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Muhammad Yunus

Championing the Right to Credit For Poor Women Around the World

January 25, 1998|Nancy Yoshihara | Nancy Yoshihara is an editorial writer for The Times

For Muhammad Yunus, it all began with a challenge in 1976, when he was an economics professor at Chittagong University in Bangladesh. "I had no intention of creating a bank," explained Yunus, founder and now managing director of Grameen Bank, which, to date, has lent a total of $2 billion to 2.3 million people, 94% of whom are poor women.

He started with $27 of his own money and lent small amounts to the poorest Bangladeshi women, who used the money to raise milk cows or buy supplies for their small home-crafts businesses. As they earned money, they repaid the loans. "All I was trying to do was convince the guy who was telling me it could not be done."

Yunus pioneered what has come to be known as micro-loans. The 57-year-old professor, who earned his PhD in economics at Vanderbilt University in 1970, explained, "This had nothing to do with theory. I was caught in a situation where my personal response was to give the money from my pocket and then I thought, if so many people are so happy with such a small amount of money, how can you walk away from it? Why can't you do more of it? So I went to the bank to arrange more loans and banks said we can't lend money to the poor. The debate, the struggle began."

His Grameen Bank operates only in Bangladesh, but micro-loan programs are now found in 60 countries, including the United States (Grameen means "rural" in Bengali). President Bill Clinton started a micro-lending program in Arkansas, according to Yunus. Today, such programs exist in the city of Los Angeles and in Pomona, Pasadena and Orange County. "The talk in the beginning was that it was good only for poor countries. People are surprised all of sudden--why the USA? I said anywhere anybody is rejected by the banking system, you have room for a Grameen type program. That is exactly what happened in the USA."

Despite his success, Yunus is still battling the status-quo mentality of banking. Outlays to international micro-loan programs for the poor have been held up by endless studies and reviews of existing Grameen-type programs. He talked of his frustrations and hopes for micro-loans during a recent visit to Los Angeles.

Yunus' wife, Afrozi, is a professor of physics at Jahangir Nagar University in Dhaka, where they live with their 11-year-old daughter. His 22-year-old daughter lives in Princeton, N.J.


Question: You have said that credit is a human right just like food. Isn't that a stretch?

Answer: You can list everything as a human right--food, shelter, housing, health and education. How do we ensure these human rights? One way is to create an enabling environment where each of you can establish those rights for yourself. One of the best conditions of an enabling environment is access to money, credit, so one can start to earn an income. When income flow begins then the right to food, shelter and everything else becomes a reality. So I am saying not only should it [credit] be included in the list of rights, if I was arranging them by priority I would put credit as No. 1. Credit represents the creation of self-employment, creation of income flow. This is something we have to see that everybody has equal access to. So anything which discriminates against someone getting access to credit is something we should get rid of as soon as possible.

Q: Are you saying we should get rid of some of the big international lending institutions?

A: No, no, no. I'm not getting rid of any institutions. I am saying access to credit should be ensured for everybody. It should not be based on the ownership of property or anything else. The basic requirement of financial institutions today is collateral. Unless you have collateral you cannot have access to credit and that has created two different categories of people: one who has access; one who has no access. That is the discriminating factor. That has created what I call financial apartheid: some who got it, some who never get it.

Q: Now you've had success with these programs largely overseas in Third World countries. How are these micro-loan programs working in the United States?

A: There are now more than 200 programs working in the U.S.A. And many have helped people to come out of welfare. That is the most exciting thing to happen because the welfare system in the states is such that once you are in welfare, you spend your lifetime in welfare and then your next generation spends their lifetime in welfare. So something that helps you come out of welfare is something to be applauded. So this is what is happening with the U.S.A.

Q: If you could construct a way to help people in the United States off of welfare, what would your idea be?

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