The new bank that likes to say yes

September 8, 1995

As the United Nations' Women's Conference in Beijing propels gender issues to the top of the international agenda, Stella Hughes (right) describes the fury in France ignited by perceived male domination of women's studies, John Davies (left) looks at how the British Association is preparing to tackle the changing roles of men and Sue Wheat (below) reports on how a bank manager became an idol for thousands of Bangladeshi women

Economists and bank managers are rarely idolised for long. But Muhammad Yunus, a charismatic professor of economics from Bangladesh has become something of an international guru by being both. By setting up the Grameen Bank, he has provided a springboard out of poverty for millions of people worldwide. In Beijing, supported by Hillary Clinton and Queen Fabiola of Belgium, he will be discussing the scope for Grameen's replication worldwide.

The Grameen is no ordinary bank, and Yunus is no ordinary economist. By lending only to the very poorest people in Bangladesh - mainly landless women - he turned the banking world on its head, and in the process, set up an internationally renowned system of poverty alleviation.

Yunus tells the story of Grameen with pride and modesty. "I was teaching economics at Chittagong University and could see the economy sliding away. It was so frustrating. I saw how the Bangladeshi people suffered and how the money they earned went straight into the pockets of money lenders and I realised there must be something terribly wrong with the economics that I was teaching. I thought - if I can extend the loans so that people don't have to fall victim to the money lenders - they can get out of this terrible cycle of extortion." Yunus lent 42 people the equivalent of $30 each from his own wages and the story of Grameen began.

Unable to set up official bank loans for such un-creditworthy borrowers, Yunus, then aged 34, offered himself as guarantor and came up with schemes making it easy for people to pay him back. "The bank said it would never work. But it did. Then they said it couldn't be expanded. But it was. I approached other banks but they said it wouldn't last. In 1983 Grameen became a fully-fledged bank itself. Today it makes a profit, has over 12,000 staff, 1,048 branches, operates in 35,000 of Bangladesh's 68,000 villages, has two million borrowers and a repayment rate of 98 per cent. It has been incredibly exciting."

By taking what he calls a "worms eye view" of poverty, Grameen provides micro-credit - tiny loans, often as little as $20-$30 but on average $150. Some 94 per cent of the people who meet the bank's criteria of extreme poverty are women, and Yunus insists that bank workers go to them, not the other way round, so as to reach the poorest and least mobile. Borrowers make a commitment to a set of social priorities including education, sanitation, and family planning, and a system of peer pressure and support keeps repayment rates high. Each borrower must also learn to sign their name - a policy that has dramatically increased the number of women voting. "All too often people think 'development' is big roads and large industry. But I think changing people's lives in a positive way is a development. If someone can have two meals a day instead of one, or can have a tin roof and a dry floor all year round - that's development."

For anyone who is sceptical about the bank, Yunus just points to the results. The social status, health and basic living standards of millions of women and their families have improved, and incomes have increased by an average of 53 per cent in real terms over three years.

"Charity doesn't help poor people, giving them opportunities does." With 75 per cent of foreign aid to Bangladesh being channelled back to donor countries as payment for services, consultants and equipment, Yunus is scathing about how conventional aid compares.

Now, when he walks through Bangladeshi villages, women lay rose petals down for him to walk on. In the West, development studies academics and aid workers describe him as "a visionary", comparing him to Ghandi and Mandela. Even Bill Clinton, president of the United States, called him "one of my heroes" and suggested he be nominated for the Nobel Peace Prize. In the United Kingdom he has received an honorary doctorate from the University of East Anglia, and numerous awards from elsewhere.

But despite such accolades Yunus is down-to-earth, humble, and tireless. "If it can be done in Bangladesh - one of the world's poorest countries - it is possible everywhere," he insists. Some 170 replication projects already operate, many supported by the Grameen Trust, a non-profit organisation set up to provide training, capital, and advice to new projects.

"I believe micro-credit is a human right," he says. "And the world should get ready to reach 100 million families by the year 2000 through giving micro-credit to women."

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