Every year, the Nobel Prize is awarded to the finest brains alive. This time the Nobel Peace prize for 2006 went to Dr. Mohammad Yunus, along with Grameen Bank for “their efforts to create economic and social development from below.”
Dr. Yunus and his brainchild Grameen (village in Bangla) Bank literally turned a simple concept of self-help to a worldwide trend. Dr. Yunus was born and brought up in Bangladesh, a country known more for torrential rains, floods and hurricanes than producing Nobel laureates.
The story of Dr. Yunus is intricately linked with the story of Bangladesh, the most densely populated country in the world with a population of 135 million, which is a little larger than Louisiana. Dr. Yunus got his undergraduate education from the University of Dhaka in Bangladesh and received a Ph.D. in economics from Vanderbilt University.
He went back home in the early 1970s when Bangladesh was struggling with a famine. He was baffled by the fact that his elegant economic theories were not helping the poor people around him. He was convinced a poor person does not need any charity. Rather s/he needed to be taught how to fish instead of giving fish. As we say, s/he needs a hand — not a hand out.
The fundamental mantra in the modern banking industry is to lend money to those who have the capacity to pay back, so one needs to have good credit to receive a bank loan. Obviously a poor person is not credit-worthy _” he or she is a risk according to traditional banking. What Dr. Yunus did with his micro-lending model was to reverse the traditional lending model. His Grameen Bank awarded a loan to a person – not based on credit-worthiness but on “potential of a person.” The Grameen bank uses a system of “solidarity groups” for ensuring repayment. Instead of individuals, a team applies for a loan and everyone act as co-guarantors. They help one another to bring economic advancement together. More interestingly, he made sure most loan recipients (95 percent) were women. He found women to be more interested in eradicating poverty than men.
Dr. Yunus observed; “Grameen Bank methodology is almost the reverse of the conventional banking methodology. Conventional banking is based on the principle that the more you have, the more you can get.
“As a result, more than half the world’s population is deprived of the financial services of conventional banks. Conventional banking is based on collateral, while the Grameen system is collateral-free. Grameen methodology is not based on the material possession of a person, but on the potential of a person. Grameen believes that all human beings, including the poorest, are endowed with endless potential.”
The guru of micro-lending blended the elegant economic theories to a practicable model for helping the poor people in Bangladesh and around the world. Currently, one fourth of our fellow human beings live on less than $2 a day. It’s really reassuring that there are some remarkable individuals, who gave up their traditional mode of over-intellectualizing social problems, and did something which works for the poor people. The catch is to believe in one’s idea and come out with a practical modus operandi to do it again and again, consistently and move forward. Dr. Yunus once said that he wants to make sure our future generation know about poverty only in museums. There is light at the end of the tunnel.