I’m a week late on this one, so apologies for being even more behindhand than usual…
A week and a bit ago Muhammad Yunus received the Nobel Peace Prize for his work as ‘banker to the poor’. I’m not one for the ‘great man’ (it’s always men) school of history, but there are a few obvious Mandela-stature exceptions and Muhammad Yunus is one of them.
With Grameen Bank and Grameen Phone, Yunus proved that the poor and even destitute can be customers, using the collateral of their own skills and hard work.
I remember back in the 1980s when the New York banks were widely condemned for practising a secret policy of ‘red-lining’ – drawing a red line around deprived areas of the city on a map and creating a blanket policy of not lending to the people who lived there, as they were assumed to be a bad credit risk.
Cutting off whole sections of the population from banking services stinks in moral terms, leaving them with no option but loan sharks and pawn brokers; no ladder out of the cycle of poverty. Yunus showed it stinks in capitalist terms, too. When the major banks laughed at his suggestion that they break destitute Bangladeshis out of the poverty cycle with a new concept that gave them an alternative to loan sharks – micro-lending – they laughed in his face.
So, he leant a group of villagers the money in his own pocket – £14 – to buy the materials they needed to set up smallscale businesses. They all paid him back with interest. His new idea – microlending – grew into the £2.5 billion Grameen Bank that is owned by its users, is estimated to have helped hundreds of thousands of people out of poverty AND continues to make a profit.
The proportion of borrowers who default on their loan is tiny compared to traditional bank lending. Yunus then spotted that with mobile phones, local growers and crafts people – mostly women – could jump past middle-men who tended to exploit them with very low prices, to find out what actual prices were in markets and negotiate direct with buyers further away, increasing their bargaining power.
So, he launched Grameen Phone, a phone rental scheme with its own network to get mobile phones in the hands of the poor. Now if you go to Bangladesh ‘GrameenPhone’ is likely to pop up on your phone screen as your local provider as it has become, like the bank, a highly profitable success story.
Yunus, an economics professor, still lives in a tiny flat in Bangladesh. He explained once that he developed the idea for the Grameen Bank during the Bangladeshi famine in the 1970s, when he became increasingly disillusioned that people were dying while he and other economics professors were sitting around in Chittagong University teaching elegant economic theories “whereas in fact the starvation all around us showed we knew nothing. What we were teaching wasn’t helping.”
He once said to The Guardian newspaper “One day we will look in museums and say to our children, ‘That’s what poverty looked like.'”
That sounds naive. Until you look at what he has achieved so far. Fifty other countries – including the US – have taken up micro-lending. Yunus’s work helped prompt C K Prahalad’s book The Fortune At The Bottom Of The Pyramid, which looks at practising a new form of global capitalism that includes the world’s poorest and that makes healthy profits while at the same time helping people out of poverty.
Now, like I said, I am wary of the whole ‘great man as leader’ or ‘great man as forger of history’ school of thinking. But, every now and again one comes along that makes us see the world afresh and inspires us by showing us we can do the apparently un-doable and take the lead to make change happen. Sounds like a leader to me.
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