Do you think you can’t change the world?
What if I told you one man with $27 did exactly that?
This is the incredible story of Muhammad Yunus. He’s from Bangladesh, formerly a part of India and one of the world’s poorest nations. Its annual income per person is just $440 and 58% of its people can neither read nor write.
A Ph.D. in Economics from Vanderbilt University, Dr. Yunus returned to Bangladesh and taught at Chittagong University. He felt the university should encourage its scholars to use their knowledge to benefit the community and one day in 1976, he decided to leave the beautiful campus to visit a nearby village.
The extreme poverty he saw sickened him.
There many women lived in crude huts, barely able to feed and clothe their children. In most huts they would squat barefoot on the dry mud floor and produce bamboo products that were profitably sold in the marketplace although not by them but by middlemen.
And those middlemen paid the women so little, that they and their children lived as virtual slaves, with no money to educate their children, as the system perpetuated itself.
Determined to break this cruel cycle Dr. Yunus reached into his wallet and took the equivalent of $27 and loaned it to 42 bamboo weaving ladies so that each could skip the middlemen.
He charged them very little interest and did this on a handshake. The ladies signed nothing for they couldn’t read and write and they had no conventional collateral. All they had were their skills and the greatest collateral of all, their determination to feed their families and uplift themselves from hunger and poverty.
That $27 would later have a profound impact on the world for against all odds, the women paid the loan back with interest. Pleased, Dr. Yunus took additional money out of his wallet and loaned it to more poor people and again, they paid it back with interest.
Soon it became a very profitable business but instead of keeping the profits for himself, Dr. Yunus used the money to greatly expand the lending. In 1983 he formed Grameen Bank, Grameen meaning “rural” or “village” in Bengali, the language of Bangladesh.
Today, Grameen is a giant enterprise with $5.7 billion in loans to 6.6 million borrowers, 97% of whom are women. The average loan Grameen makes today is about $100 and it has become a huge employer with nearly 19,000 employees in 2,226 branches.
The loan default rate is an astoundingly low 1.5% [although some people argue the default rate would be higher if Grameen didn’t extend or refinance the loans of some of its borrowers.]
And here are some other astonishing facts: The bank is 94% owned by its borrowers, many of the people who used to be mired in poverty. [The government owns the other 6%.] And the loans are funded from profits and borrower deposits. No government handouts and still no legal documents to sign and no conventional collateral.
Borrowers join small groups such as a five-person “solidarity” group. Each borrower is individually responsible but loans require all members of the group to make their payments. The result is they support each other’s efforts in becoming financially self-sufficient and in making their payments.
Who are the borrowers? People who until recently no other banks would touch: Destitute widows and mothers with children to support, penniless laborers, street sweepers and others on society’s bottom rung, including the beggars.
With the money they borrow, these people buy yarn to weave into clothing, bamboo to weave into furniture, and they buy crops and other products to sell in stalls or door to door.
As for the beggars: In September at a conference hosted by former U.S. President Bill Clinton, Dr. Yunus said: “All we are doing is telling beggars… since you go house to house begging, would you like to take some merchandise with you, some cookies, some candy, something?
“A typical loan for a beggar is [about] $12, he said. “With $12, she has a basket of merchandise she carries around and goes house to house. Today, we have more than 80,000 beggars in the program,” he added. “Many of them have already quit begging completely.” [New York Times, 10-14-06]
Dr. Yunus revealed what makes the programs successful. “No one works harder than someone who is striving to achieve life’s basic necessities, particularly a woman with children to support,” he told The Wall Street Journal. [10-14-06]
“More than half our borrowers have moved out of poverty, mainly through their own efforts,” he added. “Most importantly, when you lend money to disadvantaged people, it gives them a sense of pride, rather than the humiliation they may feel over a handout.”
This microfinance approach has greatly affected the world’s antipoverty programs. According to Microcredit Summit a Washington, DC based non profit advocacy organization, in 2005 over 3100 institutions in 130 nations made small loans to more than 100 million people.
As these lending programs grow if they’re run well they could make a profound difference beyond what they already have. So much violence in the world comes from people who are frustrated and hungry, and who have no vested interest in their communities.
They have nothing to lose and they see no future for themselves. But as happened in Bangladesh because of Dr. Yunus and Grameen Bank, lending to the poor has spread elsewhere in the world, including to the U.S. and the poor can help themselves and their families.
Many of them will think less in terms of bombs and more in terms of living meaningful lives.
And what has become of Dr. Yunus? Aside from being respected all over the world as a great humanitarian, in October he and Grameen Bank were awarded the 2006 Nobel Peace Prize.
And to think it all began with a $27 loan.
Success Tip of the Week: If you think you can’t change the world, think again. It may begin with a tiny act you do today, as Dr. Yunus did 30 years ago, that will touch one life and then another and will continue to touch lives as it spreads across the globe.
In the next KazanToday: Have you ever felt the crushing blow of being fired? It happened to me and I’ll tell you how I bounced back, and how you could too.