By Brian Salazar, MBA’05
On March 7, 2005, Dr. Muhammad Yunus, founder of the Grameen Bank and pioneer of micro-finance, spoke to a full-house at Babson’s Sorenson Auditorium encouraging those in attendance to think differently about the world’s poor. As part of Babson’s annual celebration honoring Martin Luther King, Jr., Dr. Yunus’ keynote capped a day-long visit to the campus to explain the background and foundation of micro-lending and micro-credit.
In a discussion with Babson faculty, he commented, “Poverty is not created by the poor. It is created by an economic system that has to change in order to serve the people, especially in an effort to eliminate poverty.” Dr. Yunus mentioned that banking can, and should, adjust its procedures to allow the poor to lift themselves from poverty.
Unlike traditional banks, the Grameen Bank lends to the poor through a series of micro-finance products geared towards individuals without collateral or access to traditional credit. In Bangladesh, the Grameen Bank reaches out to nearly four million people, mostly women. In addition, Dr. Yunus has used the Grameen system to create nearly a dozen supplemental institutions in finance, transportation, education, and communication.
One such institution that Dr. Yunus is incredibly proud of is Grameen Phone. Before it, the bank was able to help the poor lift themselves from poverty in approximately 6 years. Grameen Phone provides successful members with a subsidized cellular phone that allows them to expand their businesses beyond the boundaries of their own villages. Dr. Yunus commented that the 3 million business women participating in the Grameen Phone program have cut that timeline out of poverty from 6 years to 2; an incredible achievement for individuals with no formal education or training. Dr Yunus added that the success of this program is in its ability to empower participants, allowing them to negotiate and transact business across greater distances and with a higher rate of success.
After working in the Unites States as a Fulbright Scholar, Dr. Yunus returned to Bangladesh in 1972 where he sought to help those in need. “I started working in the city, but I felt I could be more useful in the villages [of Bangladesh] because that’s where the real need was.” After helping one woman finance her bamboo stool business, he quickly surveyed the village to see if others could benefit from loans under similar terms. Indeed the need was apparent, and Dr. Yunus provided his first set of 42 loans without any collateral from the borrowers. Built on a sense of trust and community, Dr. Yunus set to do what others sad was impossible and founded the Grameen Bank in 1983.
Probably the most important message by Dr. Yunus to the Babson community was that the need for micro-lending is not a phenomenon foreign to the Unites States. While on a tour of the Unites States in the early 1990’s, Dr. Yunus observed individuals, at the request of Bill Clinton, then Governor of Arkansas, who expressed a real need for micro-finance products.
“When I spoke with a group of Economists at the University of Chicago, they never thought this type of financing would be desired in the Unites States. But speaking with these people from Arkansas clearly explained the distance between the knowledge of the world’s decision makers and the reality of the needs of the poor,” Dr. Yunus commented.
At the end of his presentation, Dr. Yunus challenged the Babson community to question the economic institutions that do not change to meet the needs of the people. Through the Grameen Bank, Dr. Yunus has successfully done what others claimed was impossible. In fact, 50% of Grameen members have been lifted out of poverty since 1983. As an additional testament to the success of the Grameen method, other micro-credit institutions have formed throughout the developing world to provide the world’s poor with new opportunities. Indeed, Dr. Yunus’ mission to lift the world’s poor from poverty is shared among many throughout the world. Like Dr. King before him, Dr. Yunus has dedicated his own life to fulfill this grand vision.
