The NI Interview
The NI Interview
Next month sees the world's largest-ever summit on micro-credit for the poor.
Para Teare interviews the founder of the Grameen Bank in Bangladesh, where it all started...
I am meeting Mohammed Yunus outside the Arts Centre building at Warwick University in England where he has come to be made an honorary member. As he stands chatting to his friends he could be any middle-class, educated Bengali man. Stocky, with grey hair, he is wearing the traditional pyjama panjami. He tells me the story of how he came up with the idea of Grameen.
‘In 1974 there was a serious famine in my country. People were dying. I became very frustrated. As a university teacher I felt that the economic theories that I was teaching had no effect. What was going wrong?
‘I decided to find out for myself. I went to speak to the villagers. Then I noticed a woman making a bamboo stool. I chatted with her and discovered that she made only two pennies a day. I found out that because she did not have the money to buy the bamboo, she had to borrow from the trader who buys the final product. The trader decided how much the stool cost – made the profit and gave her the cost of the raw materials. And she was left with two pennies a day.
‘I was amazed. I said. “My God!” I asked her what she would do if she had the money to buy the bamboo. She answered that she would immediately double or triple her income by selling the stools. I was keen to give her the money myself but I resisted.
‘Instead I took a student of mine and decided to find out if the woman were alone in her plight. Within a week we came up with 42 people and the total amount they needed to start a business was only $27. I was very ashamed of being part of a society that cannot even provide $27 – not to give for free, mind, just make a loan. I decided to go to the bank.’
The bank told him that it didn’t lend to poor people because they were not credit-worthy. After much debate, he offered himself as a guarantor and was loaned the money, which he then distributed.
‘I had to demonstrate to the bank that the people would repay the money. I started with two villages and moved on to 50 villages and then a whole district. I became very excited. People were repaying the money! But the bank remained unconvinced.
‘Then an idea struck me. Why not set up my own bank? I went to the Government – same reluctance, same problems. It took two years to convince them but finally, in 1983, the Grameen Bank was born.’
‘It took a long time,’ says Yunus, ‘to persuade women to take the money. Men were happy to take out quite large loans – but less good at paying them back. And yet the women felt that the money should go to their husbands. Even when they did take it they would only ask to borrow very small quantities – $10 or $15. They would then spend sleepless nights worrying. It took us six years initially to convince women to become borrowers.
‘However, when a woman pays the first weekly instalment, there is real excitement,’ smiles Yunus. ‘“I did it, I did it!” is the cry, especially after the second and third instalments. When she completes the last instalment, she is a different person.
‘Her husband thought she was stupid. Her parents thought she was stupid. Her neighbours thought she was stupid. She thought she was stupid. But she has found out that she is not as stupid as everyone thinks she is. The excitement of self-discovery is for me the most important thing about the Grameen Bank.’ Yunus’s eyes positively twinkle with excitement.
He explains that the loan is initially used for something the woman is familiar with, that provides the least risk. For example, rice-husking or basket-making. The women know the price of the rice and they know all about rice-husking. So when the woman succeeds in repaying the first loan, she takes out another. She ventures into something which is more risky. She raises a cow, she sells milk. Within a year she can have two cows and if the loan is repeated again, she may have four.
‘Today,’ says Yunus proudly, ‘we work in half the villages in Bangladesh – 6,000 in all. In 1995 we loaned out over $400 million. Our repayment rate is over 98 per cent. We are a profitable bank. We have 2.1 million members – 94 per cent of whom are women.’
When I asked him why this was, he was quite clear: ‘When I started Grameen, I wanted half of my borrowers to be men, the other half women. Then we noticed that women borrowers made more of an impact in the household. So we decided to prioritize the women. We make no apology for this. Maybe one day, I will be accused of being biased against men. So what!’
His wife, he says, points out that he may be supporting women but that his work keeps him away from home. ‘She tells me that I sometimes treat other women better than I treat her!’
Yunus points out that mobilization of women on this scale has other spin-offs. In the elections last year, more women turned out to vote than ever before. For the first time, women voters outnumbered men. Research on Grameen has shown that for its members child nutrition, sanitation, housing and health are all vastly improved.
People who borrow from Grameen have to agree to the 16 ‘resolutions’ on improved social practices. These were instituted in 1984 and include drinking water that is either boiled or from a tube-well, growing vegetables (and eating them all year round) and having smaller families. I question him as to whether the last policy smacked of population control. ‘No,’ says Yunus. ‘It is very easy to convince people to have fewer children. Now that the women are earners, having more children means losing money. If they are pregnant, they cannot work.
‘Though growing old is a constant worry for them, they have to ponder on quality or quantity. The most natural choice is to choose quality – have fewer children and spend more on them. Send them to school.’
Micro-credit cannot by itself solve the problem of poverty in Bangladesh but Yunus is understandably proud of what Grameen has achieved: ‘We have righted a wrong that is being done by the financial world, which operates a caste system by not giving money to the poor. We are doing something about it. Now they cannot say that the poor will not repay.’
He looks at me hard: ‘Let me put it another way. If you are a fighter, you need a weapon. In the case of Grameen, that weapon is credit.’