Grameen Bank, Bangladesh

I D E A S
5 March 1991
ID 9099

                            
THE GRAMEEN BANK


         Copyright *1991 The Canadian Broadcasting Corporation
                          All Rights Reserved

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    CBC IDEAS Transcripts, P.O.  Box 500, Station A, Toronto, Ontario,
    M5W 1E6



Lister Sinclair

Good evening. I'm Lister Sinclair and this is Ideas on the Grameen Bank
of Bangladesh.

Walk into any bank and ask for a loan and the bank manager will pull
out the forms and start asking you about the value of your car, your
house, your salary. Before the bank will loan you money, it wants to
know in effect whether you already have lots. In Bangladesh, a unique
institution called the Grameen Bank is pioneering a different approach.
It's a bank that lends only to the rural poor. Often its borrowers lack
even a change of clothes or a roof sturdy enough to keep out the rain.
And yet an astonishing ninety-eight per cent of them pay back their
loans.

The loans average no more than seventy-five dollars -- too small
for other banks to even bother with -- and yet with these loans
people revolutionize their lives. The Grameen Bank is founded on a bold
but simple idea that the answer to poverty is not charity but credit.
In fifteen years of operation, it has disbursed a quarter of a billion
dollars to more than eight hundred thousand people. It has lent
predominantly to women in a country where this was previously unheard
of and it has been emulated around the world.

The Grameen Bank began out of the pocket of one man, Dr. Muhammad
Yunus, and tonight on Ideas you'll meet him in conversation with Ideas
writer David Cayley. His story begins in 1972, the year after
Bangladesh won its war of liberation from Pakistan. Yunus had recently
completed his graduate studies at Vanderbilt University in the United
States and was teaching at a college in Tennessee when he was invited
to take up the position of head of the department of economics at
Chittagong University in southeastern Bangladesh.  He arrived home in
the midst of the euphoria and high hopes that followed independence.


Muhammad Yunus

I went back and joined everybody else in the country and then I became
head of the department of economics. I thought now things will start
moving and moving up. To my surprise and to the surprise of all of us,
this country was sliding downwards very rapidly. And by 1974, we had a
terrible famine: a lot of people were dying on the streets. So I got
very frustrated with what I teach, the development economics and all
those theories where everything sounds so good and it all works out.
And when you walk out of the university campus, you see the real world
is so different what you say in the classroom and what appears on the
outside. So to me it appeared like it is a movie house: you go to a
movie, you see how everything is working, and you consider that the
hero in the end will win and at the end he wins. You come out of the
classroom as if you come out of the movie house: the real world is very
suddenly different -- everybody gets beaten, nobody wins.I
thought, what's the use teaching this economics if I don't have faith
in it? How can I teach my students who are so credulous? When I'm
disenchanted, how can I inspire my students? So I wanted to learn
economics the way I feel it should be, the real world is and I wanted
to know from the people around. Chittagong University campus is located
among villages, it's out of town. So I had the advantage I could just
walk out of the campus and these are real Bangladesh villages. And I
chose to talk to the very poor people in the village because that's
where the problem is: Why can't they change their life? Why can't they
improve their living conditions? And I kept on talking not as an
economist, not as a teacher, not as a researcher -- just as a
human being, as a neighbour.  Wy do things remain the way they are?

And I learned so many things. I start feeling that this is the real
university I missed out all my life. And in my classroom, in my
textbooks, I never learned all these things that they're saying now. So
among the many things I learned, I came across a woman and she makes
only two pennies a day by making bamboo stools. And I couldn't accept
why anybody should work so hard and make only two pennies. And she
explained why she makes two pennies: she doesn't have the money to buy
the bamboo which goes into the bamboo store, so she has to borrow money
from a trader, the trader who buys the final product. So he lends her
the money to buy the bamboo. When he buys the final product, he offers
her a price which barely covers the cost of all the raw materials. Her
labour comes almost like free, like she works like a slave. So I said,
look, this is so simple to solve. It doesn't need big theories to solve
this.

If somebody could make this money available to her so that she can buy
her own bamboo, she can sell the product wherever she gets a good
price. And I took a student of mine, went around the village for
several days to find out if there are other people like her who are
borrowing from traders and missing out what they should earn. And in a
week's time, we came up with a list of forty-two such people. The total
amount needed by all forty-two of them was thirty dollars. I was so
ashamed of myself that, look, what big theories we are talking about in
classroom? Here's a situation of thirty dollars and we have not
organized our society in a way where well-bodied, well-trained,
skilled, hardworking people could get thirty dollars to do their job.So
my first reaction was to take this thirty dollars out of my pocket and
asked my student to distribute this money to them as loans, tell them
that it's a loan, they have to pay me back. They can sell their product
wherever they want, wherever they get a good price. Having done that, I
thought I had found a solution to this problem. A couple of days later
I started feeling down again. This was not a solution because every
time they need money they won't come to me because I'm not available to
them. I'm a teacher in a university, I'm not in the money business. I
thought there must be some institutional way of handling this rather
than personal way of handling this.

So I thought of the bank. The bank should do the distribution. When I
went to the bank, talked to the manager, he gave me a big laugh. He
thought it was such a funny idea even to talk about. I said "Why?" He
said, "This little money is not even worth all the papers they have to
fill in and so on, and bank is not going to do that." I said, "Why not?
To them this is really important." Then he said, "Well, we can't give
loans to the poor people." "Why not?" "They don't have any collateral."
I said, "So what? You don't eat collateral, you want your money back."
"Of course we want our money back, but at the same time we need
collateral." "To me it doesn't make sense if somebody can be sure that
the money comes back, why do we need collateral?" He said, "That's our
rule." He said, "I can't help you. Why don't you go and talk to the
officials in a higher position than me to convince them."

And I tried. I moved around, ran around to different offices trying to
persuade. And everybody said the same thing: "Look, this is the rule.
We can't do anything else." Somebody gave an idea: if you could find a
guarantor in the village for each loan, a well-to-do person, then we
can give the loan. I said, "No, I can't do that because then the
guarantor would treat the other person as a slave because he became the
guarantor of the loan." I said, "I won't do that." I got an idea. I
said, "Why don't I become the guarantor?" Why don't you accept me as a
guarantor? I sign everything you give me." Then they were put on the
spot. They thought about it and asked me "How much money are you
talking about?" I said, "Oh, altogether probably three hundred dollars,
not more than that." And they said, "Okay, we'll accept you as three
hundred dollar guarantor, but don't ask for more money. That's all we
can give you." I said, "Okay, that will be enough for me." This is now
1976. After all this discussion, when I really wanted the money, they
said, "No, we need permission from the head office." It took six months
of writing back and forth to get it formalized and finally, at the end
of 1976, I succeeded in taking a few loans and giving it to the poor
people at the village.That is the beginning of what I'm doing
today -- but after a long struggle. And I wanted to make sure
that people do pay back so that the bank does not stop this procedure,
and people did pay back. So I gave more loans and it became wider and
wider. I then told the bank, "Why don't you do it to yourself? Why do
you need me as a guarantor? It's working. You said people will not pay.
Now they're paying." "No, no, you can do it in one village, you have
your students with you, you yourself work very hard, but if we do it,
it won't work." I said, "That's funny." They said, "If you do it in
more than one village, it won't work." So I said, "Okay, let me try."
So I did it over several villages. Still it worked, but the bankers
were not satisfied. They said, "No, this is not big enough." So I did
more villages, to the extent that I was challenged to do it over a
whole district. I did it over a whole district. And still it worked.
But the bankers were not persuaded.

So I said, why am I running after these bankers? Why don't I set up my
own bank and just settle the whole issue? Then I started running around
in the Central Bank and the government offices to give us the
permission to set up a bank which will work only for the poor people.
It took a long time. Finally in 1983, government permitted us to set up
a bank and we became an independent bank.

This bank, now called Grameen Bank, works only for lending money to the
poorest people in Bangladesh -- landless, assetless people. Today
we have eight hundred thousand borrowers in this bank. We work in
eighteen thousand villages. We have seven hundred and thirty-five
branches. And this bank not only lends money to the poor people, it is
owned by the poor people.  The people that we lend money to, they also
become the shareholders of the bank and own the bank. Out of the eight
hundred thousand borrowers that we have today, ninety per cent of them
are women. Our average loan size is less than seventy-five dollars;
maximum loan is hundred and eighty dollars. So this is what we've got
right now.


David Cayley

How does the repayment of your loans compare to what conventional
bankers can expect?


Muhammad Yunus

Oh, it's way, way different. Our loan is ninety-eight-per-cent-plus
recovery, but the other banks, like an agricultural loan, recovery is
less than fifty per cent. In industrial loans, it is around ten per
cent. So compared to that, ours is the real bank.


David Cayley

Why would that be, if you're dealing with the poorest who, presumably,
are very close to the line and one misstep and they can't repay?


Muhammad Yunus

One reason is the rich and the powerful, if they don't pay, nobody can
catch them, they can get away, they don't care. They know these
institutions are for their benefit and they take advantage of that;
whereas the poor, they see this is the only opportunity they've got. If
they get into any trouble, if they don't pay back, they're not going to
get any further loans. So they want to keep it open and they never in
their life dreamt that anybody would give them any money and for the
first time Grameen Bank comes and convinces them that yes, this is
really true, because at first they don't think this is true. They think
somebody's tricking them into something. Why should anybody give me
money? I don't have anything to offer them in return. And when money
lenders give money to you, they in exchange take your land, they take
so many other assets, and I have nothing. Why should a bank come and
give me money?

So it takes a lot of time to build up the confidence and once they
started getting the money, they're totally surprised -- the way
the money comes and the way they can use the money, the way they can
repay the money. And their confidence builds up. Even if the money is
available, people cannot believe that they can really use the money,
because they never used it. They don't believe that they can really
make income and they can't do anything. So a process of rebuilding the
person's image of himself and herself begins and that's more important
than the money itself, because what is happening, our society, all our
societies, the way we build our societies, got into the habit of
putting people down, rejecting people, and is not in the habit of
building people up. You look at any society that we have around us: for
flimsy things, immediately people are rejected. People don't find any
way. And more and more people are rejected, and not being able to enter
into the mainstream of life.

So what we have done we have built barriers: on the one side of the
barrier people enjoying their life and the other side of the barrier
they are just languishing there. When you are on the other side of the
barrier, you start feeling yourself probably you're good for nothing,
you have nothing to offer, that's why you're being rejected, that's why
you are in the garbage. And here you are not. Only society has created
that condition for you and you started believing that. So to peel off
that feeling takes a little time. After you are successful in peeling
off that feeling, the real human being comes out and that human being
is as good as anybody else.

And we are not trying to remove those barriers. Whenever we talk about
the people at the bottom or poor people, our usual reaction is to write
a cheque.  Okay, take care of them, feed them, clothe them, give them
somewhere to live.  We don't remove barriers. We simply say, let them
stay on the other side of the barrier, but feed them a little. What I'm
saying, they don't need your throw-away money, they don't need
hand-outs. They need an opportunity, a fair deal. They don't have fair
deal right now.

Now, for example, take the case of banks: they are not asking for free
money from the bank. In Grameen Bank people pay sixteen per cent
interest, just like anybody else in a commercial area. Now, how can you
say the poor are not credit-worthy people? I rather would say, the
banks are not people-worthy. So this is an absence of a fair deal for
people. Like there are many countries where you have welfare benefits,
public assistance programs. That is again writing the cheque. You stay
there, okay, and I'll take care of you.I say that's not fair. I mean,
once somebody's put on welfare or on public assistance, the rules and
laws that we have built are such that she or he has no way of getting
out of that system. I'm saying, no, there must be doors, there must be
windows open for them so that they can get out of it. I said, one
simple way that I see right away when I'm giving public assistance, at
the same time if I could offer them a credit option. You can either
take the public assistance, here is your cheque, or you can borrow so
many dollars and try out what you can do about it and see if you can
come out of it. That's the door. And you are not forcing anybody,
saying, "No, we are not going to give public assistance." We are
saying, "Okay, you can take public assistance."

I say that if five per cent of the people who are receiving public
assistance decided to take credit option, and out of the five per cent
two per cent succeeded in coming out, you will have done such a
satisfying thing. Instead of condemning people, we have helped people
to come out of the situation that they were in.

We talk about employment, that we have not generated enough employment
or employment fluctuates, sometimes unemployment becomes larger than we
can accept. We are always thinking of employment as wage employment.
There must be some factory or business where I'm hired. I say, why?
That's not how economy began. When we go back in the economy, we see
everybody did their own thing, make a living by doing
that -- self-employment. What happened to the self-employment? In
the entire economic literature, you will never see a word called
"self-employment." Our economic theory begins with the firm and how
much you can produce, how much labour you have to employ, and then you
come to the macro level, how it is put together, how many are hired.
Why should I be at the mercy of somebody else? I'm a human being, I'm a
creative person, I can find a way to see how I make a living. But that
our generation or our economy has completely lost sight of. I'm saying
self-employment is a very important aspect of human life. That
opportunity must be kept open.


David Cayley

And presumably wage employment isn't in any case available to most of
the people in the world and there's no prospect that it will be.


Muhammad Yunus

Precisely. Take a country like Bangladesh, where hardly forty per cent
of the people can be employed in wage employment. What about the sixty
per cent? And then you don't even think about the women, as if they
don't have to do anything, because your theory cannot accommodate them
into any place. So if we can create the self-employment situation, what
you are doing, you are allowing millions of small hands doing millions
of small activities, creating entire new economic environments. When a
tiny, tiny thing can start happening a million times, it becomes a
large thing. Totality is a large number.

To give our example of our savings program: every person, every Grameen
bank borrower has to save one taka, which is about two and a half
pennies, every week. But the totality of it becomes enormous when you
do it repeatedly. With eight hundred thousand people we are talking,
when you take a nation of a hundred and eleven million in Bangladesh,
when you can release the energy of this hundred and eleven million
people, by doing tiny, tiny, tiny, tiny things, it becomes an enormous
capacity. That we do not notice. And this is a fault in our
conceptualization. We do not conceptualize that way. People are not at
fault. People are willing to work very hard and they do. The poorer you
are, the harder you work, the lesser you are. Somebody takes away the
fruit of your labour. That's why they are poor.


David Cayley

This approach gives credit a whole new meaning.


Muhammad Yunus

Absolutely. I'm saying that credit is an entitlement to resources. You
don't look at it that way because our conceptualization of credit has
kept it in a kind of docile fashion, it's a lubricant of business, or
something. But, if you imagine when a bank is writing a cheque, giving
a loan of one million dollars to somebody, what it has done is given
the control or command over resources worth one million dollars to
somebody who didn't own it. All of a sudden he became now in a position
to command one million dollars worth of resources. So why this
fortunate person should be bestowed with that kind of privilege and
then another person cannot even take ten dollars?A few people command
enormous amounts of credit and the large number of people never have
any access to that command at all. I'm saying that that's not a fair
deal. And you cannot find an argument why it should be so. So far you
are saying, oh, they cannot offer collateral, that's why we cannot give
them the loan. We have demonstrated that it is a myth: collateral has
nothing to do with it. With collateral you cannot get your money back;
without collateral we are getting our money back. It's a myth created
in their favour because laws and rules we create to protect ourselves.

So when you see people working and trying to make a living, in most
countries, these are illegal things. If you want to sell something on
the sidewalk, you are doing something illegal. If you want to lend
money to those people, it's an illegal activity. And kind of being
generous to it, you call it "informal sector." You don't want to treat
it as something dignified, but to me that is people's economy and
that's what's the most dignified thing that one can do.  People are
working very hard to find a niche, to create something, to make a
living for themselves. And all your laws and rules are created to
reject them from there. I said, your laws are wrong, your rules are
wrong. You change those rules so that you first protect them, build
them up so that they can come up, and they can fulfill every other
responsibility in the society they can have.


David Cayley

Can we talk for a moment now about how the bank is organized?


Muhammad Yunus

Yes, please.


David Cayley

For example, I think the borrowers are formed into circles?


Muhammad Yunus

Yes.


David Cayley

How does that work? And why is it done that way?


Muhammad Yunus

When a person wants to borrow from Grameen Bank, we would ask her to
form a group of five people and she has to find four other friends to
make a group of five. And it's not an easy process. It takes time to
find four other friends who would like to join with you. After you have
successfully found four other friends, formed a group, then the bank
would like to discuss with you the rules and procedures of Grameen
Bank. Among many things, the bank will explain that we will not give
loans to all the five at the same time. You choose two among yourselves
and preferably the most needy two and then we give loans to these two
persons first. And the group will be asked to watch out that they use
the money right and repayment is right, so that they don't get any
problems. Because if they get into problems in repayment, then we will
consider that this group is not a good group, so we'll be hesitant to
deal with this group in future, meaning that the rest of the three may
not receive their loans. So the advantage of doing that is a kind of
group support builds up. You're not responsible only to yourself. When
you are part of a group, you try to do things which are not looked down
upon by your own friends -- something they appreciate. And that
makes you feel happy that they are appreciating what you're doing.


David Cayley

And in the case of default? The others are responsible?


Muhammad Yunus

Not in a formal way. What we say is, if something goes wrong in a
group, we will not consider that group one that we would like to do
further business with, which means you are losing the facilities. We
are not punishing them and we also encourage them to look at each
other's activity, so that nobody gets into any trouble. Troubles come,
like a husband snatched away the money, took it away from her, and then
she cannot do the business further anymore. So the other members of the
group will try to persuade the husband, "Look, if she gets into
trouble, we all get into trouble. Why don't you be good to us, return
the money, so that we can be in a position to continue the business."
So this is how all these issues are sorted out at the group level.


David Cayley

And the groups then also participate in regional centres, I believe?


Muhammad Yunus

Yes. It's called centres. Several groups get together and form a
centre. In each village, there may be one or two centres. And the
principle of Grameen Bank is people should not go to the bank, the bank
should go to the people. So nobody has to come to the bank. Always the
bank goes to them. And the centre is the forum which deals with the
bank. So on a fixed day of the week, the centre will gather together
and hold a meeting where a bank representative will be present. All the
banking transactions will be done in that meeting in their own
neighbourhood.


There you feel strong. When person comes from a distance to come to
you, he's not that powerful. When you're asked to come to the office,
the office becomes a symbol of terror. You see, you are a helpless
person: you are put in a line, you don't know the rules, somebody says
you go there, somebody says you go there, somebody says where are your
papers, and no, you come next time. So you're absolutely helpless, at
the mercy of people. And when you sit behind the desk, you talk like a
machine, you don't recognize me anymore. And for poor people at the
bottom, the poor people, they are so scared of this kind of situation,
they would rather not deal with you, they'd rather stay the way they
are.

So we changed it. We changed the whole situation. We give the
prominence to them. You are the boss, you are there, I come to you. So
if you want to shout at me, you shout at me, because I'm alone. If I
have not bought something, it's my fault, because you have everything,
because you are right in front of your house. That way they feel very
content. The confidence gradually builds up.


David Cayley

And do the centres take on other social functions as well, not just
supervising the loans?


Muhammad Yunus

Oh yes, oh yes. A lot of things. Gradually they can get into all
aspects of life. In the process of doing that, they have come up with
something which is popularly known in Grameen Bank as "sixteen
decisions." Like one of the sixteen decisions is, they will say, we
shall not take any dowry when we're marrying our sons and we shall not
give any dowry when we are marrying off our daughters.

Dowry is such a thing in Bangladesh -- it destroys families. When
you're going to marry off your daughter, because of dowry, when a girl
child is born to a poor family, she is looked at as a disaster in the
family. Everybody gets so unhappy that a girl child is born, they don't
even want to talk about her birth, that she is born, because they are
afraid that the family would go into such a big crisis in marrying her
off because a bundle of money would be needed to get her in marriage.

So we said, why should that be happening? Can't we solve this problem?
So we let them discuss this issue because we see this problem so much.
They came up with this decision that it doesn't depend upon anybody
else but us. We are the mothers of sons, we are the mothers of
daughters. When we are marrying off our sons, we are the ones who are
looking for dowry; when we are marrying off our daughters, we get
scared of our dowries. So why don't we just don't take and don't give?


David Cayley

How radical is this decision? How controversial? How difficult to
make?


Muhammad Yunus

Absolutely. Absolutely. Absolutely radical, because you are against an
entire social stream and the way it's flowing. You stand up and say,
"Look, I'm not going to do it." It is something unimaginable to say
things like that. And poor people stand up and say, "Look, I'm not
saying this for anybody else, but for me: I don't want to take and I
don't want to give. If nobody wants to agree to that, we five, we ten,
we twenty, we will do it, we will mutually marry off our sons and
daughters. Because we are mothers, we can do that."

And as Grameen Bank grows, they feel more and more confident, at least
within Grameen Bank we can marry people without dowry. And this is
actually happening. They are marrying their daughters and sons within
the Grameen Bank, and everybody knows that this is a good idea,
although they know it's something against tradition, but everybody
appreciates it's a good idea. As a result, many non-Grameen Bank
members say, "Okay, we will agree to that too." So a new wave is rising
with that kind of tradition.


David Cayley

And these decisions are in effect vows?


Muhammad Yunus

Sort of, but it's not something...


David Cayley

And are they required to borrow?


Muhammad Yunus

No, no. These are not conditions on loans. We make it very clear. You
take a loan, you pay it back, pay sixteen per cent
interest -- that's all you're responsible for. But why are we
taking these loans for? We want to change our life. And this is number
two decision of the sixteen decisions:  that we want to change our
life; we want to have prosperity in our life, and we want to ensure a
healthy environment around us, we want to grow trees -- this is
one of the vows, one of the sixteen decisions. At the plantation
season, we should be planting trees, and throughout Grameen Bank,
hundreds of thousands of trees are planted during the planting season.
Grameen Bank is one of the largest seedling sellers in the whole
country.

Malnutrition is a big problem in Bangladesh. Still, people are not in
the habit of eating vegetables and it's so easy to grow vegetables. So
Grameen Bank sells vegetable seeds to their borrowers. And there's
night blindness, it's a disease for the children because of vitamin A
deficiency. All this needs is green vegetable eating, that's all. So
that cures that problem. All these things come naturally when you
become aware of your life and when you start seeing life in a different
way. If you are in a condemned situation, you are not taking stock of
yourself because you have nothing to look forward to -- you have
no tomorrow. Now Grameen Bank has put them in a situation, they see the
tomorrow, they see the day after tomorrow, and they prepare for it.


David Cayley

Why are so many of the borrowers women?


Muhammad Yunus

We deliberately aimed it that way. In the beginning, one of the
allegations that I was bringing against the banking system was that the
banking system is deliberately against the poor. That's why they build
the wall of collateral.  And number two, I was making the allegation
that it is anti-woman: banks do not want to lend money to women. If a
woman wants to borrow from a bank, the manager will ask the woman to
bring her husband along, so that he can discuss the business. I said
this is a very biased way of doing business with one part of the
society.So when I started, I wanted to make sure that at least fifty
per cent of our borrowers are women, and this was not easy at all,
because women are not in the habit of borrowing. They knew they cannot
handle this money, this is the belief they had, and their husbands were
not very enthusiastic about it. But we made it a point that this is the
way we were going to do it, we have to do it. And it took us a long,
hard work to achieve that fifty per cent level.

After we have achieved fifty per cent level, we see a strange thing
happening:  money going through a woman in a household brought more
benefits to the household than money entering the household through a
man. A woman, when she brings in some income, the immediate beneficiary
of the income becomes the children, the top priority for the mother is
the children, and after the children has been taken care of, the second
priority the woman has is the household. She wants to buy a few
utensils, she wants to improve the living conditions, she wants to put
a little stronger roof on the top. But for a man, these are not the
issues. The man's first immediate attention is himself: he wants to go
and enjoy himself, go to a movie, if he can, he can do gambling a
little bit, and that sort of thing -- not immediately looking
after the things that the woman does. So I said, why should we then
approach the household through men? Why don't we approach it through
women, because after all we want to see changes taking place within the
family, and if the children are benefiting, children represent the
future, so we gradually focus more and more on women.

So as a result we became ninety per cent women. You see, women have
seen the worst part of poverty. If being poor is tough, being a poor
woman is toughest.  When she is given little opportunity, she struggles
so hard to get out of it.  And then, being woman, she is totally
insecure. She is insecure in her husband's house, because husband can
throw her out any time he wishes. And she's insecure when she's in her
parents' house. The parents are just every day waiting to get her out,
some way, because she's a burden, society doesn't accept her in her
parents' house, she must be married off somehow. If she is divorced and
coming back to the parents' house, again it becomes a disgrace to the
parents' house. She's not accepted anywhere.So given an opportunity,
she wants to build up her security, and she's much more systematic in
her approach than a man. Men have a very limited horizon: he's more
limited to today...  Woman sees not only today, but next year and year
next.


David Cayley

This is a very unflattering portrait of men. Is it men in situations of
poverty particularly that you are talking about?


Muhammad Yunus

Particularly in situations of poverty because he gave up. He gave up,
he thinks that this is the way it's going to be. So he has accepted
that position. And related to woman, he is in a better situation. For
example, to him dowry doesn't immediately become a very annoying thing
because he's the beneficiary of the dowry, whereas a woman is the
person who is the victim of dowry. So there are differences in how he
feels. The woman is the one who spends twenty-four hours in the house
with the children. Men, in the morning he leaves the house and all the
agony of hunger and pains of the children are left with mother. He
doesn't care. And at times of extreme stress, like famine, it's a very
usual scene to watch -- men abandon their family and disappear.
But a mother never disappears, leaving her children behind. A father
doesn't pay that kind of attention to the children.


David Cayley

Have you encountered much opposition to this? I'm thinking not just of
the bureaucratic resistance that you related earlier, that the banks
were unwilling to change their practice, but I'm imagining, for
example, that people on the left would be very contemptuous of this
approach.


Muhammad Yunus

We have a lot of controversies around us. Some on the left say that
this is a capitalist way and this is done deliberately to destroy any
prospect of revolution, because what you're doing, you're giving little
opium to the poor people, so that they don't get involved with any
bigger issues and they sleep peacefully and they don't make any noise.
Their revolutionary zeal cools down.  This is one interpretation of the
leftist view of what we do.Another group in support of us, from the
left, says, at least he's organizing the poor people through Grameen
Bank. They didn't understand what organization is, but within Grameen
Bank organization is very strong. A hungry person has no politics. A
hungry person only knows where the food is; whoever gives him food he
jumps over to him. So first you must take over the responsibility that
they have their stomachs full. Then they can think about the next
thing. Then the politics comes.

Previously they didn't understand what politics is. Now they can see
clearly because they are not bound to anybody. Previously for their own
survival, they had to bow to the rich people because otherwise they
don't get the job or they don't get the food, or whatever it is. Now
he's freed them by giving the loans. The traditional ties, traditional
links are cut off now. They are free people now because they can do
whatever they want. So the left are divided on this issue whether this
is the right thing to do or wrong.


David Cayley

What about the elites and those who would have lent money formerly at
much higher interest and so on? How are they reacting?


Muhammad Yunus

They don't react favourably. So what they do, they spread rumours. They
will spread rumours that if you take Grameen Bank money, if you are a
woman and you're taking Grameen Bank money, you'll be expelled from
your religion because this is against the religion for a woman to take
money from the bank.  So we will not put you in a grave in a religious
way. So that's very scary thing for a woman who has nothing and now she
thinks even if I die, I don't get the last religious rites for my
burial.

These kinds of rumours get spread. But after you get started in one
corner of the village and some people take the money and see that
nothing is happening, they're rather improving their condition, they're
improving their house, then people say, "Well, why not? I need the
money too." And gradually it spreads.  So those rumours kind of thin
away, they disappear very soon. They don't do it very successfully.
David Cayley

Can we return now to the world of development economics, from which we
departed at the beginning of our conversation when you walked out the
gates of the university?


Muhammad Yunus

Yes, that's right.


David Cayley

What is Grameen Bank saying to this world of development economics and
development theory that you were so dissatisfied with?


Muhammad Yunus

I have been saying that people talk about development a lot, write
about development a lot, volumes are written, billions of words are
written, but it has only created confusion about development instead of
clarifying development. Nobody can precisely say this is what I mean by
development. I tried to explain what I mean by development and I stick
to that image of development. My development is a positive change in
the life of the bottom fifty per cent of the people.

When you talk about development as we see in the literature -- a
dam, a road, an international airport, buying a new jumbo
jet -- everything becomes development. If I buy a jumbo jet, you
tell me, in how many cycles later that will affect the life of the
bottom fifty per cent positively? I would refuse to call buying the
jumbo jet as anything to do with development.  Or that beautiful
highway that you build from north to south or east to west and say that
that will revolutionize the whole economy, I would refuse to accept it
as a development project. That highway, by the way, may even adversely
affect the bottom fifty per cent of the people by removing them from
their habitat while they are building that road and then forgetting
where they are, making them paupers. So you call it development because
you invested so much money in it, somehow you thought that makes your
country beautiful, beautiful cars will be running through this road.

That's not development to me. People talk about per capita electricity
consumption as an index of development. I say I don't see any meaning
to that, because this bottom fifty per cent don't even consume any
electricity. If the electricity consumption per capita increases a
thousandfold, what happens to the people at the bottom? Nothing. So, to
me, that is not an index of development. If you want an index of
development, to me, I would say, if a family which has one set of
clothing -- they don't have a change of clothing -- and
they achieve a level where now they have another set of clothing that
they can change, I'd say that is tremendous development.After all, the
top fifty per cent, they don't need your assistance. They can handle
their life themselves and most often they handle it in a way that
creates a problem for the rest. So we should be addressing the bottom
fifty per cent.  Now, look at the donors, people, the countries,
societies which try to help the countries of the south, they come with
their ideas about development and they would like to fund those things.
And what happens ultimately? Ultimately, the projects are built, dams
are built, roads are built, plants, power generators are set up.
Countries in the north probably sold a few more generators, a few more
planes, a few more ships, a few more whatever it is, and called it
development assistance, and their experts designed these
programs -- and in the end poverty in the recipient country has
increased, it has deepened, the economic situation worsened. So why
should we call this development?

What I'm saying is, at least let us take a pause and ask ourselves what
it is we are trying to accomplish. The donor countries in the north,
before they spend one dollar, ask themselves, why am I spending this
dollar for this country? Most often the taxpayers in the countries of
the north are told, we are helping the third-world countries, they are
poor countries, they need our help, otherwise they cannot survive. This
is the reason.

What I'm trying to point out is, they are never told, the taxpayers,
that there are rich people in the poor country. Most often the
resources that we are sending to the third-world countries are received
by the people at the top, not the people at the bottom. If they knew it
clearly, the taxpayers knew it clearly, I don't think taxpayers would
be so excited about giving money to the third-world countries. Before
we send out our cheques from the north, funds from the north to the
south, I think the cheques should be rewritten in a more direct way and
instead of saying that this is the cheque addressed to Bangladesh, it
should say to the poor people of Bangladesh. If we take a little bit of
care, I think it will have more effectiveness. David Cayley

I remember a story that a Brazilian environmentalist, Jos Lutzenberger,
told me a couple of years ago. He is an agronomist. He's now been made
a minister of the environment in Brazil, but he was then an agronomist.
And he went to the World Bank with a number of small projects he was
interested in and he received a very sympathetic hearing. And then one
of the bank officers said, "Mr. Lutzenberger, I'm sorry, the trouble
with your ideas is that they're too cheap." Can the World Bank be
interested in the Grameen Bank?


Muhammad Yunus

The World Bank has shown interest in the Grameen Bank because it has
gained a lot of attention worldwide. But the World Bank certainly will
not be interested in tiny, tiny replications of the Grameen Bank that
are coming along, which is very important because it just starts in a
tiny way, but it has a tremendous potential. Not only the World Bank,
most of the donors, unless it is above a certain amount, they are not
interested. So grandiose projects get priorities, not human projects,
small projects, which have the seeds of further expansion, further
growth in them. These things are left out.  One cannot start with a
twenty-thousand-dollar project, fifty-thousand-dollar
project -- it's always million-dollar projects and billion-dollar
projects, because their experts are used to bigger figures. They see in
a more global way, a more macro way, rather than a micro way.

One of the arguments I was making is that the fault in our planning and
thinking is, we got used to having a bird's eye view. We want to see
the whole world, the whole country, in one sweep, and make decisions. I
say, when you have a bird's eye view, that means you are flying pretty
high. When you're flying pretty high, you don't see things clearly and,
if you're not seeing things clearly, you start imagining things. And
that's where the trouble begins. Your imagination is so fertile because
it has read or been taught of so many other things, you start imagining
things which do not exist at all on the soil.

I have been arguing that it's much better, much safer to begin with, to
have a worm's eye view, be on the surface, and walk and find out what
exactly is there, and if there is an obstacle, how to overcome that
obstacle. This is more concrete. This is much more practical,
pragmatic, but people don't enjoy it so much. It's not glamorous to
have a worm's eye view. It's so much more glamorous to be flying up and
seeing everything.


David Cayley

On the small scale at which you work, what is possible for people when
you're dealing with amounts of hundreds of dollars? Doesn't that mean
that only a very restricted range of, say, business activities are
available to people?


Muhammad Yunus

First of all, I've been saying that every person, every human being has
capability, inherent capacity, which is buried inside, and society has
created obstacles to letting it come out. Once the barriers are
removed, it comes out.  But capabilities differ. I can offer large
opportunities, but my capability is only to take the smallest scoops of
this, and that's my capability, you cannot blame me, and that's what I
do. Grameen Bank offers the opportunity to go as to your capability. I
cannot push a person to become something that he is not, but gradually
if I take two scoops, or one scoop first and I have built confidence,
maybe I'll think of three scoops and four scoops in the next round.
That is important.

What does it do if I do one little step or two little steps through
Grameen Bank? If we consider and come back to that question of one set
of clothing versus two sets of clothing: if a family which has started
with one set of clothing moves to two sets of clothing, to you it's not
a very dramatic change because what has happened -- two sets of
clothing -- that's not development. But, to the family, it's an
utmost fantastic thing that happened to their life. We meet women in
Bangladesh who cannot come out of the house to talk to us because she
has washed the clothes that she was wearing. To that person to have
another new set of clothes opens up the whole world and re-establishes
her human dignity. So that is to her a very important thing. So these
little changes can accumulate and bring people to a higher and higher
level.

A person who never lived in a house which has reasonable roofing in a
monsoon country like Bangladesh -- where you live practically on
mud and slush with your family and your clothes are never
dry -- to have a tin roof over your head and have a dry floor
inside for the whole year round is a tremendous amount of change. You
may not see it from above, from a distance, but what has happened to
people inside [Bangladesh] is a tremendous change.


David Cayley

Dr. Yunus, thank you very much. It's been quite a pleasure to talk with
you.


Muhammad Yunus

Thank you for giving me this opportunity.


Lister Sinclair

Tonight on Ideas you've been listening to a conversation between David
Cayley and Dr. Muhammad Yunus, the founder of the Grameen Bank of
Bangladesh.  Production assistants: Gail Brownell and Faye Macpherson.
Technical production: Joe Hill. We'd like to thank the Calmeadow
Foundation for their assistance in setting up this interview. The
executive producer of Ideas is Bernie Lucht.

Transcription by Hedy Muysson.

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Hari Srinivas - hsrinivas@gdrc.org
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