Muhammad Yunus and the Grameen Bank

“This is not charity. This is business: business with an objective, which is to help people get out of poverty.” – Muhammad YunusOne day in 1976, an economics professor went to a poor village in the countryside of his home country of Bangladesh. He met a woman who made bamboo stools for a living. Although she worked hard, she was very poor because she was forced to pay a very high price for the bamboo. She did not have enough money to buy the bamboo herself, and the village moneylenders charged usurious fees. All the woman needed was 25 cents! The man knew that he could not simply give her the money she needed; doing so would rob the woman of her dignity. Instead, he asked people in the village how much money they needed to get started on their own small businesses and to free themselves from their cycle of poverty. The man then lent the equivalent of about US $27.00 from his own pocket to 42 of the village women.
That man was Muhammad Yunus, and that day in the village was the start of something big! Those women then started their own small businesses, earning money to support their families (their net profit on that first loan amounted to about two cents each). Muhammad Yunus went on to found the Grameen Bank, which has helped over two million Bangladeshi women escape the chains of poverty. The world now knows about the concept of “microcredit” – the granting of “micro-loans” to the very poor, those without collateral and who would otherwise be rejected by conventional banks as loan recipients.
In 2006, the Nobel Peace Prize was awarded jointly to Muhammad Yunus and the Grameen Bank “for their efforts to create economic and social development from below”. The Nobel Prize committee made a wise choice, reminding us that the road to peace must include concerted efforts to reduce the number of people living in poverty. The idea that microcredit can be a guiding principle for successful businesses is catching on throughout the developing world and also developed nations like Canada and the United States. Like the Grameen Bank, the new microcredit lending institutions lend money to women.
Muhammad Yunus is a hero around the world. At one point, he was thinking about becoming involved in politics in Bangladesh, and formed a political party called “Citizens’ Power” in 2007. So far, he has not embarked on a political career, but became a member of an international think tank of leaders called The Elders, of which Nelson Mandela was a founding member. He now speaks out about his theory of the “social business enterprise”, which places value on enterprises that “generate social improvements and serve a broader human development purpose” in addition to focusing on economic gains. Yunus stresses that capitalism is too narrowly defined in that it focuses solely on profit maximization. Given what industrialization has done to this planet in the name of profit maximization, it is clear that the time has come for the world to get on board with Muhammad Yunus.
(This article has been published in 2015 in the Popular Complete Smart Series of Canadian Curriculum Book for Grade 7)