Mohammad Yunus, the modest "banker of the poor" By Can Merey

dpa German Press Agency
Published: Friday October 13, 2006

New Delhi/Dhaka- Mohammad Yunus has established a worldwide reputation as being the modest "banker of the poor." His admirers - besides those in his poverty-stricken Bangladesh itself for whom Yunus is making possible a decent life - include such prominent persons as former US President Bill Clinton and his wife Hillary. For years now Yunus had been regarded as a potential recipient of the Nobel Prize for Economics, but now, in a complete surprise, he has been named the winner of the Nobel Peace Prize.

The 66-year-old's ambitious aim in life is to conquer poverty in the world.

"One day our grandchildren will go to museums to see what poverty was like," Yunus once said in an interview in the Independent on Sunday newspaper.

His recipe is at once simple and brilliant: His Grameen Bank - which was named as co-recipient of the Nobel Peace Prize - provides small loans to the needy, almost all of them women.

The bank demands no collateral. The interest rates are much lower than those demanded by the sharks to whom the poor previously had to turn to, since without any collateral they would not qualify for regular bank loans.

"Poverty covers people in a thick crust and makes the poor appear stupid and without initiative," Yunus said. "Yet if you give them credit, they will slowly come back to life."

Instead of becoming the "good banker" in his home country, Yunus could have embarked on a typical career and become a successful businessman. Born 1940 in Chittagong, Bangladesh's chief commercial hub, he was the son of a goldsmith who enabled him to get a good education. But it was his mother who especially influenced him

"Mother always helped any poor who knocked on our door," Yunus said.

Yunus received a Fulbright Scholarship to study in the United States and at the conclusion of his studies he returned to Bangladesh as a professor of economics at Chittagong University. He was 33.

But Yunus could not avert his eyes from the increasing poverty in his country which had just gained its independence. "While people were dying of hunger on the streets, I was teaching elegant theories of economics.

"I started hating myself for the arrogance of pretending I had answers. We university professors were all so intelligent, but we knew absolutely nothing about the poverty surrounding us."

From such a realization, Yunus drew one conclusion: "I decided that the poor themselves would be my teachers. I began to study them and question them on their lives."

In the mid-1970s Yunus and his students would visit a poor village several times and see how private loan sharks with their exorbitant interest rates prevented the people from rising out of poverty.

"Their poverty was not a personal problem due to laziness or lack of intelligence, but a structural one: lack of capital," Yunus recalled in the Independent on Sunday newspaper story. It was the existing system which prevented the poor from being unable to save money and invest in improving their own lot.

And so the idea of a bank providing small-size credits at fair conditions was born.

At first, Yunus was laughed at. Bankers did not regard the poor as being creditworthy. But Yunus argued back: "How do you know they are not creditworthy if you've never tried? Perhaps it is the banks that are not people-worthy?"

In 1983 his Grameen Bank - which means "rural bank" in Bengali - became licensed. As of mid-2005 the Grameen Bank had loaned upwards of 5 billion dollars to to poor. And the sceptics have been silenced - 99 per cent of the loans have been repaid.

Yunus' idea has in the meantime found imitators in more than 60 developing countries.

"I invite everyone to steal my idea," the former professor told the German radio network ARD last year. "It's a great idea, everyone should do it. My only complaint is that a lot more people haven't yet taken up the idea and put it to use."

© 2006 dpa German Press Agency