Business for a poor tomorrow
December/January, 1999

Banker to the poor Muhammad has realized that the solutions to global poverty and Third World Debt can be found in pennies. Se while the World Bank deals in millions his ‘Grameen Bank’ is looking to help 100 million people in the next 7 year via micro credit

One of the most common ways to start a piece of editorial in 1998 has to have been as we approach the year 2000 followed by some tenuous link to a subject that has little to do with the golobal impact of the new millennium with the Grameen Bank however such a clich? may well be appropriate.

Professor Muhammad was an economics lecturer at chittagong University in Bangladesh when in 1974 his country became engulfed in famine. All of a sudden, the highly complex economic theories that had excited him with their all encompassing answers began to lose their appeal. As he says in his autobiography: What good were these elegant theories. What good were these elegant theories when pople died of starvation on pavements and on doorsteps?

What followed was Yunu’s regressing bank to student life in the small village of Jobra he learnt of the situation that hundreds of thousands of Bangladeshi women and countless other people in the developing world had been unwittingly forced into In order to buy the materials that they later turn into furniture the women of the village have been borrowing money from money lenders (or mahajons) who then require the finished product to be given back to them to sell.

The money the mahajons make from the sale then covers the initial loan and a fraction of any further profit is given back to the manufacture a figure that is often only of one or two pence.

Yunus saw that if the residents of Jobra weren’t bound to the mahajons viscous circle then they could get the best prices possible for their products on the free market. Yunus and his team of students calculated that it would cost just 17 to give the 42 families in Jobra the chance to buy their own materials and therefore avoid the trappings of the mahajons. "I was not trying to become a money lender" says Yunus, I had no intention of lending any money. All I wanted to do was solve an immediate problem"

From successful beginnings in Jobra Yunus started the Grameen Bank (from Gram meaning village) and set about granting small micro economic loans to those on or below the poverty line. After following the principles laid out in Jobra (and in the face of direct opposition from many including the World Bank) the organization has grown into a company that employs well over 12000 people and gives out loans of 35 million every week. Bearing in mind that the company asks for no collateral against its loans and is therefore based solely around trust the pay back rate of 98% that it currently enjoys in unprecedented. It is clear when looking a Grameen that is is much more than an economics issue Yunus and Grameen see credit as a basic human right which has tremendously successful knock on effects that eventually benefit the whole country.Grameen has now moved into the developed world and a scheme in Norich (which apparently has the lowest income for women in the UK) is currently underway with plans to start a similar projct in tower Hamlets. The Norwich project is currently running into trouble because it contravenes UK benefit legislation (any money a Grameen Bank – style organisation loans to an individual shuld. by law, be docked from any income from the state) Michael Rigby, Grameen’s representative for the projects in the Uk, is currently looking for a way around this problem. He feels that the uncentive structure that makes Grameen Work so weel in the developing world isn’t in place in this country, But are those in the west as trustwrthy as those on the poverty line in the developing world? " One thing that I have noticed after talking to street people." he says, "is that personal respect is a startlingly dominant trait. "Yunus himself says, "I find people trustworthy anywhere, east or west. people everwhere prefer to live in an environment of trust rather than move away from it."

Poverty, it seems is a great leveller. Not only has Grameen Bank come up with a viable solution to the global problem of poverty, it has done it by focusing on the area that is so ofter neglectd in word- wide issues: the individual, Surely if a system such as this was available to the billions of poor people in the world, eradicating third world debt would become far more achievable