In July of 1972, a young professor returned from the US to his native and newly independent Bangaladesh to be part of the building of a new Nation. He joined the Chttitagong University to teach Econmic theory. But in 1974 the great famine hit Bangladesh. Combined with the oil crisis of 1973 all economic structures started to collapse. Hundreds of thousands were dying. Prof Yunus saw no point in teaching antiquated western economic theories that had no relevance the reality around him. So he and his students started to tarvel to the nearby villagers to help. In that period he discovered people that were caught in the economic trap of moneylenders. Taking micro loans to barely survive, but could never pay off. And so became slaves to the money lenders for the rest of their lives. Prof Yunus and his students made a study of of the number of such families in the two villages next to their campus. They found 42. They calculated the total amount these families had borrowed.
The total sum was $27. For want of $27, forty two families were living below the poverty line in conditions of abject slavery. Muhammad Yunus gave the families $ 27 and freed them from a life long bondage to poverty. And the first seeds of the Grameen Bank were sown…
The bank was formed on principles that will make a normal banker laugh. Lend (not give) money only to those that are destitute and stuck in the poverty trap. To those that can offer no security. To those that existing banks would not even acknowledge the presence of. To those that society has given up on and turned a blind eye to. To women that actually have never handled money before. To beggars on the streets. And when they return the money, give them more to build their lives even better. So was born the the philosophy of ‘microcredit’, a system that has lifted the lives of 100 million people world wide across six continents.
Today the Grameen Bank that has continued with exactly the same principles. It has given loans to over 7 million people that were stuck in the poverty trap in 78,000 villages in Bangladesh. 97 percent of the borrowers are women ! Since it opened Grameen Bank has given loans to the poor and destitute worth $ 6 billion. The repayment rate is a mind boggling 99 % !. Compare that to the loans given by IDBI to companies in India that have been bankrupted by their owners by illegally transferring their assets overseas. Grameen Bank has made a profit in almost every year of operation since it’s inception. It has refused to accept donor money for the last 15 years, and deposits are at a comfortable position of 156 % of outstanding loans. Compare that with the subprime losses, born of the greed of the great US banks !
And guess who owns the Grameen Bank ? You are absolutely right in being astonished. The borrowers ! The destitute, the beggars, the women that had to be persuaded to actually even touch money ! They now collectively own a major bank. All this goes to prove one thing. That the success of an enterprise has absolutely nothing to do with the profit motive.
I have never been so moved by a speech as I was by Prof Yunus at the YPO in Mumbai yesterday. His speech followed mine. I had tears in my eyes as he talked about the giving life and an honourable living to the poor of the world. Surely that is the effect that Gandhi must have had in his talks.
How can I bring these ideas in the work I do ? I am raising a fund now, where one of the prime motives is to use technology to bring good primary education to every child in India through interactive classrooms. There is so much to learn from this man. On his understanding of a completely different economic viewpoint. On his commitment. On his compassion.
He has invited me to Dacca to study how his people are motivated – wow !