Banking on poor women

Muhammad Yunis, a former economics professor in Bangladesh, has an unprecedented vision for changing the lives of poor women all over the world.


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Dawn MacKeen
February 13, 1998 1:00AM (UTC)

Laily Begum remembers what it was like to live like an animal -- to spend her nights sleeping in a cow shed and her days begging on the streets of Patira, Bangladesh, eating the scraps of food people handed her. "Nobody helped me before," she says now, looking back. Begum, a 35-year-old mother of three, remembers what it was like to be breathtakingly poor. But in Bangladesh, where more than 50 million people live below the poverty line, Begum was just one of the many.

The only way out of poverty, Begum thought, was to get enough money to buy a cow so she could sell its milk. Needless to say, she couldn't get a loan from a traditional bank because she had nothing to offer as collateral and only a meager income doing housework. It was a stranger from Dhaka who finally helped her -- a man named Muhammad Yunis, who has an unprecedented vision for changing the lives of poor women all over the world.

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After hearing about Grameen Bank, which lends money to the poor and was founded by Yunis, Begum took out a loan for 5,500 taka ($119) and bought her cow. Only seven years and as many loans later, Begum has transformed her life. She now moves about her own two-room home -- made of mud, reinforced sticks and a tin roof -- with a cell phone pressed to her ear. The phone is the result of her latest loan, which she has turned into a profitable business of selling phone calls to other people in her village of 10,000.

"People now come to me for help," Begum says through a translator on an early Friday morning phone interview. "I'm self-sufficient and I can feed myself and my family, and now other people look at me and they treat me with respect."

Mention the name Muhammad Yunis to Begum and she pauses for a long time. "He is the one who has made it possible for us to have phones, for us to have cows, for us to change our lives," she says finally. "I have seen him occasionally when he comes to our village."

The truth is, Yunis probably doesn't know who Begum is or exactly how her life has changed over the last seven years. She is just one of 2 million women whose lives have been altered since Yunis founded the Grameen Bank 15 years ago. The bank is a place where Bangladesh's poorest come and are not turned away, for having little or no money is a criteria to become a borrower at Grameen, which means "village" in Bangla. "The fact that somebody is a human being is good enough an introduction for us," Yunis says, and adds fervently that credit should be a human right, not a privilege.

Grameen started as an idea when Yunis left the United States for his native Bangladesh after it became an independent country in 1971. He taught economics at Chittagong University. Yunis had started to wonder if the theories of economics he was teaching were just that -- mere theories, which work only in diagrams on a chalkboard -- when, as he left the classroom each day, he could see people struggling to survive. Yunis started traveling from village to village to learn about real economics.

"One woman that I met was making bamboo stools, and she was making only 2 pennies a day," he says. "And I couldn't believe that anybody could make such a beautiful product and earn so little." The woman explained that she didn't have enough money to buy the bamboo outright, so she had to go through a trader who made her sell the final product back to him for a price that he decided. "And I realized what had happened: She had become a bonded laborer to the trader."

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The first loans Yunis ever made were out of his pocket -- $27 a piece to 42 people. He had become convinced that people were poor not just because they had no financial resources but also because they had no social currency. Yunis, then in his 30s, made it his life's work to change both the plight and the perception of the poor. "When you see that you can touch the life of one person and it happens right in front of your own eyes, it's a very intoxicating experience," he says. "What excites me is the possibility that this can happen to millions and billions of people around the world."

Yunis convinced the Bangladeshi government to allow him to start a bank, which has since grown to become the country's largest rural credit institution, operating in almost 40,000 villages across Bangladesh. Since its founding, the bank has loaned out almost $2 million to a mostly female clientele (94 percent of the bank's total borrowers). The 57-year-old Yunis targets women because he believes they are the key to improving the lives of children. They tend to funnel more money, he says, back into the family than men do, and tend to invest in tomorrow while men spend their money as soon as they get it.

Yunis, himself a father of two, believes that his work at Grameen is more about people than dollars and cents. It's about helping the poor release themselves from poverty's grip; it's about remedying the problem, not donating money in the name of charity and then walking away. "Charity doesn't help poor people, it takes away their dignity; it takes away their initiative," Yunis says. "So I think when a person has a business kind of arrangement, a partnership, he or she feels equal. Charity helps remove concern about the poor because people feel that they have done their duty just by throwing a few crumbs at them." Yunis believes he's promoting more of a philosophy of living than an economic model. His 16 somewhat controversial commandments for Grameen borrowers are embodiments of that philosophy -- thou shall grow vegetables year 'round, thou shall exercise, thou shall not exchange dowries, thou shall keep thy families small. "Why does a family need so many children? To help you in your old age?" Yunis asks. "Have less children and build them up so they become economically sound people. It's better to go for quality than quantity."

By promoting his philosophy and loaning small amounts of money -- averaging the equivalent of $100 at a time -- to women wanting to start or expand a business, Yunis has started a revolution in the banking world. That revolution is called "microcredit," a principle of promoting money-lending at commercial interest rates to the world's poorest. Hundreds of institutions from Bolivia to Kenya have now modeled themselves on the principle of microcredit. Moreover, what Yunis discovered -- and what the rest of the world is finding out -- is that the poor are not financial risks: 98 percent of Grameen's borrowers repay their loans.

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"What started out as a social and geo movement is now moving into the mainstream of the private sector," says Joyita Mukherjee, microfinance specialist at the Consultative Group to Assist the Poorest at the World Bank. "Commercial banks are now looking at these individuals as a market niche. And that's good." The microcredit movement has grown so much that last year there was a Microcredit Summit in Washington, D.C., that kicked off a global campaign to try to bring credit to the poorest people, with a goal of reaching 100 million lives by the year 2005. The summit brought together more than 2,900 participants, from Hillary Rodham Clinton to the president of the Women's Environment & Development Organization, all in the name of spreading Yunis' microcredit principle.

Mukherjee observes that the movement is not just changing women's economic status -- it is also changing their traditional social status as well. "You see a big difference in the lives of these women and what they are able to do. You can take a view and say this is only financial services but it actually affects more than just the economic activity. It's also about empowerment and changing women's roles in society."

Since Begum took out her loan and became an important entrepreneur in her village, she has seen other women begin to walk around and leave their traditional places -- a significant shift in rural Bangladesh, where women are expected to stay literally inside their homes. And within her own family, the roles have definitely changed: She is the breadwinner and outearns her husband by 30 to 40 percent. This Bangladeshi woman now not only leaves her hut everyday but also, through a cell phone and a cow, has made herself a place in the world -- all, she says, because of that man she sees visiting her village every once and a while.

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Dawn MacKeen

Dawn MacKeen is a former senior writer for Salon, and author of a forthcoming book about her grandfather’s survival of the Armenian Genocide, "The Hundred-Year Walk: An Armenian Odyssey" (Houghton Mifflin Harcourt, January 2016).

MORE FROM Dawn MacKeen

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