October 15, 2006
"Empowering women is the best antidote to extremism anywhere.
Women don't go off to drink away their money at the bar or gamble it
away at cockfights." Muhammad Yunus, winner of the 2006 Nobel Peace
This yearâ€™s Nobel Peace Prize was awarded to â€˜the banker of the poor,â
€™ a man whose visionary idea about empowering poor women by making them
economically independent has helped tens of millions of people and created a
micro-loan system now copied by over one hundred countries, not all of them
poor . Muhammad Yunus, a Bangladeshi professor of economics, speaks with
the passion of a prophet and has fervently believed in his idea since the mid
1970s, ignoring skepticism and the angry and often violent reaction of his own
chauvinistic Moslem society. I interviewed Muhammad Yunus in 1999 and
traveled around Bangladesh to visit the beneficiaries of his ideaâ€¦â€¦
This is the story:
Bangladesh, January 1999:
Bangladesh is one of the worldâ€™s most crowded and poorest countries, a
piece of the earth cursed by cyclones, floods and chronic poverty. In this country
Muhammad Yunus has been known for three decades as "the banker of the
poor," a man who has fought catastrophes, male prejudice and religious
Two decades ago (1976) Yunus began lending money exclusively to poor
women with no collateral, an experiment in banking ridiculed by bankers and
violently opposed by Muslim extremists as a threat to male-dominated family life.
By 1999 he presided over a $2.4 billion empire, shelling out loans of $25 to $75
to poor Bangladeshi women in an effort to give them a sense of self-assurance,
economic independence and a chance to launch small cottage industries--often
no more than making one chair or one pot a day.
The Nobel Peace Prize honored Yunus as the founding father of micro-credits,
the global trend to help the poor by stimulating their pride and productivity rather
than by nursing them along on the handout mentality of most Western charities.
His Grameen Bank has inspired successful programs in over 100 countries and
has been copied by 5,000 international institutions. His micro- credit system,
also adopted by the Women's Self-Employment Project in Chicago, has weaned
unwed mothers off welfare. It also has been incorporated into programs to help
American Indians in South Dakota and Oklahoma, and Mexican-Americans in
Until a few months ago (in 1999) Grameen enjoyed an enviable repayment rate
of 94 percent from its loans to the poor. But then the banker of the poor himself
was looking for a $200 million loan to help his customers who lost everything in
that summerâ€™s devastating flash floods.
For three months, two-thirds of Bangladesh was covered by water. Two crops
were lost, and loan repayments plunged to 68 percent before they came back to
88 percent in January. A four-month bank moratorium on installment payments
needs to be funded, and many of the 2.1 million people Grameen supports need
to be refinanced.
Yet Yunus is not worried. During a 1995 cyclone disaster he raised $100 million,
and he has survived the other natural disasters that periodically ravage
The professor has weathered man-made setbacks as well: the extremists who
torched his bank branches, threatened his life, and beat up his staff and female
clients. Besides opposing the loans to women, the radicals consider the bank's
insistence that its borrowers practice family planning to be "un-Islamic."
By the year 2,000 family planning had halved Bangladesh's birthrate of six
children per family. The country's radical Islamic parties lost 14 of their 17 seats
in parliament during the general election in 1996--a defeat attributed to women
voters, many of them clients of the Grameen Bank.
"Empowering women is the best antidote to extremism anywhere," Yunus told
me: "Women don't go off to drink away their money at the bar or gamble it away
To the bafflement of commercial bankers, Yunus has shown that the poor pay
back their debts, that trust and faith can be sound collateral, and that women are
far better customers than men on a subcontinent where male chauvinism still
His bank fights to continue the tiny loans for mini-projects, such as the weaving
of a single bamboo chair a day, the continued ownership of a tricycle rickshaw,
the bank-financed use of a cellular phone for an entire village or fodder for a
single cow. The repayments and a hefty 20 percent interest rate ensure more
poor people can obtain loans that no other bank is prepared to offer them.
Though his fans promote Yunus as a candidate for the Nobel Peace Prize, his
enemies call him a usurer whose terms are so harsh that his debtors must pay
back their weekly installments before they are allowed to spend money on
burying their dead. But from his fifth- floor study, the 58-year-old professor can
look across the wetlands of his native Bangladesh where people in some 39,000
villages are making a livelihood thanks to his bank.
In this river-braided delta of the Ganges and the Bramaputra rivers, a nation
Henry Kissinger once derided as "the world's basket case," half the 125 million
people live below the poverty line. Begging is common, and two-thirds of the
population and 80 percent of all women remain illiterate.
Amid this misery Yunus pursues his dream. He wants to be known no longer as
"the banker of the poor" but as "the banker of the formerly poor."
He is fighting for an international agreement to set aside for micro-credits $1
billion of the estimated $60 billion annually poured into global investment funds.
He wants financial institutions to break with the principle that collateral is the
only requisite for a loan and he wants Third World governments to pay back
their foreign debts in micro-credits in their own currency to their own country's
"Credit is a human right," he argues.
His crusade began 23 years ago, during a visit to a village where the young
economics professor saw a woman weaving one bamboo chair a day. To
purchase the material for the chair she had to borrow money at an exorbitant
daily rate. She then had to sell the chair at a fixed price.
"I lent her the $3 she needed to buy material," Yunus said. As an experiment, he
lent a total of $69 to 42 residents in the village. All paid back their loans, with
"I went to my banker friends all excited," he recalls. "They just laughed. `Try the
experiment on five villages,' they said. I did, and it worked. `Try it on 50.' I did,
and it worked. And then 100 and a 1,000 and now its 39,000. And it has always
His bank now runs 18 subsidiary projects, from a telephone company to a fishing
cooperative and an Internet service.
"Poverty is not a problem just for Bangladesh," he said. "This is a problem
everywhere. People in Chicago told me, `You are crazy to promote this in
Chicago. You don't understand the U.S.A.' I told them we are talking about poor
people. Poor people in Chicago react the same way as poor people in
Bangladesh. They are made poor the same way."
He exudes confidence, not just over his bank but about a people who have
learned to mark progress as two steps forward and one step back. He knows his
customers will cling tenaciously to the one chance the bank offers them, fully
aware that defaulters can never apply for another loan.
Ahmena Khatoon has no intention of defaulting. She lives off the Dhaka-to-
Chittagong highway, among canals and streams that flood every year, amid
yellow mustard fields, orchards and vegetable patches in summer and foul-
smelling stagnant water ponds all year round.
She has two small sons and a husband who has not worked for years. But over
the past six years the illiterate young woman has bought two motorized
rickshaws with loans from Grameen. She leases the vehicles to villagers who
pay a daily fee.
Every Sunday, members of the Grameen Bank staff arrive at her village, as they
do at villages all over Bangladesh, to collect the repayments. Khatoon pays a
weekly 440 takka ($10).
She is part of a unit of 42 women. Grameen borrowers must be members of a
minimum unit of four women, and each unit member is responsible for the others.
If one defaults, all default.
"My husband left for Saudi Arabia, and I did not hear from him for seven years,"
Khatoon said. "I had a baby to feed, no job, no income. So I joined a unit of 41
other women who took out loans from Grameen. We all have our own
businesses. One bought chickens, another a cow and someone else breeds
Under Grameen's strict regime, the entire unit loses its credit rating if any one of
them misses a week's payment. Each Sunday before the bank staff collects
payments, the women recite out loud the 16 Grameen principles each must
adopt as condition for a loan.
Among the 16 pledges are the promises: "I will never, never default on my
payments" and "I will always practice family planning."
Khatoon is 26 and self-assured. Her standing in the village as an entrepreneur
has given her confidence and rights that women have never had in this Muslim
Her husband returned from Saudi Arabia without money and with debts to the
agent who sent him. She has paid back the debts, kept her formerly unemployed
brother at work and managed to build a small hut with a corrugated roof on the
edge of the village canal. She has electricity and a television set. By
Bangladeshi standards she is rich.
She admits the bank's conditions are tough and the women in her unit often lend
one another money to manage the weekly repayments.
"But if the bank was not so tough," she said, "all of us would have defaulted a
long time ago. Then we would all be poor again." (ends)