Monday, July 5, 2010

The Yunus Series: Banker to the Poor

Banker to the Poor -- this is the book that educated millions about microfinance and the Grameen Bank. Written by Dr. Muhammad Yunus, the book describes Yunus' journey to creating the Grameen Bank and how the Bank has developed since its founding. 

Early Life
Born in present-day Bangladesh, Dr. Yunus was surrounded by a large Muslim family and grew up in a time of political strife as India and Pakistan gained independence from Britain. His education led to him to a Fulbright Scholarship to study in the USA. Living in the USA for a few years after getting his Ph.D in economics, he supported the Bangladeshi War of Liberation. Upon returning to Bangladesh, Dr. Yunus witnessed a great famine in 1974 and created a program to help relieve the famine's devastating effects in the university where he taught economics. By promoting a sustainable farming project, he saw the potential of farmers to become prosperous, but saw a greater need to help the poorest of the poor break out of the cycle of poverty.

The Beginnings of Grameen
Dr. Yunus' initial projects were completely at the grassroots level as he visited villagers in Jobra, Bangladesh, observed their lifestyle, talked to them, and thought about how to best help them. He noticed how difficult reaching out to women was as women are supposed to be shielded from the outside world as per Muslim custom. Tempted to give them money, Dr. Yunus knew that handing them money would certainly not help their situation in the long run. On an impulse, he loaned a bit of money to a local villager in the hopes of receiving of his money back when she would use it to improve her business. This experience is what motivated him to develop the concept of microlending. Dr. Yunus consulted banks and lawyers, trying to get someone to buy into an idea of a bank for the poor (hence the title of the book!) but his obstacles never seized to block his vision. Nobody believed that the poor had the potential to learn, grow a business, or even manage expenses. According to the naysayers, such skills were far beyond the abilities of the villagers Dr. Yunus spoke to. Working to develop a program with the government led to compromises on Yunus' side and on the government's side. The bank was finally formed as a branch of the state bank but operated on its own terms for the most part. His team consisted mostly of students and when the bank began to prosper, it expanded to other villages and tried out various projects. After several years of struggling, the bank was finally fully formed and functional. 

Grameen's Principles 
From the start, Dr. Yunus knew that women needed to be empowered not only in his community, but also in the global community. Grameen makes its women entrepreneurs more confident about managing money so they won't just give the money to their husbands out of fear. Grameen also ensures that entrepreneurs are well-supported by their community when taking a loan by holding meetings in the villages where entrepreneurs can talk about their loans and businesses. When entrepreneurs face natural disasters or other unpredictable events, the bank doesn't take the money away, it simply makes the loan easier to pay off, fitting the entrepreneur's needs. As entrepreneurs become more prosperous, they can also acquire shares of the bank, making them active participants in their nation's economy. 

The Bank Expands
The question of sustainability is always associated with microfinance. How do we know that once an entrepreneur pays back her loan, she doesn't end up back in poverty? How do we know that she leads a better life? To resolve this question, the Grameen Bank developed several programs to ensure that people benefit in the long run. Grameen Shikkha provides student loans so the children of entrepreneurs can get a good education. Other programs provide housing loans, telephones, cellphones, electricity, and healthcare clinics that ensure that entrepreneurs lead prosperous lives. Since the Grameen Bank was formed, its microfinance model has been used all around the world. As of June 2010, the bank has more than 2,000 branches and has helped millions of people achieve financial self-sufficiency. In 2006, Dr. Yunus and the Grameen Bank were awarded the Nobel Peace Prize for helping to alleviate poverty through microfinance. 

Trust me, this book will make you want to make a difference. Since this brief summary is in no way exhaustive (but hopefully enticed you to read the book), I really do encourage you to read Banker to the Poor! If you are interested in buying the book, I ask that you buy it through iShop4Microfinance -- 4% of your purchase goes to microfinance organizations such as Acumen Fund, Grameen Bank, and Kiva! 

Comment below to let me know what you thought of the book! 

Works Cited
Yunus, Muhammad. Banker to the Poor. New York: Public Affairs, 2007. 

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