8/8/2018 Banker to the Poor

Micro-Lending and the Battle against

World Poverty
By Muhammad Yunus

Amulya Pothkanuri
PP0000617
About The Book: The book “Bankers to the Poor” helps us to understand
the journey of Yunus from the beginning of his micro credit program to the
successful implementation of Grameen in supporting life’s of people by
providing micro credits and all other programs.
From the book we can learn:
1. Why Muhammad Yunus established Grameen Bank
2. How he did it and the obstacles he faced
3. How the bank has succeeded and
4. How “microcredit” and other market based programs can improve
the lives of the poor
About The Author: Nobel Peace Prize laureate Muhammad Yunus is the
founder and managing director of Grameen Bank. He chaired economics
at Bangladesh’s Chittagong University.

LIFE OF GRAMEEN – A TIMELINE

Bangladesh fell into the grips of famine (a flood of hungry
1974
people started moving to Dhaka)
1976 $27 lent to forty-two people
1977 Started experimenting “Rural Banking”
1978 Seminar on “Financing the rural poor” by USAID
1980 First national workshop – Four Decisions
1982 Second national workshop – Ten Decisions
Decided to form own micro-credit organization in
1984
Bangladesh
1984 Sixteen Decisions to support people through Grameen
1985 Agreement with fisheries ministry of Bangladesh
1986 World Food Day teleconference
Project Dunganon at the island of Negros Occidental in
1988
the Philippines
1989 Created Grameen Trust
1990 In-depth evaluation of Grameen by the World Bank
1991 & Grameen suffered its first losses due to huge increases in
1992 the size and salaries of our staff
Created an independent non-stock, not-for-profit company
– Grameen Uddog (Grameen Initiatives) - To link up the
1993
traditional hand-loom weavers with the export-oriented
garment industry
 Draft report of the evaluation showed that Grameen would
Spring always remain financially sick or would soon go bankrupt.
1993 But after reconsidering the situation caused in 1991 &
1992, a different conclusion emerged
November World Hunger Conference at the Washington DC
1993 headquarters of the World Bank
Requested International Fund for Agricultural
1993 Development (IFAD) for money to expand Project
Dunganon
World Bank announced a $2 million grant to the Grameen
December Trust, which is responsible for replicating Grameen
1993 worldwide, and already established sixty-three
programmes in twenty-seven countries around the world
At the end World Bank created the Consultative Group to
1993
Assist the Poorest (CGAP).
1995 Rejected a soft loan from the World Bank
The government of Bangladesh issued three cellular
1996
licences
Agreement signed between the government of the
1996
Philippines, the Asian Development Bank (ADB) and IFAD
Micro-credit Summit was held to reach 100 million families
1997
by the year 2005
Formed two independent companies - one for profit
1997 (Grameen Phone), another not for profit (Grameen
Telecom)
1998 $2.3 billion lent to 2.3 million families
1998 fifty-eight countries have Grameen clones
World Bank declared the mission to create a world free
from poverty - To reduce the number of people in abject
1998
poverty (earning less than a dollar a day of income) by
half by the year 2015.

Everyone has the right to a standard of living adequate for the

health and well-being of himself and his family, including food,
clothing, and housing and medical care, and necessary social
services, and the right to security in the event of
unemployment, sickness, disability, widowhood, old age, or
other lack of livelihood in circumstances beyond his control
The Universal Declaration of Human Rights.
Bangladesh is one of the poorest countries in the world with 40 percent of
unemployment and 43.1 percentage of literacy. And mostly, about one
third of the country floods annually due to monsoons.
During 1974, when Bangladesh fell into the grips of famine people started
moving to Dhaka in search of food, shelter etc.
Yunus argues that “Unfortunately, no formal financial institution was
available to cater for the credit needs of the poor” and he says that people
require an institutional solution to get out of poverty.
In order to alleviate poverty Yunus started the Grameen Bank in the latter
part of 1970s through the use of microcredit (small loans). Yunus says
that “credit should be accepted as a human right, and credit could play a
strategic role in removing hunger from the world”.
Grameen became an independent bank in 1983, and with independence
came the freedom to grow. The Grameen approach to microcredit has
been applied to many other countries in the world. Since the late 1970s,
Yunus’ loan programs have constantly changed and evolved to meet the
needs of the poor. In 1977, a meeting with the managing director of the
Bangladesh Krishi (“Agriculture”) Bank led to the loan program’s
expansion beyond Jobra into the district of Tangail, a poor area of
Bangladesh near the nation’s capital, Dhaka.
Two years later, Yunus took a leave of absence from teaching and opened
the first official branch of Grameen Bank as an offshoot of Krishi Bank. It
grew rapidly. By the end of 1981, loans totalled $13.4 million. In 1982, with
Ford Foundation money as well as a loan from the International Fund for
Agricultural Development, Grameen Bank moved into five more districts
and disbursed another $10.5 million.
These accomplishments seemed highly unlikely in 1976, but Yunus
believes that “before we actually translate something into reality, we must
be able to dream about it. Any socioeconomic dream is nothing but the
first step in the process of mapping the course to our destination.”
December 1993, this was the beginning of the Bank’s recognition of micro-
credit as a legitimate economic tool in the fight against poverty
‘Microcredit programmes have brought the vibrancy of the market
economy to the poorest villages and people of the world. This
business approach to the alleviation of poverty has allowed millions
of individuals to work their way out of poverty with dignity.’ – James
D. Wolfensohn, president of the World Bank, 1996
As per Yunus, “The direct elimination of poverty should be the objective
of all development aid. Development should be looked at as a human
rights issue, not as a question of GNP growth where it is assumed that if
a national economy picks up, it will benefit the poor.”
Accordingly, Yunus imagines a world free from poverty by 2050. “Poverty
does not belong in a civilized human society. Its proper place is in a
museum,” he says. “We have created a slavery-free world, a smallpox-
free world, an apartheid-free world. Creating a poverty-free world would
be greater than all these accomplishments while at the same time
reinforcing them. This would be a world we could all be proud to live in.”

References:
Banker to the Poor: Micro-Lending and the Battle against World Poverty
Muhammad Yunus; New York: Public Affairs, [1999] 2003, 288 pp. DOI:
10.1177/0486613405285433 Accepted April 11, 2005