An Interview with the 'Banker to the Poor' Muhammad Yunus
This week I interviewed a banker who only lends money to people with no job, no assets, no income and no education – oh, and only women too.
I was at a charity do in honour of Nobel Peace Prize winner Professor Muhammad Yunus, otherwise known as the “banker to the poor” (and one of my all-time heroes).
It was a long and broad-ranging interview. Here are some of the things he had to say:
“Like skeletons – just skin and bones.”
The banker to the poor ,Yunus, had a life-changing moment 35 years ago when his native Bangladesh was suffering a tragic famine.
As a young economics professor he would stand at his blackboard teaching economics, while beyond the gates of the university he could see people “who looked like skeletons – just skin and bones”.
“What’s the use of these economic theories if they can’t feed people who are dying in the streets of starvation?” he thought.
Thought then turned to action, and Yunus went to a poor village to see what he could do.
There he met a group of women who were trapped by a loan shark – forever working to pay the interest off on their high-rate loans.
For Yunus, it was a lightbulb moment.
“Poverty has nothing to do with people,” he explained. “The babies that are born into poverty have the same intelligence, the same creativity and the same compassion as a baby born in the west.”
But a major difference is their inability to access credit. Yunus explained that even today banks won’t touch about two-thirds of the world’s population (about 4 billion people).
“If you have absolutely nothing, you’re our best customer.”
Thankfully Yunus saw the light – lending poor people money for income-producing businesses (such as street stalls and sewing machines) at a fair rate that allowed them to earn an income, repay the loan and pull themselves out of poverty.
Yet when he took the idea to the bankers they just scoffed.â€¨Yunus set out to prove them wrong.
“At the start I didn’t know much about banking actually. I still don’t,” he confided.
But that didn’t stop him from starting up a bank – which he called the Grameen Bank – to operate in exactly the opposite way to traditional banks.
“In a traditional bank, the richer you are, the more important you are. With Grameen Bank, the poorer you are, the more important you are. In fact, if you have absolutely nothing – well, you’re our best customer!”
“At the time banks only lent to men. At Grameen we lend almost exclusively to women.”
Yunus explained that over 30 years of experience has shown that women who take loans for income-generating business are much more likely to use the income from that business to look after their children.
“Most banks require collateral before they’ll lend you any money,” he said. “Yet at Grameen we don’t require anyone to stump up anything. Poor people don’t have any assets – that’s why they need the money.
“We don’t need any guarantees. Banks spend a lot of time looking at people’s credit history. Our bank is more interested in your future.”
“You’ll be alright – after all, your mother owns a bank.”
The program worked so well that some of the women who’d taken loans soon had children with the ability to go to university – if only they could get someone to lend them the money to do so. So Grameen started giving out higher education loans.
Yunus told me he would counsel the young recipients not to worry about having enough money to complete their studies: “You’ll be alright – after all, your mother owns a bank.”
And that’s another of the major differences. While Yunus founded Grameen, he doesn’t own it. In fact he’s a non-voting director.
“It is owned by the people,” he said.
You can see why traditional bankers thought Yunus was crazy. After all, we all know how much strife banks got into by lending money to subprime borrowers. Yet Grameen lends to the sub-sub-subprime – the poorest people on earth – without collateral, without even a guarantee.
Despite this, since its inception the bank’s repayment rate has been consistently close to 100 per cent. Yunus added with a wry smile: “And throughout the global financial crisis we didn’t have to be bailed out by anyone”.
“Why don’t more people go into business with the aim of changing the world?”
Yunus was in town to promote the idea of developing more “social businesses” like Grameen Bank.
One example is a recent partnership with international food conglomerate Danone to produce and sell a cut-price nutritious yoghurt to give to poor, malnourished children.
Like with Grameen, all the money made in the venture first pays back investors and then is reinvested into the business to feed more children.
“Traditional economics says that people are motivated purely by self-interest, but in reality we are three-dimensional – we want to make a difference,” Yunus said.â€¨His final statement to me was: “Why don’t more people go into business with the aim of changing the world?
”â€¨With my interview concluded, all I needed was a photo. Easier said than done. He was being mobbed by suits who were all jostling to have their photos taken with him on their Blackberries.
With no sign of a slowdown, I politely grabbed Yunus and led him to a side alley so we could have our photo taken. It was there that he came face to face with two clearly stunned Bangladeshi waiters (who’d been serving the suits).
My Bengali is a bit rusty so I couldn’t understand what they were saying. But given the energetic embrace they then gave him, it would appear that as one of the true heroes of Bangladesh he had touched their lives in some way.
Tread your own path!
Link - https://barefootinvestor.com/ainterview-banker-to-the-poor-muhammad-yunus/
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