Special Feature 
Breaking the Barriers to Replication 
An Interview with  Professor Muhammed Yunus 
[This is the remaining part of the interview. The first part was published in the Grameen Dialogue #30] 

Alex Counts: Related to donor funding, you have been very successful; in some cases, you have had more money than you actually needed.  More important, your donors have not significantly interfered with the format of Grameen Bank.  Do you have any advice on how to approach donors, what you should never compromise or how to justify a project? 

Muhammad : One problem is that donors will try and put a lot of conditions on your project when your mind is not focused on what you want.  They will fill in those gaps.  So the more room you leave for them, the more they will try to fill in. If you don�t know what to do, they will tell you.  Some donors send consultants to help, but they don�t always allow room for you to think for yourself.  They get impatient.  The most important point I want to make on this issue is that you must be prepared.  The more you are prepared,  lesser the chance that  the donors can push you around.  Because, if you are prepared, they will have to argue with you to change your mind.  It is more of a two way negotiation than the usual one way interaction, where the donor has most of the say. 

Many recipients do not have the details or a prepared scheme, so they fall victim to the advice.  Donors tell you how to implement the project and you start having problems.  You need to argue your case and stand on your own feet.  Then it is more difficult for donors to tell you what to do.  If a consultant is trying to push advice on you, but you are serious about some issue, hold your ground, and don�t be impatient to get the money.  People will appreciate the fact that you have your own ideas and, hopefully, they will give you a chance to do things your way. 
Look at the donors� recommendations as advice.    Look and see if there is something good in them and if not, say so. Even if you are a small organization, do not get scared when the big guys come and tell you what to do.  If you know what you want to do, stick to it. If you make a mistake along the way, then change your path and  say you are correcting it.  If you make changes you may have trouble with donors, but feel free to make changes and strengthen your program. Overall it is important : (1) to be very clear, (2) stand your ground and (3) don�t get swept away by the amount of money or facilities you are promised so that you have to give up too much ground. 

AC: Sometimes the donors require many reports and they overburden you.  They will send in consultants that you do not need.   Any advice in this matter? 

MY: Read through everything you are signing; people get so impatient that they don�t read their agreements with donors.  Design your own agreement form, so that you learn what you are getting and what you are agreeing to.  Negotiate those things, don�t accept the argument that this is their �standard agreement�.  Let them know you have a standard format also. 

Design your own reporting form.  Their standard reporting form may not apply to your situation at  all.  You will have to struggle with their form and you cannot make them happy because their questions are not relevant to the context of your project. They may just pass the same form around from one project to the next.  First find out what they want to know about you, then tell them you will design a format that will answer those questions.  They will be the ones struggling to find out what they want to know.  Otherwise, they want to know everything under the sun without knowing what they are going to do with it. 

Look at what the questions you want answered, as an administrator.  Wherever possible, prepare things for yourself and then simply pass it on to them.  That way you don�t feel you are just doing it for them. Be true to yourself and the things you need. In the budget, keep as much flexibility as possible, because you don�t know what will happen in the future.  Say it is a tentative thing and will be redesigned every six months based on need.  Keep some money as an unallocated amount so you don�t have to keep arguing about moving line item 1 to line item 2. Unallocated funds allow flexibility and so does redesigning the budget every six months. 
Regarding consultants and so-called �supervision missions�, from our experience we recommend that replicators avoid this term completely.  If it is a review mission, then it should be a joint mission.  It is also important to review what the donor has done.  The donors don�t always follow their own agreements.  The money doesn�t come at the right time or they sit on your letter for months without sending a reply.  Then six months later they come and yell at you for not sending a reply or something.  They don�t explain why the money hasn�t come.  So you need to explain the problems you have faced because funds have not been released.  It should be a review of both sides and result in both sides stating what they have agreed to. 
AC: What is your vision for expanding credit to the poor globally in the next 10 years?  Any fears or concerns? 

MY: In the case of Grameen, it is a problem of getting bigger, older and inefficient.     It is an inevitable process. Some organizations become old at three years of age and others at fifty.  You need to design your path.  If you become old, the younger and the more efficient organizations will take over.  IBM was threatened by Macintosh. This is natural.  But while those two organizations fight it out, the computer itself remains.  You are really talking about the service.  In  our case, it is credit for the poor.  Tomorrow Grameen Bank  may not exist, but credit for the poor will remain.  It will flourish. It is an irreversible process.  People now know that the poor are credit worthy.  Efficient organizations that are aggressive will continue to arise in Bangladesh as well as in other countries. 
Credit for the poor has deep roots, and it will continue to sprout.  The Credit Summit�s slogan is to reach out to 100 million families by the year 2005.  That�s 100 million of the poorest families, through women.  That is what the next 10 years is about.  We might not reach 100 million families, but if we reach 20, 30, or 50 million families, then that will really be something.  We will have created the base. 
I remember the story of a king who was approached by a commoner who said, �Please help me.  Put one grain in the first square of a chess board, then the next square you double it and keep doubling  it with each square.�  The commoner said, �this is the greatest  thing anyone could do for me.�  So the king looked at him and laughed and said, "I have so much to give I and you only asked for this?" So the king said "yes" and before he reached the last square he had lost his whole kingdom. So this is the power of moving from one to two to four. Don't laugh at one or two, because this is the stage where you create momentum. If in the year 2005, there are only 20 million families that have been reached, I can guarantee you that growing to 100 million families will not be that far away. Going from 20 to 100 million is not the difficult part. The difficult part is reaching the 20 million. 

Organizing the Microcredit Summit and the World Bank microcredit fund are both big steps. They don't answer all the questions, but they are steps in the right direction and may be, many things will come out of them. May be, they will lead to the creation of microcredit activities all over the world and national microcredit funds. This is being discussed in Bangladesh with the government.   

Finding a way to get involved with the capital market itself would be a fantastic thing to do. When I was in the States, I was discussing with people about forming a financing company called the Calvert Grameen Finance Company. It would focus on tapping into the world capital market. The world capital market is a virtually unlimited market; the closer you get to it the more resource constraints become a thing of the past. 

AC: With new funding for microcredit is there a potential problem of opportunist organizations that know how to write proposals, but do not know microcredit, getting the funding? Do you have any advice for NGOs, so that they will not be overwhelmed by opportunists? 

MY: You create business standards as you go along. Just throwing in money doesn't help anybody. So you try to create standards and norms of how you select organizations. Only when nothing exists, do donors create a problem for themselves and for genuine organizations. Because now a days fancy people get the fancy money. The people who are genuine must work very hard to create those standards and persuade donors. Donors don't throw away money, if they know what the real thing is. When they don't know what it is, they chase the buzz words. If donors and recipients are not careful, donors will be feeding the weeds along with the rice plants. That doesn't mean the rice doesn't grow; it does. But the best thing you can do is to pick out the weeds as you go. That process needs to go on continually. That's one reason why it's important to get business people involved with Grameen replication; they can help us distinguish the real thing from something else. The people involved with authentic replication of Grameen need to close their ranks so that they can bring in information about what is right and what is wrong. 

AC: Regarding the issue of interest rates and organizations struggling to set rates that allow them to break even, what advice do you give them? 

MY: From my experience, 20% should be the rate. Some find for a short time they need to charge 25%, but in my opinion they should try to bring it back down to 20%. This is 20% real interest, after taking inflation into account. I see 40% and 60% interest rates being charged by microcredit programs and I don't understand why it needs to be this high. I think people should be patient and be prepared to wait 5 to 10 years for viability, instead of trying to reach it in one year. In the meantime, they should develop a program that works using the 20% interest rate; and by this I mean 20% simple interest charged on a declining balance. Once you feel too free about your interest rate, you don't hesitate to raise it and pass all the burden on to the borrowers. So they are forced to bear the weight of your inefficiency and incapability. 


AC: What ways can people participate in reaching the goal of 100 million families if they are not involved in implementing a microcredit program? 

MY: Groups like RESULTS create ways in which other people can embark on starting a microenterprise program. They change the mind set of people, change legislation, and create pressure for the decision makers to support credit for the poor. Take, for example, their initiative to collect signatures of Parliamentarians, or a letter to the World Bank President. This is extremely important. The People's Fund we have created is another mechanism; individuals can encourage other citizens and donors to contribute to this fund.  

It is important for people to remember that the creation of the microcredit fund by the World Bank is not the end, it is just one step. We need to see how they are designing it and what is really happening. As a vigilant citizen, you would like to see it properly implemented all the way down. The alternative citizen's approach that we are creating through the People's Fund can work as an example of what can be achieved. If the citizens' approach can work better it leads to a continuous pressure on the governments. 


1. Alex Counts is currently the Executive Director of Grameen Foundation in Washington, D.C. in April 1997.  


2 Professor Muhammad is the founder and Managing Director of Grameen Bank.