Grameen Bank, Bangladesh

Reproduced with permission from CBC-Ideas

5 March 1991
ID 9099



Copyright *1991 The Canadian Broadcasting Corporation All Rights Reserved Under no circumstances may this transcript or matters contained herein be reproduced or otherwise used for any purpose beyond the private use of the recipient (other than for newspaper coverage, purposes of reference, discussion, and review) without the prior written consent of CBC. CBC IDEAS Transcripts, P.O. Box 500, Station A, Toronto, Ontario, M5W 1E6 Lister Sinclair Good evening. I'm Lister Sinclair and this is Ideas on the Grameen Bank of Bangladesh. Walk into any bank and ask for a loan and the bank manager will pull out the forms and start asking you about the value of your car, your house, your salary. Before the bank will loan you money, it wants to know in effect whether you already have lots. In Bangladesh, a unique institution called the Grameen Bank is pioneering a different approach. It's a bank that lends only to the rural poor. Often its borrowers lack even a change of clothes or a roof sturdy enough to keep out the rain. And yet an astonishing ninety-eight per cent of them pay back their loans. The loans average no more than seventy-five dollars -- too small for other banks to even bother with -- and yet with these loans people revolutionize their lives. The Grameen Bank is founded on a bold but simple idea that the answer to poverty is not charity but credit. In fifteen years of operation, it has disbursed a quarter of a billion dollars to more than eight hundred thousand people. It has lent predominantly to women in a country where this was previously unheard of and it has been emulated around the world. The Grameen Bank began out of the pocket of one man, Dr. Muhammad Yunus, and tonight on Ideas you'll meet him in conversation with Ideas writer David Cayley. His story begins in 1972, the year after Bangladesh won its war of liberation from Pakistan. Yunus had recently completed his graduate studies at Vanderbilt University in the United States and was teaching at a college in Tennessee when he was invited to take up the position of head of the department of economics at Chittagong University in southeastern Bangladesh. He arrived home in the midst of the euphoria and high hopes that followed independence. Muhammad Yunus I went back and joined everybody else in the country and then I became head of the department of economics. I thought now things will start moving and moving up. To my surprise and to the surprise of all of us, this country was sliding downwards very rapidly. And by 1974, we had a terrible famine: a lot of people were dying on the streets. So I got very frustrated with what I teach, the development economics and all those theories where everything sounds so good and it all works out. And when you walk out of the university campus, you see the real world is so different what you say in the classroom and what appears on the outside. So to me it appeared like it is a movie house: you go to a movie, you see how everything is working, and you consider that the hero in the end will win and at the end he wins. You come out of the classroom as if you come out of the movie house: the real world is very suddenly different -- everybody gets beaten, nobody wins.I thought, what's the use teaching this economics if I don't have faith in it? How can I teach my students who are so credulous? When I'm disenchanted, how can I inspire my students? So I wanted to learn economics the way I feel it should be, the real world is and I wanted to know from the people around. Chittagong University campus is located among villages, it's out of town. So I had the advantage I could just walk out of the campus and these are real Bangladesh villages. And I chose to talk to the very poor people in the village because that's where the problem is: Why can't they change their life? Why can't they improve their living conditions? And I kept on talking not as an economist, not as a teacher, not as a researcher -- just as a human being, as a neighbour. Wy do things remain the way they are? And I learned so many things. I start feeling that this is the real university I missed out all my life. And in my classroom, in my textbooks, I never learned all these things that they're saying now. So among the many things I learned, I came across a woman and she makes only two pennies a day by making bamboo stools. And I couldn't accept why anybody should work so hard and make only two pennies. And she explained why she makes two pennies: she doesn't have the money to buy the bamboo which goes into the bamboo store, so she has to borrow money from a trader, the trader who buys the final product. So he lends her the money to buy the bamboo. When he buys the final product, he offers her a price which barely covers the cost of all the raw materials. Her labour comes almost like free, like she works like a slave. So I said, look, this is so simple to solve. It doesn't need big theories to solve this. If somebody could make this money available to her so that she can buy her own bamboo, she can sell the product wherever she gets a good price. And I took a student of mine, went around the village for several days to find out if there are other people like her who are borrowing from traders and missing out what they should earn. And in a week's time, we came up with a list of forty-two such people. The total amount needed by all forty-two of them was thirty dollars. I was so ashamed of myself that, look, what big theories we are talking about in classroom? Here's a situation of thirty dollars and we have not organized our society in a way where well-bodied, well-trained, skilled, hardworking people could get thirty dollars to do their job.So my first reaction was to take this thirty dollars out of my pocket and asked my student to distribute this money to them as loans, tell them that it's a loan, they have to pay me back. They can sell their product wherever they want, wherever they get a good price. Having done that, I thought I had found a solution to this problem. A couple of days later I started feeling down again. This was not a solution because every time they need money they won't come to me because I'm not available to them. I'm a teacher in a university, I'm not in the money business. I thought there must be some institutional way of handling this rather than personal way of handling this. So I thought of the bank. The bank should do the distribution. When I went to the bank, talked to the manager, he gave me a big laugh. He thought it was such a funny idea even to talk about. I said "Why?" He said, "This little money is not even worth all the papers they have to fill in and so on, and bank is not going to do that." I said, "Why not? To them this is really important." Then he said, "Well, we can't give loans to the poor people." "Why not?" "They don't have any collateral." I said, "So what? You don't eat collateral, you want your money back." "Of course we want our money back, but at the same time we need collateral." "To me it doesn't make sense if somebody can be sure that the money comes back, why do we need collateral?" He said, "That's our rule." He said, "I can't help you. Why don't you go and talk to the officials in a higher position than me to convince them." And I tried. I moved around, ran around to different offices trying to persuade. And everybody said the same thing: "Look, this is the rule. We can't do anything else." Somebody gave an idea: if you could find a guarantor in the village for each loan, a well-to-do person, then we can give the loan. I said, "No, I can't do that because then the guarantor would treat the other person as a slave because he became the guarantor of the loan." I said, "I won't do that." I got an idea. I said, "Why don't I become the guarantor?" Why don't you accept me as a guarantor? I sign everything you give me." Then they were put on the spot. They thought about it and asked me "How much money are you talking about?" I said, "Oh, altogether probably three hundred dollars, not more than that." And they said, "Okay, we'll accept you as three hundred dollar guarantor, but don't ask for more money. That's all we can give you." I said, "Okay, that will be enough for me." This is now 1976. After all this discussion, when I really wanted the money, they said, "No, we need permission from the head office." It took six months of writing back and forth to get it formalized and finally, at the end of 1976, I succeeded in taking a few loans and giving it to the poor people at the village.That is the beginning of what I'm doing today -- but after a long struggle. And I wanted to make sure that people do pay back so that the bank does not stop this procedure, and people did pay back. So I gave more loans and it became wider and wider. I then told the bank, "Why don't you do it to yourself? Why do you need me as a guarantor? It's working. You said people will not pay. Now they're paying." "No, no, you can do it in one village, you have your students with you, you yourself work very hard, but if we do it, it won't work." I said, "That's funny." They said, "If you do it in more than one village, it won't work." So I said, "Okay, let me try." So I did it over several villages. Still it worked, but the bankers were not satisfied. They said, "No, this is not big enough." So I did more villages, to the extent that I was challenged to do it over a whole district. I did it over a whole district. And still it worked. But the bankers were not persuaded. So I said, why am I running after these bankers? Why don't I set up my own bank and just settle the whole issue? Then I started running around in the Central Bank and the government offices to give us the permission to set up a bank which will work only for the poor people. It took a long time. Finally in 1983, government permitted us to set up a bank and we became an independent bank. This bank, now called Grameen Bank, works only for lending money to the poorest people in Bangladesh -- landless, assetless people. Today we have eight hundred thousand borrowers in this bank. We work in eighteen thousand villages. We have seven hundred and thirty-five branches. And this bank not only lends money to the poor people, it is owned by the poor people. The people that we lend money to, they also become the shareholders of the bank and own the bank. Out of the eight hundred thousand borrowers that we have today, ninety per cent of them are women. Our average loan size is less than seventy-five dollars; maximum loan is hundred and eighty dollars. So this is what we've got right now. David Cayley How does the repayment of your loans compare to what conventional bankers can expect? Muhammad Yunus Oh, it's way, way different. Our loan is ninety-eight-per-cent-plus recovery, but the other banks, like an agricultural loan, recovery is less than fifty per cent. In industrial loans, it is around ten per cent. So compared to that, ours is the real bank. David Cayley Why would that be, if you're dealing with the poorest who, presumably, are very close to the line and one misstep and they can't repay? Muhammad Yunus One reason is the rich and the powerful, if they don't pay, nobody can catch them, they can get away, they don't care. They know these institutions are for their benefit and they take advantage of that; whereas the poor, they see this is the only opportunity they've got. If they get into any trouble, if they don't pay back, they're not going to get any further loans. So they want to keep it open and they never in their life dreamt that anybody would give them any money and for the first time Grameen Bank comes and convinces them that yes, this is really true, because at first they don't think this is true. They think somebody's tricking them into something. Why should anybody give me money? I don't have anything to offer them in return. And when money lenders give money to you, they in exchange take your land, they take so many other assets, and I have nothing. Why should a bank come and give me money? So it takes a lot of time to build up the confidence and once they started getting the money, they're totally surprised -- the way the money comes and the way they can use the money, the way they can repay the money. And their confidence builds up. Even if the money is available, people cannot believe that they can really use the money, because they never used it. They don't believe that they can really make income and they can't do anything. So a process of rebuilding the person's image of himself and herself begins and that's more important than the money itself, because what is happening, our society, all our societies, the way we build our societies, got into the habit of putting people down, rejecting people, and is not in the habit of building people up. You look at any society that we have around us: for flimsy things, immediately people are rejected. People don't find any way. And more and more people are rejected, and not being able to enter into the mainstream of life. So what we have done we have built barriers: on the one side of the barrier people enjoying their life and the other side of the barrier they are just languishing there. When you are on the other side of the barrier, you start feeling yourself probably you're good for nothing, you have nothing to offer, that's why you're being rejected, that's why you are in the garbage. And here you are not. Only society has created that condition for you and you started believing that. So to peel off that feeling takes a little time. After you are successful in peeling off that feeling, the real human being comes out and that human being is as good as anybody else. And we are not trying to remove those barriers. Whenever we talk about the people at the bottom or poor people, our usual reaction is to write a cheque. Okay, take care of them, feed them, clothe them, give them somewhere to live. We don't remove barriers. We simply say, let them stay on the other side of the barrier, but feed them a little. What I'm saying, they don't need your throw-away money, they don't need hand-outs. They need an opportunity, a fair deal. They don't have fair deal right now. Now, for example, take the case of banks: they are not asking for free money from the bank. In Grameen Bank people pay sixteen per cent interest, just like anybody else in a commercial area. Now, how can you say the poor are not credit-worthy people? I rather would say, the banks are not people-worthy. So this is an absence of a fair deal for people. Like there are many countries where you have welfare benefits, public assistance programs. That is again writing the cheque. You stay there, okay, and I'll take care of you.I say that's not fair. I mean, once somebody's put on welfare or on public assistance, the rules and laws that we have built are such that she or he has no way of getting out of that system. I'm saying, no, there must be doors, there must be windows open for them so that they can get out of it. I said, one simple way that I see right away when I'm giving public assistance, at the same time if I could offer them a credit option. You can either take the public assistance, here is your cheque, or you can borrow so many dollars and try out what you can do about it and see if you can come out of it. That's the door. And you are not forcing anybody, saying, "No, we are not going to give public assistance." We are saying, "Okay, you can take public assistance." I say that if five per cent of the people who are receiving public assistance decided to take credit option, and out of the five per cent two per cent succeeded in coming out, you will have done such a satisfying thing. Instead of condemning people, we have helped people to come out of the situation that they were in. We talk about employment, that we have not generated enough employment or employment fluctuates, sometimes unemployment becomes larger than we can accept. We are always thinking of employment as wage employment. There must be some factory or business where I'm hired. I say, why? That's not how economy began. When we go back in the economy, we see everybody did their own thing, make a living by doing that -- self-employment. What happened to the self-employment? In the entire economic literature, you will never see a word called "self-employment." Our economic theory begins with the firm and how much you can produce, how much labour you have to employ, and then you come to the macro level, how it is put together, how many are hired. Why should I be at the mercy of somebody else? I'm a human being, I'm a creative person, I can find a way to see how I make a living. But that our generation or our economy has completely lost sight of. I'm saying self-employment is a very important aspect of human life. That opportunity must be kept open. David Cayley And presumably wage employment isn't in any case available to most of the people in the world and there's no prospect that it will be. Muhammad Yunus Precisely. Take a country like Bangladesh, where hardly forty per cent of the people can be employed in wage employment. What about the sixty per cent? And then you don't even think about the women, as if they don't have to do anything, because your theory cannot accommodate them into any place. So if we can create the self-employment situation, what you are doing, you are allowing millions of small hands doing millions of small activities, creating entire new economic environments. When a tiny, tiny thing can start happening a million times, it becomes a large thing. Totality is a large number. To give our example of our savings program: every person, every Grameen bank borrower has to save one taka, which is about two and a half pennies, every week. But the totality of it becomes enormous when you do it repeatedly. With eight hundred thousand people we are talking, when you take a nation of a hundred and eleven million in Bangladesh, when you can release the energy of this hundred and eleven million people, by doing tiny, tiny, tiny, tiny things, it becomes an enormous capacity. That we do not notice. And this is a fault in our conceptualization. We do not conceptualize that way. People are not at fault. People are willing to work very hard and they do. The poorer you are, the harder you work, the lesser you are. Somebody takes away the fruit of your labour. That's why they are poor. David Cayley This approach gives credit a whole new meaning. Muhammad Yunus Absolutely. I'm saying that credit is an entitlement to resources. You don't look at it that way because our conceptualization of credit has kept it in a kind of docile fashion, it's a lubricant of business, or something. But, if you imagine when a bank is writing a cheque, giving a loan of one million dollars to somebody, what it has done is given the control or command over resources worth one million dollars to somebody who didn't own it. All of a sudden he became now in a position to command one million dollars worth of resources. So why this fortunate person should be bestowed with that kind of privilege and then another person cannot even take ten dollars?A few people command enormous amounts of credit and the large number of people never have any access to that command at all. I'm saying that that's not a fair deal. And you cannot find an argument why it should be so. So far you are saying, oh, they cannot offer collateral, that's why we cannot give them the loan. We have demonstrated that it is a myth: collateral has nothing to do with it. With collateral you cannot get your money back; without collateral we are getting our money back. It's a myth created in their favour because laws and rules we create to protect ourselves. So when you see people working and trying to make a living, in most countries, these are illegal things. If you want to sell something on the sidewalk, you are doing something illegal. If you want to lend money to those people, it's an illegal activity. And kind of being generous to it, you call it "informal sector." You don't want to treat it as something dignified, but to me that is people's economy and that's what's the most dignified thing that one can do. People are working very hard to find a niche, to create something, to make a living for themselves. And all your laws and rules are created to reject them from there. I said, your laws are wrong, your rules are wrong. You change those rules so that you first protect them, build them up so that they can come up, and they can fulfill every other responsibility in the society they can have. David Cayley Can we talk for a moment now about how the bank is organized? Muhammad Yunus Yes, please. David Cayley For example, I think the borrowers are formed into circles? Muhammad Yunus Yes. David Cayley How does that work? And why is it done that way? Muhammad Yunus When a person wants to borrow from Grameen Bank, we would ask her to form a group of five people and she has to find four other friends to make a group of five. And it's not an easy process. It takes time to find four other friends who would like to join with you. After you have successfully found four other friends, formed a group, then the bank would like to discuss with you the rules and procedures of Grameen Bank. Among many things, the bank will explain that we will not give loans to all the five at the same time. You choose two among yourselves and preferably the most needy two and then we give loans to these two persons first. And the group will be asked to watch out that they use the money right and repayment is right, so that they don't get any problems. Because if they get into problems in repayment, then we will consider that this group is not a good group, so we'll be hesitant to deal with this group in future, meaning that the rest of the three may not receive their loans. So the advantage of doing that is a kind of group support builds up. You're not responsible only to yourself. When you are part of a group, you try to do things which are not looked down upon by your own friends -- something they appreciate. And that makes you feel happy that they are appreciating what you're doing. David Cayley And in the case of default? The others are responsible? Muhammad Yunus Not in a formal way. What we say is, if something goes wrong in a group, we will not consider that group one that we would like to do further business with, which means you are losing the facilities. We are not punishing them and we also encourage them to look at each other's activity, so that nobody gets into any trouble. Troubles come, like a husband snatched away the money, took it away from her, and then she cannot do the business further anymore. So the other members of the group will try to persuade the husband, "Look, if she gets into trouble, we all get into trouble. Why don't you be good to us, return the money, so that we can be in a position to continue the business." So this is how all these issues are sorted out at the group level. David Cayley And the groups then also participate in regional centres, I believe? Muhammad Yunus Yes. It's called centres. Several groups get together and form a centre. In each village, there may be one or two centres. And the principle of Grameen Bank is people should not go to the bank, the bank should go to the people. So nobody has to come to the bank. Always the bank goes to them. And the centre is the forum which deals with the bank. So on a fixed day of the week, the centre will gather together and hold a meeting where a bank representative will be present. All the banking transactions will be done in that meeting in their own neighbourhood. There you feel strong. When person comes from a distance to come to you, he's not that powerful. When you're asked to come to the office, the office becomes a symbol of terror. You see, you are a helpless person: you are put in a line, you don't know the rules, somebody says you go there, somebody says you go there, somebody says where are your papers, and no, you come next time. So you're absolutely helpless, at the mercy of people. And when you sit behind the desk, you talk like a machine, you don't recognize me anymore. And for poor people at the bottom, the poor people, they are so scared of this kind of situation, they would rather not deal with you, they'd rather stay the way they are. So we changed it. We changed the whole situation. We give the prominence to them. You are the boss, you are there, I come to you. So if you want to shout at me, you shout at me, because I'm alone. If I have not bought something, it's my fault, because you have everything, because you are right in front of your house. That way they feel very content. The confidence gradually builds up. David Cayley And do the centres take on other social functions as well, not just supervising the loans? Muhammad Yunus Oh yes, oh yes. A lot of things. Gradually they can get into all aspects of life. In the process of doing that, they have come up with something which is popularly known in Grameen Bank as "sixteen decisions." Like one of the sixteen decisions is, they will say, we shall not take any dowry when we're marrying our sons and we shall not give any dowry when we are marrying off our daughters. Dowry is such a thing in Bangladesh -- it destroys families. When you're going to marry off your daughter, because of dowry, when a girl child is born to a poor family, she is looked at as a disaster in the family. Everybody gets so unhappy that a girl child is born, they don't even want to talk about her birth, that she is born, because they are afraid that the family would go into such a big crisis in marrying her off because a bundle of money would be needed to get her in marriage. So we said, why should that be happening? Can't we solve this problem? So we let them discuss this issue because we see this problem so much. They came up with this decision that it doesn't depend upon anybody else but us. We are the mothers of sons, we are the mothers of daughters. When we are marrying off our sons, we are the ones who are looking for dowry; when we are marrying off our daughters, we get scared of our dowries. So why don't we just don't take and don't give? David Cayley How radical is this decision? How controversial? How difficult to make? Muhammad Yunus Absolutely. Absolutely. Absolutely radical, because you are against an entire social stream and the way it's flowing. You stand up and say, "Look, I'm not going to do it." It is something unimaginable to say things like that. And poor people stand up and say, "Look, I'm not saying this for anybody else, but for me: I don't want to take and I don't want to give. If nobody wants to agree to that, we five, we ten, we twenty, we will do it, we will mutually marry off our sons and daughters. Because we are mothers, we can do that." And as Grameen Bank grows, they feel more and more confident, at least within Grameen Bank we can marry people without dowry. And this is actually happening. They are marrying their daughters and sons within the Grameen Bank, and everybody knows that this is a good idea, although they know it's something against tradition, but everybody appreciates it's a good idea. As a result, many non-Grameen Bank members say, "Okay, we will agree to that too." So a new wave is rising with that kind of tradition. David Cayley And these decisions are in effect vows? Muhammad Yunus Sort of, but it's not something... David Cayley And are they required to borrow? Muhammad Yunus No, no. These are not conditions on loans. We make it very clear. You take a loan, you pay it back, pay sixteen per cent interest -- that's all you're responsible for. But why are we taking these loans for? We want to change our life. And this is number two decision of the sixteen decisions: that we want to change our life; we want to have prosperity in our life, and we want to ensure a healthy environment around us, we want to grow trees -- this is one of the vows, one of the sixteen decisions. At the plantation season, we should be planting trees, and throughout Grameen Bank, hundreds of thousands of trees are planted during the planting season. Grameen Bank is one of the largest seedling sellers in the whole country. Malnutrition is a big problem in Bangladesh. Still, people are not in the habit of eating vegetables and it's so easy to grow vegetables. So Grameen Bank sells vegetable seeds to their borrowers. And there's night blindness, it's a disease for the children because of vitamin A deficiency. All this needs is green vegetable eating, that's all. So that cures that problem. All these things come naturally when you become aware of your life and when you start seeing life in a different way. If you are in a condemned situation, you are not taking stock of yourself because you have nothing to look forward to -- you have no tomorrow. Now Grameen Bank has put them in a situation, they see the tomorrow, they see the day after tomorrow, and they prepare for it. David Cayley Why are so many of the borrowers women? Muhammad Yunus We deliberately aimed it that way. In the beginning, one of the allegations that I was bringing against the banking system was that the banking system is deliberately against the poor. That's why they build the wall of collateral. And number two, I was making the allegation that it is anti-woman: banks do not want to lend money to women. If a woman wants to borrow from a bank, the manager will ask the woman to bring her husband along, so that he can discuss the business. I said this is a very biased way of doing business with one part of the society.So when I started, I wanted to make sure that at least fifty per cent of our borrowers are women, and this was not easy at all, because women are not in the habit of borrowing. They knew they cannot handle this money, this is the belief they had, and their husbands were not very enthusiastic about it. But we made it a point that this is the way we were going to do it, we have to do it. And it took us a long, hard work to achieve that fifty per cent level. After we have achieved fifty per cent level, we see a strange thing happening: money going through a woman in a household brought more benefits to the household than money entering the household through a man. A woman, when she brings in some income, the immediate beneficiary of the income becomes the children, the top priority for the mother is the children, and after the children has been taken care of, the second priority the woman has is the household. She wants to buy a few utensils, she wants to improve the living conditions, she wants to put a little stronger roof on the top. But for a man, these are not the issues. The man's first immediate attention is himself: he wants to go and enjoy himself, go to a movie, if he can, he can do gambling a little bit, and that sort of thing -- not immediately looking after the things that the woman does. So I said, why should we then approach the household through men? Why don't we approach it through women, because after all we want to see changes taking place within the family, and if the children are benefiting, children represent the future, so we gradually focus more and more on women. So as a result we became ninety per cent women. You see, women have seen the worst part of poverty. If being poor is tough, being a poor woman is toughest. When she is given little opportunity, she struggles so hard to get out of it. And then, being woman, she is totally insecure. She is insecure in her husband's house, because husband can throw her out any time he wishes. And she's insecure when she's in her parents' house. The parents are just every day waiting to get her out, some way, because she's a burden, society doesn't accept her in her parents' house, she must be married off somehow. If she is divorced and coming back to the parents' house, again it becomes a disgrace to the parents' house. She's not accepted anywhere.So given an opportunity, she wants to build up her security, and she's much more systematic in her approach than a man. Men have a very limited horizon: he's more limited to today... Woman sees not only today, but next year and year next. David Cayley This is a very unflattering portrait of men. Is it men in situations of poverty particularly that you are talking about? Muhammad Yunus Particularly in situations of poverty because he gave up. He gave up, he thinks that this is the way it's going to be. So he has accepted that position. And related to woman, he is in a better situation. For example, to him dowry doesn't immediately become a very annoying thing because he's the beneficiary of the dowry, whereas a woman is the person who is the victim of dowry. So there are differences in how he feels. The woman is the one who spends twenty-four hours in the house with the children. Men, in the morning he leaves the house and all the agony of hunger and pains of the children are left with mother. He doesn't care. And at times of extreme stress, like famine, it's a very usual scene to watch -- men abandon their family and disappear. But a mother never disappears, leaving her children behind. A father doesn't pay that kind of attention to the children. David Cayley Have you encountered much opposition to this? I'm thinking not just of the bureaucratic resistance that you related earlier, that the banks were unwilling to change their practice, but I'm imagining, for example, that people on the left would be very contemptuous of this approach. Muhammad Yunus We have a lot of controversies around us. Some on the left say that this is a capitalist way and this is done deliberately to destroy any prospect of revolution, because what you're doing, you're giving little opium to the poor people, so that they don't get involved with any bigger issues and they sleep peacefully and they don't make any noise. Their revolutionary zeal cools down. This is one interpretation of the leftist view of what we do.Another group in support of us, from the left, says, at least he's organizing the poor people through Grameen Bank. They didn't understand what organization is, but within Grameen Bank organization is very strong. A hungry person has no politics. A hungry person only knows where the food is; whoever gives him food he jumps over to him. So first you must take over the responsibility that they have their stomachs full. Then they can think about the next thing. Then the politics comes. Previously they didn't understand what politics is. Now they can see clearly because they are not bound to anybody. Previously for their own survival, they had to bow to the rich people because otherwise they don't get the job or they don't get the food, or whatever it is. Now he's freed them by giving the loans. The traditional ties, traditional links are cut off now. They are free people now because they can do whatever they want. So the left are divided on this issue whether this is the right thing to do or wrong. David Cayley What about the elites and those who would have lent money formerly at much higher interest and so on? How are they reacting? Muhammad Yunus They don't react favourably. So what they do, they spread rumours. They will spread rumours that if you take Grameen Bank money, if you are a woman and you're taking Grameen Bank money, you'll be expelled from your religion because this is against the religion for a woman to take money from the bank. So we will not put you in a grave in a religious way. So that's very scary thing for a woman who has nothing and now she thinks even if I die, I don't get the last religious rites for my burial. These kinds of rumours get spread. But after you get started in one corner of the village and some people take the money and see that nothing is happening, they're rather improving their condition, they're improving their house, then people say, "Well, why not? I need the money too." And gradually it spreads. So those rumours kind of thin away, they disappear very soon. They don't do it very successfully. David Cayley Can we return now to the world of development economics, from which we departed at the beginning of our conversation when you walked out the gates of the university? Muhammad Yunus Yes, that's right. David Cayley What is Grameen Bank saying to this world of development economics and development theory that you were so dissatisfied with? Muhammad Yunus I have been saying that people talk about development a lot, write about development a lot, volumes are written, billions of words are written, but it has only created confusion about development instead of clarifying development. Nobody can precisely say this is what I mean by development. I tried to explain what I mean by development and I stick to that image of development. My development is a positive change in the life of the bottom fifty per cent of the people. When you talk about development as we see in the literature -- a dam, a road, an international airport, buying a new jumbo jet -- everything becomes development. If I buy a jumbo jet, you tell me, in how many cycles later that will affect the life of the bottom fifty per cent positively? I would refuse to call buying the jumbo jet as anything to do with development. Or that beautiful highway that you build from north to south or east to west and say that that will revolutionize the whole economy, I would refuse to accept it as a development project. That highway, by the way, may even adversely affect the bottom fifty per cent of the people by removing them from their habitat while they are building that road and then forgetting where they are, making them paupers. So you call it development because you invested so much money in it, somehow you thought that makes your country beautiful, beautiful cars will be running through this road. That's not development to me. People talk about per capita electricity consumption as an index of development. I say I don't see any meaning to that, because this bottom fifty per cent don't even consume any electricity. If the electricity consumption per capita increases a thousandfold, what happens to the people at the bottom? Nothing. So, to me, that is not an index of development. If you want an index of development, to me, I would say, if a family which has one set of clothing -- they don't have a change of clothing -- and they achieve a level where now they have another set of clothing that they can change, I'd say that is tremendous development.After all, the top fifty per cent, they don't need your assistance. They can handle their life themselves and most often they handle it in a way that creates a problem for the rest. So we should be addressing the bottom fifty per cent. Now, look at the donors, people, the countries, societies which try to help the countries of the south, they come with their ideas about development and they would like to fund those things. And what happens ultimately? Ultimately, the projects are built, dams are built, roads are built, plants, power generators are set up. Countries in the north probably sold a few more generators, a few more planes, a few more ships, a few more whatever it is, and called it development assistance, and their experts designed these programs -- and in the end poverty in the recipient country has increased, it has deepened, the economic situation worsened. So why should we call this development? What I'm saying is, at least let us take a pause and ask ourselves what it is we are trying to accomplish. The donor countries in the north, before they spend one dollar, ask themselves, why am I spending this dollar for this country? Most often the taxpayers in the countries of the north are told, we are helping the third-world countries, they are poor countries, they need our help, otherwise they cannot survive. This is the reason. What I'm trying to point out is, they are never told, the taxpayers, that there are rich people in the poor country. Most often the resources that we are sending to the third-world countries are received by the people at the top, not the people at the bottom. If they knew it clearly, the taxpayers knew it clearly, I don't think taxpayers would be so excited about giving money to the third-world countries. Before we send out our cheques from the north, funds from the north to the south, I think the cheques should be rewritten in a more direct way and instead of saying that this is the cheque addressed to Bangladesh, it should say to the poor people of Bangladesh. If we take a little bit of care, I think it will have more effectiveness. David Cayley I remember a story that a Brazilian environmentalist, Jos Lutzenberger, told me a couple of years ago. He is an agronomist. He's now been made a minister of the environment in Brazil, but he was then an agronomist. And he went to the World Bank with a number of small projects he was interested in and he received a very sympathetic hearing. And then one of the bank officers said, "Mr. Lutzenberger, I'm sorry, the trouble with your ideas is that they're too cheap." Can the World Bank be interested in the Grameen Bank? Muhammad Yunus The World Bank has shown interest in the Grameen Bank because it has gained a lot of attention worldwide. But the World Bank certainly will not be interested in tiny, tiny replications of the Grameen Bank that are coming along, which is very important because it just starts in a tiny way, but it has a tremendous potential. Not only the World Bank, most of the donors, unless it is above a certain amount, they are not interested. So grandiose projects get priorities, not human projects, small projects, which have the seeds of further expansion, further growth in them. These things are left out. One cannot start with a twenty-thousand-dollar project, fifty-thousand-dollar project -- it's always million-dollar projects and billion-dollar projects, because their experts are used to bigger figures. They see in a more global way, a more macro way, rather than a micro way. One of the arguments I was making is that the fault in our planning and thinking is, we got used to having a bird's eye view. We want to see the whole world, the whole country, in one sweep, and make decisions. I say, when you have a bird's eye view, that means you are flying pretty high. When you're flying pretty high, you don't see things clearly and, if you're not seeing things clearly, you start imagining things. And that's where the trouble begins. Your imagination is so fertile because it has read or been taught of so many other things, you start imagining things which do not exist at all on the soil. I have been arguing that it's much better, much safer to begin with, to have a worm's eye view, be on the surface, and walk and find out what exactly is there, and if there is an obstacle, how to overcome that obstacle. This is more concrete. This is much more practical, pragmatic, but people don't enjoy it so much. It's not glamorous to have a worm's eye view. It's so much more glamorous to be flying up and seeing everything. David Cayley On the small scale at which you work, what is possible for people when you're dealing with amounts of hundreds of dollars? Doesn't that mean that only a very restricted range of, say, business activities are available to people? Muhammad Yunus First of all, I've been saying that every person, every human being has capability, inherent capacity, which is buried inside, and society has created obstacles to letting it come out. Once the barriers are removed, it comes out. But capabilities differ. I can offer large opportunities, but my capability is only to take the smallest scoops of this, and that's my capability, you cannot blame me, and that's what I do. Grameen Bank offers the opportunity to go as to your capability. I cannot push a person to become something that he is not, but gradually if I take two scoops, or one scoop first and I have built confidence, maybe I'll think of three scoops and four scoops in the next round. That is important. What does it do if I do one little step or two little steps through Grameen Bank? If we consider and come back to that question of one set of clothing versus two sets of clothing: if a family which has started with one set of clothing moves to two sets of clothing, to you it's not a very dramatic change because what has happened -- two sets of clothing -- that's not development. But, to the family, it's an utmost fantastic thing that happened to their life. We meet women in Bangladesh who cannot come out of the house to talk to us because she has washed the clothes that she was wearing. To that person to have another new set of clothes opens up the whole world and re-establishes her human dignity. So that is to her a very important thing. So these little changes can accumulate and bring people to a higher and higher level. A person who never lived in a house which has reasonable roofing in a monsoon country like Bangladesh -- where you live practically on mud and slush with your family and your clothes are never dry -- to have a tin roof over your head and have a dry floor inside for the whole year round is a tremendous amount of change. You may not see it from above, from a distance, but what has happened to people inside [Bangladesh] is a tremendous change. David Cayley Dr. Yunus, thank you very much. It's been quite a pleasure to talk with you. Muhammad Yunus Thank you for giving me this opportunity. Lister Sinclair Tonight on Ideas you've been listening to a conversation between David Cayley and Dr. Muhammad Yunus, the founder of the Grameen Bank of Bangladesh. Production assistants: Gail Brownell and Faye Macpherson. Technical production: Joe Hill. We'd like to thank the Calmeadow Foundation for their assistance in setting up this interview. The executive producer of Ideas is Bernie Lucht. Transcription by Hedy Muysson.

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