Would you lend money to a woman with no money and no other financial security?
Muhammed Yunus did.
I had the chance to meet Muhammed Yunus last week. Professor Yunus is a social entrepreneur, banker, economist and civil society leader who was awarded the Nobel Peace Prize for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance.
With the Grameen Bank, Yunus has proven that «…even the poorest of the poor can work to bring about their own development »1
Yunus started out with a very small ambition, he figured that if he made himself useful to another person for one day, it would be a day worth living.
During that day’s devotion to helping the poor in his country, Bangledesh, he noticed a serious problem: loan sharks! Loan sharks were lending the poor money at interest rates that were quickly pushing people deeper into poverty and desperation.
Loan sharks had set up in poor regions because traditional banks don’t lend to poor people. Poor people don’t have any collateral to offer the banks as protection against the possibility of non-repayment.
He knew then that he could not solve the whole problem, but he decided that he could help a few people. He used his own money to lend to people, but even with microloans of a few dollars, that could only go so far.
He tried very hard to get banks to lend to the poor, but made little headway. Three years later, he started his own bank, the Grameen Bank. The bank now has 8.5 million borrowers and is owned by the borrowers (a bit like with a credit union). Repayment rates are excellent.
The World Bank recently acknowledged that ‘this business approach to the alleviation of poverty has allowed millions of individuals to work their way out of poverty with dignity’
NobelPrize.org. Retrieved 27 October 2014.