Grameen Bank, Bangladesh

dhaka, dec 26 (ips) -- ever since henry kissinger, a former u.s.
secretary of state, dismissed bangladesh as a basket case, the
world community has virtually written-off the country.

enmeshed in the familiar third world problems of endemic
corruption, deepening poverty and exploding population, the
country grows poorer with each passing year even as billions of
dollars pumped in as aid seemingly vanishes into thin air.

part of the reason for this is bangladesh's unofficial
reputation as one of the world's most corrupt countries.
grandiose projects never seem to get to those most in need.

but there are some exceptions. mohammad yunus has transformed
the lives of thousands of impoverished people through the grameen
bank -- a scheme that threw established banking norms to the wind
by lending money only to the poorest of the poor.

loans of a few dollars for tools to husk rice, to buy a cow or
a sewing machine -- all small things have made a big difference
to people's lives.

many of the 1.2 million grameen borrowers, 90 percent of them
women, had been reduced to begging for a living. now most of them
have a roof over their heads and can support themselves.

yet yunus does not find his achievements extraordinary. he
explains that the problem with traditional approaches to poverty
alleviation and development is that they fail to seek things at a
grass-roots level.

''not all people have access to a bird's eye view'' explains
yunus. ''poor people don't.  they're too busy seeking out a
survival for themselves with their worm's eye view.''

yunus believes that social scientists and development experts
overwhelm themselves with the seeming enormity of problems in the
developing world. yunus works on the principle that large
problems are merely the composite of a great number of simple
problems. and simple problems can be solved by simple people.

''removal of poverty must be a continuous process of creation
of assets by the poor at a steady rate'' says yunus.

''poor people know what they must do to get out of the rut.
but the people who make decisions refuse to put faith in their
ability,'' he adds in exasperation. 

a former economics professor at the chittagong university,
yunus says he learnt 'real-life economics' by unlearning all he
was taught. his faith in established economic principles was
shattered by the disastrous famine of 1974, when thousands died.

''i got really frustrated and out of disgust...began walking
through a village just outside the campus'' yunus recalls.  ''i
was trying to find what is the poor people's economics...so that
village became a university for me.''

one of the first people he met was a widow with two daughters.
sufia khatun was a landless peasant, one of the 55 million in
bangladesh a country with a population twice that number. sufia
had borrowed money to make bamboo stools which she then sold. but
as the loan had to be repaid, her daily profit was only two cents.

yunus says that he ''couldn't accept why anybody should make
only two cents for such a beautiful skill.''

all khatun needed to improve her income was the equivalent of
four dollars. yunus lent her the money and her profits soared to
one and a quarter dollars every day.

the spectacular result prompted yunus to approach a local bank
to lend sufia money. the manager laughed at the idea saying that
the bank had never lent money to an illiterate woman who could
not provide collateral. yunus agreed to become her guarantor and
the manager relented.

sufia repaid the loan and continued to make profits. but the
bank still refused to deal with her directly.

it was then that yunus decided to set up a bank which would
cater only to those rejected by traditional banks -- the poor,
the illiterate, and women.

what began with a few small grants and loans from
international donors, has now provided over 100 million dollars
in loans. ninety eight percent of all loans are paid back.

the secret of grameen's success is the trust between the bank
and its borrowers, a result of their regular interaction. in the
upside-down world of grameen, the borrowers do not go to the
bank, the bank goes to them.

representatives of the 973 branches of grameen visit the
village for a weekly meeting with the members. besides
disbursement of loans and repayment of interest, the meeting
discusses all sorts of problems -- personal and collective.

the bank also aims to raise health and environmental
consciousness. each of its members must plant at least one
sapling a year as part of a afforestation programme.

''lending money does not help the poor individual,'' says
yunus ''unless at the same time you help bring out inner
potentials that help the individual overcome seemingly
insuperable odds.'' 

Return to the Grameen Bank Page

Hari Srinivas - hsrinivas@gdrc.org
Return to the Virtual Library on Microcredit