
sale.[24]

Scholarships and Education Loans

Children of Grameen Bank members receive scholarships every year, with priority
given to girls. This is to encourage them to do well in their studies and move on to
college and university. Every year more than 13,000 children receive scholarships
from the Grameen Bank. Here again, Dr. Yunus demonstrates his one-pointed
determination to remove poverty from the face of the earth. Education can go a long
way towards removing poverty. Students who require assistance are provided with
loans to cover the costs of their education, including tuition fees, cost of living
expenses, books and office supplies. Many students are now studying at university
level with some in medical school and others in engineering, while being supported
by Grameen Bank loans. While ideally higher education should be provided free by
the government (as in Germany, for example), until this is implemented by the
Bangladesh government, the Grameen Bank is doing wonders to help the children of
Bangladesh receive higher education.

Grameen Network
Many spin-off companies have been created with the Grameen name; however, they
are independent legal entities, paying taxes like any other company in Bangladesh. A
closer look reveals the unlimited imagination of Dr. Muhammad Yunus in starting
these companies, which are also working in multifarious ways to uplift the poor of
the country. The names of some of these companies are: 1) Grameen Phone Ltd., 2)
Grameen Telecom, 3) Grameen Communications, 4) Grameen Cybernet Ltd., 5)
Grameen Software Ltd., 6) Grameen IT Park, 7) Grameen Information Highways Ltd.,
8) Grameen Star Education Ltd., 9) Grameen Bitek Ltd., 10) Grameen Uddog
(Enterprise), 11) Grameen Shamogree (Products), 12) Grameen Knitwear Ltd., 13)
Gonoshasthaya Grameen Textile Mills Ltd., 14) Grameen Shikkha (Education), 15)
Grameen Capital Management Ltd., 16) Grameen Byabosa Bikash (Business
Promotion ) and 17) Grameen Trust. Still more companies created by Grameen Bank
as separate companies are the Grameen Fund, the Grameen Krishi Foundation and
the Grameen Motsho (Fisheries) Foundation. Two more are the Grameen Shakti and
Grameen Motsho (Fisheries) Foundation. Grameen Kalyan is another company which
is actually an internal fund called Social Advancement Fund (SAF) and uses funds to
carry out social advancement activities for Grameen Bank borrowers, such as
educational opportunities, health care and technological advancement (cell phones,
Internet access). Grameen Telecom and Grameen Communications have provided
loans to 53,237 village women so they can purchase cell phones so that they can run
a business offering the use of the phone to everyone in their respective villages. This
is one of the more profitable businesses undertaken, and those ‘phone ladies’
certainly become the center of the village! Presently Grameen offers the cheapest
cellular rates in the world – 9 cents per minute for airtime during peak hours and 6.7
cents per minute during off-peak hours. A hurdle in using phones in the villages is
lack of electricity. Dr. Yunus does not see problems without seeing solutions. He
created Grameen Shakti (energy) to develop alternative forms of energy. Now solar
energy is spreading through the villages. Dr. Yunus has also started Grameen
Cybernet, expecting that the children of current members will in future be able to
work for employers around the world from their villages using the Internet. It also
means that many businesses such as data entry, data management, secretarial,
transcription, accounting, global answering services can all be conducted right there
in the villages!

What does Muhammad Yunus say about charity? He says it is not good. It is not the
solution to poverty because it takes away the incentive of the poor people. Charity is
a copout for the rich because it lets them go on with their lives and forget about the
poor. Yunus says, we need a level playing field. Everybody deserves a chance.

Criticisms and Comments

Badruddin Umar, former professor in Bangladesh and presently the editor-in-chief of
Sanskriti, a literary and current affairs journal published in Dhaka, criticizes the
Grameen Bank (referring to it as the most pernicious of all NGOs), claiming that their
interest rates are far higher than the regular commercial banks. The information
provided on the Grameen Bank website directly contradicts this assertion. The official
website also points out that all profits accruing from interest on loans are transferred
to a disaster relief fund, mandated by the Bangladesh government, to be used during
times of disaster relief – something that occurs nearly every year in the country.
People like Umar also need to understand that the main reason for establishment of
the Grameen Bank was that those very commercial banks refused to give micro-
loans to the destitute, thus creating, in Yunus’ terms, financial apartheid. Secondly,
Umar says that by giving the poor people small loans, it keeps them trapped in a life
of continuing poverty with only minute economic improvement, which then crushes
the urge in them to fight for major social and economic changes. Hence, he says, the
NGOs work as reactionary and counter-revolutionary agents in the country.[25] A
response here could be that the Grameen Bank puts a big emphasis on education –
education of borrowers and particularly of their children. Muhammad Yunus knows
that the key to real change lies in educating the people. He also establishes
programs to encourage the poor people to vote in political elections. Yunus’ strategy
may not be entirely what the strategy of Umar would be; however, the goal is the
same – the economic liberation of the poorest of the poor in Bangladesh.

Islamic scholars, without knowing thoroughly the Grameen Bank structure, will
criticize the fact that interest is charged on loans. But, as Dr. Yunus points out, the
ban on charging of interest as stated in the Shariah (Islamic code of laws) does not
apply to the Grameen Bank because the poor people own the bank. Hence, if the
borrowers pay interest to the bank, they are paying the interest to themselves.

Dr. Jamal Anwar,[26] a Berlin-based geologist doing yeoman work in removing

arsenic from rural drinking water, on one of his many visits to the villages, saw first-
hand a group of village women quarreling with the Grameen Bank representative.
They were shouting and saying that they cannot afford to pay the interest, that they
want to pay off the loan immediately instead of week by week with 20 percent
interest. According to this author, borrowers must be allowed to pay off their loans
early if they so choose. They must not be compelled to pay the 20 percent interest
by paying weekly installments. Many women cannot afford the 20 percent interest.
Their living standard will never go up as a result. Hence, if they wish to pay early,
they must be allowed to, just as in the US people are allowed to pay off their
mortgages, car loans and credit card debts whenever they like. The option and
freedom of choice must be there.

Dr. Shamima Ahmed, Political Science professor at Northern Kentucky University, in

her own research learned two things: (1) it has happened in a few instances that
when a woman took a loan, purchased items such as a house, cow or goats and then
not repaid the loan, the Grameen Bank representatives have gone to the village and
repossessed the items she purchased – much as what would happen in the US. Dr.
Ahmed said this has created some negative feeling amongst the villagers. Yet,
suppose Grameen Bank took no action in such a case, then there would be a strong
likelihood that the action of not repaying the loan, if successful, could spread to other
women. If other women witness that she suffered no repercussions when defaulting
on the loan, certainly some of them would be inclined to try the same. For this
reason, it would seem that the Grameen Bank is justified in its actions to repossess
the material goods purchased with the loan. (2) According to Dr. Ahmed, it is
generally realized that all NGOs in Bangladesh, including Grameen Bank, BRAC,
Proshika, World Vision, etc. do not reach the poorest of the poor. Rather, they reach
the poor. But, of all the mentioned NGOs, she said that Grameen Bank does the best
work in reaching the absolute poorest. The reasons for this could be multifold. The
poorest of the poor may not have initiative and hence entrepreneurial skills. The old,
sick and disabled poorest frankly are not in a position to become one of Grameen
Bank’s entrepreneurs. In his book, Banker to the Poor, Dr. Yunus talks at great
length about the innate entrepreneurial ability of every human being to survive and
get ahead economically if provided capital in the form of micro-loans. However, he
barely mentions the categories of old, sick and disabled – those not able to work.
Another category might be those who really do not have a business mind, whose
mind instead may focus on art, literature, poetry, or on God-realization. It will be
difficult to bring out the entrepreneurial abilities of persons whose minds are
completely immersed in non-material or spiritual ideas. Hence it is not clear how
these people would be able to pull themselves out of abject poverty, while
recognizing that such people also have a valuable function in the society.

The Grameen Bank is often criticized for not providing any training to the villagers.
Dr. Yunus firmly believes that the poor are their own best trainers. The poor know
about survival. He calls it the survival skill. He believes in maximal utilization of their
existing skills. Not only that, when given loans, the women teach each other new
skills. They share their knowledge with each other, be it husking rice paddy, raising
cows, basket weaving or using a cell phone. Dr. Yunus says, the women are their
own best teachers, and they are the best teachers of other women in the village.
Yunus writes:

Government decision-makers, many NGOs and international consultants

usually start the work of poverty alleviation by launching very elaborate
training programs. [They assume] people are poor because they lack skills…
Thanks to the flow of aid and welfare budgets, a huge industry has evolved
worldwide for the sole purpose of providing such training. Experts on
poverty alleviation insist that training is absolutely vital for the poor to
move up the economic ladder. But if you go out into the real world, you
cannot miss seeing that the poor are poor not because they are untrained or
illiterate but because they cannot retain the returns of their labor. They
have no control over capital, and it is the ability to control capital that gives
people the power to rise out of poverty. Profit is unashamedly biased
toward capital. Why can they not control any capital? Because they do not
inherit any capital or credit and nobody gives them access to it because they
are not considered credit-worthy.”[27]

Dr. Yunus also points out that formal training or formal education would have
frightened off most of their borrowers. It would have threatened the women, made
them feel inferior, stupid and useless. It would have also destroyed their natural
capacity, intelligence and creativity. Training is good when the women seek it out. If
the women want to learn about poultry farming, it is arranged. If they want to learn
new ways of storing and processing crops, Grameen brings them the new technology.
At present Grameen is bringing cell phones, solar energy and the Internet down to
the village level. Soon borrowers will need to know how to calculate the cost of the
phone calls, and will need to read the words on the computer screen. When the
desire is there to learn, the women learn automatically and with deep desire and
satisfaction. The most thrilling part of this entire adventure called Grameen Bank is
that it is the women above all who are learning, and coming up economically,
socially, culturally and spiritually. They are coming out of the dark caves of dogma,
superstition and rigid male chauvinism of their husbands and fathers and bursting
forth into a new world of endless opportunities and freedom. This is the unbounded
greatness of Professor Muhammad Yunus. For this alone, for bringing freedom to so
many millions of women in Bangladesh, he ought to stand in first place to receive the
Nobel Peace Prize!

In 1998 the United Nations released a report about micro-lending programs which
again raised the question as to whether micro-credit programs can work everywhere
or only in certain places, and secondly, can micro-credit really make a dent in global
poverty.[28] Reflecting on the remarkable successes of Grameen Bank, one thought
comes to mind. Floods undo much of the good work of the bank. Women who were
running a good business and repaying their debts regularly are frequently destroyed
financially due to floods. They are compelled to take out new loans and struggle
anew from a lower rung on the ladder. It does not seem fair. Raising the poorest of
the poor who live in abject poverty to the next rung on the ladder is good but they
are still in the economic category of marginal poverty – assuming that climate factors
and floods have not kept them at the bottom rung. The process of rising out of
poverty is just too slow. They should not have to use their loans for medical
expenses or for educational expenses. Health care and education through university
should be funded by the central government. The financial rehabilitation of the
village women after disastrous floods must be borne by the central government. If
the government does not take its full share of the burden, it means the economic
progress of Bangladeshi women will be at snail’s pace. The poor village women
cannot do everything, no matter how hard they work. They cannot beat the losses
incurred by climatic disasters. The Grameen Bank also cannot do everything. Really
speaking, it is not the responsibility of the Grameen Bank. The bank does keep
money in reserve to distribute during times of natural disaster. But it is not enough.
It is the responsibility of the government. In fact, the government should be offering
low-interest (5 percent) loans to the poor. The government should cover the cost of
goods and homes damaged during floods. The government should carry the cost of
educating its children, and should underscore the cost of health care for all, with
medical clinics in every village and hospitals located close to the people. When in
developed countries such as the US young adults are agonizingly weighed under with
the loans taken for their college education, when according to the Wall Street Journal
medical costs are the single leading cause of bankruptcy in the US – when this is the
scenario in the so-called greatest country in the world - where is the question of the
villagers of Bangladesh overcoming horrendous obstacles in the form of floods,
hurricanes, cyclones, water-borne diseases, pesticide and arsenic poisoning – and
pulling themselves up financially? Maybe it is impossible. Maybe it is time to hold the
political leaders accountable for their lack of service to the poorest of the poor.
Maybe it is time to hold the leaders accountable for the lack of service to the millions
of marginal farmers who survive on literally a handful of rice. Professor Umar may
well be correct in surmising that by providing a few handfuls of rice and a small mud
house with a tin roof, the revolutionary fire in the hearts of the oppressed is snuffed
out.[29] Hence it is important for Grameen Bank members to simultaneously
pressure and demand their federal government to share their burden in a sincere
manner, as do the governments of Germany, Sweden, Norway, and Cuba.

None of the above criticisms, however, can make a dent in the astounding service
Muhammad Yunus has done for the poor women, not just in Bangladesh but even in
the US. A Grameen Bank replicator program called Women’s Self-Employment Project
(WSEP) was started in Chicago specifically for the poor Hispanic women living in the
downtown area. In Yunus’ autobiography he recounts speaking with one of the
borrowers – a Hispanic woman in her early forties. She lived in a small apartment
with her husband in Chicago for 15 years, and had talked to almost no one. Her
husband did not like her going out or talking to anyone. But Jenny, a WSEP
representative, kept visiting her and finally convinced her to join a group of five, and
then to take out a loan to start her own small business. When Dr. Yunus asked her
“Are you happy with the income you make?” she became very emotional, and then
spoke the following through the interpreter:

I never expected that I would ever earn money. My husband never gives me
any money to spend. We shop together. He pays. I never had money of my
own. For the fifteen years that I have lived in America, I have never even
had a bank account. Now I have money and I have my own bank account. I
have a checkbook. My husband does not know anything about it. I have not
dared to tell him yet.[30]

Dr. Yunus, very moved by her reply, then asked her if she thought that forming
groups of five was a good idea or not. She again replied very softly. “In the fifteen
years I have been here, I never had a friend. I didn’t even know anybody. I was all
alone. Now I have many friends. My four friends in the group are like my own sisters.
Even if the WSEP did not give us money, I would not leave the group.” The woman
then began to weep and she covered her face with both of her hands.[31] It means,
her gratitude was unbounded. If just one woman like this woman could come out of
that black cave of male patriarchy and domination into the daylight of economic,
physical, social and spiritual freedom – then any and all criticisms of Grameen Bank
are to be thrown into the dustbin. There is nothing more valuable or thrilling than to
witness just one woman coming out of the cave of stifling, torturous oppression into
the expansive, exaltative daylight of freedom!

Innovation After Innovation

Dr. Yunus over the years became involved in many other projects. The central
government asked him to take over failing fisheries and he did. He studied
pisciculture, learned how to clean the ponds and make them productive with baby
fish, and created one more success story. While most people know Dr. Yunus in
reference to micro-credit loans, but he took other steps for the poor. For example, he
insisted that 100 percent of all adult Grameen Bank members/villagers register to
vote and that they vote in the general as well as local elections. He did not have to
do this. But, his life from 1974 onwards was just a whirlpool of ideas just churning in
his mind one after the other – new ways to uplift the poor. Nothing could give him
more satisfaction than this.

In Bangladesh huge problems and obstacles are simply a part of the life. In 1991 a
cyclone hit the southern region of Bangladesh at 2:00 in the morning and killed
110,000 people in just the one night. After recovering from the shock, many
Grameen Bank members went out in boats looking for survivors. The bodies of the
dead – people and animals – surrounded them in the water, along with remains of
the houses. Nevertheless, the Grameen Bank staff and members are there in the
villages when disaster strikes, helping in any way possible.

Another example of Muhammad Yunus’ extraordinary vision combined with

unbounded compassion and singular determination to make a poverty-free
Bangladesh is the bank’s assistance in bigger and bigger projects (and hence loans)
for the borrower/members. Yunus said: “We wanted to help them leave the poverty
line so far behind that their young children would barely remember what it felt like to
be born poor.” Yunus together with his staff members created a new goal for
Grameen Bank: it was to make every Grameen Bank member “poverty-free” in a
specified period of time. How did they define “poverty-free?” To find out, they
interviewed numerous borrowers and came up with the following set of ten
indicators:

1. having a house with a tin roof

2. having beds or cots for all members of the family
3. having access to safe drinking water
4. having access to a sanitary latrine
5. having all school-age children attending school
6. having sufficient warm clothing for the winter
7. having mosquito nets
8. having a home vegetable garden
9. having no food shortages, even during the most difficult time of a very difficult
year, and
10. having sufficient income-earning opportunities for all adult members of the
family.[32]

Having established these goals for a poverty-free Bangladesh, Grameen Bank is

monitoring the well-being of their borrowers and has invited outside agencies and
international researchers to help them to determine the successes and setbacks of
Grameen Bank in achieving this visionary and humane goal.

Muhammad Yunus by this time was keen to convey to other economists that micro-
credit enterprise will be successful anywhere when driven by an attitude, which he
called “social consciousness.” It meant bringing a social dimension to economics – a
human side. In his life Yunus saw that the free market does not give solutions to
social problems. It does not help the poor and the elderly nor does it provide health
care and education to the people. Despite this, Yunus believes that government
should stay out of most things except for the justice system, national defense and
foreign policy. Caring for the elderly and the poor, providing health care and
education, can all be done in the private sector in the form of collective businesses or
cooperatives, owned and run by the people to serve the people. Yunus further does
not believe in the welfare system of providing unemployment checks to those without
jobs. He says it destroys their dignity and their incentive. Economic structures create
poverty. If the economic structure is changed, if it is Grameenized, if micro-loans are
given to the poor, they will work hard, they will be creative, and they will pull
themselves right out of unemployment, poverty and helplessness. They will lead lives
of dignity. And, Yunus says, they don’t need training. They need financial capital. He
says, every human being is a potential entrepreneur. If we look upon every human
being – even the beggar on the road – as a potential entrepreneur, we will change
the whole economic structure. It would mean every person has a choice in whether
to be an entrepreneur or a wage earner. In western countries entrepreneurs are
taught to think of shareholder profit only, and never to think of societal benefit. This
must change. Social values, social consciousness, must become an integral part of
economics. Yunus does not support the public and private sector as they are defined
today. Rather, he supports the creation of a new sector – the social-consciousness-
driven private sector. He says that people can be driven by the desire to serve the
social sector – the collective humanity - as much as greed drives capitalists today.
According to Yunus, greed and corruption form partnerships quickly based on mutual
self-interests. It is time to add social-consciousness as a third contestant in the
marketplace!

Muhammad Yunus has ideas that completely differ from mainstream economists, for
the simple reason that he rejects those ideas that do not benefit the poor, and he
accepts his own ideas because they specifically benefit the poor. Critics say that
micro-credit does not enhance the development of a country. Perhaps micro-credit
does not raise a country’s GDP. Yunus says that it does not matter. The sole criteria
should be, does it benefit the poor? Development in his mind means changing the
lives of the bottom 50 percent of the population. To put it more rigorously, he would
say, it means changing the quality of life of the bottom 25 percent of the population.
There is no reason also why micro-credit enterprises cannot grow and become big
enterprises – so long as they remain owned by the people, following the economic
structure of the cooperative. The crucial points, according to Yunus, are that the poor
be able to realize their unutilized potential and that the social element, the collective
social welfare be always a factor when making business decisions.

Muhammad Yunus talks very touchingly about what the future holds for the world.
According to him, after 50 years, poverty must become a relic of the past. In his
vision, there would not be a single poor person on earth. There would not be a single
person unable to meet his or her basic needs. Yunus says that poverty does not
belong in a civilized human society. Rather poverty belongs in the museum. In
future, he says, when children tour poverty museums with their teachers, they will
be horrified to see the sufferings and indignities suffered by people in the 20th and
beginning of the 21st century. The reason the problem of poverty continues is
because the well-to-do, the politicians, just do not care. They claim that if the poor
worked harder, they would not be poor. People need a level playing field. Free trade,
says Yunus, must mean free trade for the weakest rather than ‘the strongest takes
all.’ We need not just entrepreneurs looking solely to maximize profit. We need social
entrepreneurs looking to maximize the well-being of the collective society. This
means we need to do a lot of work towards building a society in which this value of
serving the collective good is given top place. According to Dr. Yunus, 30,000
children die every day due to hunger and malnutrition. However, if the bottom 20
percent of the world population are given micro-credit, they can become wage
earners and wage spenders.

There is Hope
On February 2-4, 1997, the first Microcredit Summit was held in Washington, D.C.
3,000 delegates from 137 countries attended. The stated goal of the summit was to
reach 100 million of the poorest families by 2005. When Yunus stood up to speak, he
told the delegates that the summit represented the end of a long era of financial
apartheid, and that credit is a human right. He said the summit was about
unleashing the potentialities of millions of poor people, and that it was a celebration
of the success of millions of destitute women who had transformed their lives with
micro-credit.[33] Yunus is adamant that poverty does not belong in the real word but
in the museums.

Muhammad Yunus is a great personality for what he has achieved in life, for his work
with the poor, but especially for his tremendous compassion and caring for those who
suffer economically and his burning desire and determination to do something
concrete to change the economic conditions of the poor people. He has a simple,
clear and highly educated mind that he used to develop the micro-credit system for
uplifting the poorest of the poor. This is his greatest legacy to Bangladesh and to the
world. Essentially, Muhammad Yunus started a glorious trend, which is the business
cooperative – first on a small scale, then also on a big scale. It is the cooperative
business structure which can change not only the economic welfare of the people but
also the culture and mentality of the people, moving the mindset from a self-
centered individualistic one to a mindset that thinks first and foremost of the
collective welfare of the society.

Cooperatives “combine the wealth and resources of many individuals and harness
them in a united way. To … achieve this … cooperatives should be structured so that
individual interest does not dominate collective interest.”[34] In the cooperative
system, the owners/members will make all decisions regarding when and to whom to
sell, and at what price. The members/owners will be local people only. People of all
and varying skills will be utilized with the expansion of cooperatives. During times of
economic recession or depression, all members’ labor and contribution will be
accordingly reduced, so that no one suffers from the stigma of being without a job.
This will also help the economy to pick up to a healthy level of activity. It is a clear
example of the humaneness of the cooperative system as compared to the capitalist
economic system where thousands or millions of people are laid off with the snap of
a finger. It also contrasts sharply with the Marxist/commune system wherein the
structure still entails a master-servant relationship, or supervisor and supervised
system. There is no personal ownership which means the people will not work hard
because morale will be low. What is the incentive to work hard?

The quintessential evil of capitalism is that (1) it denies the poor people any
economic participation, (2) it is based on self-interest, selfishness and profit alone,
(3) money is everything, human beings count for nothing, (4) competition is
everything, the collective good has no value, and (5) it is undemocratic. On the other
hand, the cooperative system (1) helps the weak and impoverished persons to grow,
to become strong and self-sufficient, (2) is based on the collective interest and
collective good, and not on profit. Hence the rendering of social service becomes
prominent in the community, (3) Human beings have more value than money and
profit, (4) Cooperatives provide economic stability because there is no stockpiling of
unconsumed goods and no profit motive. And (5) It is democratic – one man, one
vote. Economy of the people, for the people, and by the people! According to
esteemed economist, Prabhat Ranjan Sarkar, three factors are prerequisites for the
success of cooperatives: morality, strong supervision, and the wholehearted
acceptance of the masses. Wherever these three factors are present, the
cooperatives will be successful. There is a huge amount of work to do to bring
Bangladesh out of poverty. The work is multifarious in nature. However, Muhammad
Yunus has made a vast contribution by educating the poor people regarding the
benefits of cooperatives to their lives, and by caring enough to pull millions of women
out of the depths of poverty and onto a higher rung of the ladder. Certainly he
believes in economics for the people, by the people. He believes in cooperatives. In
the words of Sarkar:

“The sweetest unifying factors are love and sympathy for humanity. The wonts of the
human heart are joy, pleasure and beatitude. In the physical realm the best
expression of this human sweetness is the cooperative system. The cooperative
system is the best representation of the sweet nectar of humanity.[35]

Notes
1 Muhammad Yunus, Banker to the Poor: Micro-Lending and the Battle Against World
Poverty, New York: Public Affairs, 1999, p. vii.
2 Ibid, p. 203.
3 Ibid, p. 35.
4 Ibid, p. 39.
5 Ibid, p. 42.
6 Ibid, p. 57.
7 Ibid, p. 69.
8 Ibid, p. 72.
9 Ibid, p. 101.
10 Ibid, p. 135-136.
11 Ibid, p. 137.
12 Muhammad Yunus, Grameen Bank at a Glance, April 2004. http://www.grameen-
info.org/bank/GBGlance.htm
13 Ibid. .
14 Ibid.
15 Ibid.
16 Ibid.
17 Ibid.
18 Muhammad Yunus, Banker to the Poor, p. 145.
19 Ibid, p. 146.
20 Ibid, p. 147.
21 M. Yunus, Grameen Bank at a Glance, April, 2004.
22 Ibid,
23 Ibid, p. 130.
24 Ibid.
25 Mahfuz R. Chowdhury, Economic Exploitation of Bangladesh, New York, iUniverse,
Inc., 2004.
26 http://www.sos-arsenic.net
27 Muhammad Yunus, Banker to the Poor, p. 141.
28 United Nations General Assembly; 53rd Session, The Role of Microcredit in the
Eradication of Poverty (A/53/223, to August, 1998)
29 We can make the comparison of ‘poor’ or ‘lower middle class’ people in the US,
who struggle month to month or paycheck to paycheck with a credit card debt
burden of anywhere from $20-40,000.00. Yes, there is food and there is a car. But if
the credit cards are removed, how many thousands or millions would be forced to
declare bankruptcy? In Kentucky in the year 2000 the average credit card debt was
$12,000. Today, four years later, after four years of George Bush cutbacks, the
average credit card debt in the state of Kentucky is $23,000.
30 Muhammad Yunus, Banker to the Poor, p. 188.
31 Ibid, p. 188.
32 Ibid, p. 202.
33 Ibid, p. 259.
34 Prabhat Ranjan Sarkar, Proutist Economics, Calcutta: Ananda Marga Publications,
1992.
35 Ibid.

Copyright The author 2004