The Heroic Mission of
Lending Money to the Poor
by Daphne Carpenter
Why are there so many impoverished people in this world? Is it because they are lazy? Is it because it is their so-called “karma?” No, neither explains the global phenomenon of poverty. In today’s world, where the rich dominate and control the banks and the money, so many people don’t have a fair share at entrepreneurship. Or more precisely, they don’t even have their fair share of resources—the ones needed just to survive.
In countries like Bangladesh, Bolivia, Madagascar, Burundi, Guatemala, Ethiopia, The Congo, Haiti, and Mozambique, more than half the people live below the national poverty threshold.
Can you imagine the natural landscape (minus corporate grime and capitalistic infrastructure) in these resource-enriched countries? When I was in Guatemala, I nearly overdosed on the density of the tropical air there. And have you seen pictures of, or been to, Mozambique? Endless…tropical…fill in the blanks.
People that live in poverty-stricken areas “lack” resources because the resources there are unfairly distributed—not because they don’t exist. According to the “World Bank,” extreme (or absolute) poverty means the equivalent of “living” on less than $1.25 a day, and 1.4 billion people can’t even do that. They’re deprived of the basic necessities of life—clean water, food, sanitation facilities, health, shelter, education and information, and access to services. Why is this?
Does the planet not have enough resources to provide for its own inhabitants? Does the guy pumping a hundred dollars at a time into his mega SUV deserve what he “has” because he’s “worked hard for it” and the poor people “haven’t?”
“Poverty is not created by the poor people. Poverty is created by the system that we have built,” says Dr. Muhammed Yunus, a Bangladeshi Professor of Economics and a 2006 Nobel Peace Prize Laureate. His efforts to eradicate poverty through microloans with the Grameen Bank have reached one out of every thousand people on the planet. Founded in 1976 in Dhaka, Bangladesh, the Grameen Bank’s mission has been to assist poor families “help themselves” overcome what might have seemed like an endless cycle of poverty.
Initially lending $26 (from his own pocket) to 42 people, Yunus, and what eventually became the Grameen Bank, have provided loans to 8.37 million borrowers worldwide in the past 35 years.
The instrument is microcredit—small, long-term loans on easy terms. One distinction of this kind of credit versus conventional bank credit is that it’s not based on legally enforceable contracts or collateral. It’s based on trust—not on the system. The borrowers are poor and usually have no “credit history,” but rather, a solid desire for the opportunity to become self-sufficient.
“Poor people are bonsai people. There is nothing wrong in their seeds. Simply, society never gave them the base to grow on.” Dr. Yunus compares poor people to bonsai trees in the sense that “when you plant the best seed of the tallest tree in a flower-pot, you get a replica of the tallest tree, only inches tall,” he says. “There is nothing wrong with the seed you planted; only the soil-base [is] inadequate.
In this case, that inadequate soil base translates to a rugged terrain and history of military dictatorship, post-colonial collapse of infrastructure, nationalization, economic mismanagement, greed, etc.
Many people assume that poor people are poor because they don’t have any skills, or because they are lazy and lack ambition, says Yunus. “It’s always about that person; there’s something deficient about that person.”
Ninety-five percent of borrowers from the Grameen Bank are women (and poor at that)—a concept virtually unheard of in the traditional banking system. The loans help get them on their feet, giving them something to work with where they had nothing before. To be a recipient of a loan, the borrower must invest in some type of income-generating activity, like buy a cow, invest in a water pump, agricultural supplies, etc, and they must do it together with a group of five entrepreneurial friends or relatives who will become their support group throughout the process of becoming self-reliant.
But it’s not easy for women at first, especially in Muslim countries like Bangladesh, where women are considered second class citizens, and are not allowed to talk to men outside of their husbands. These women have never had such money in their pockets. Upon being given the loan, “She is scared—she is challenged,” said Yunus. But through that challenge, “She discovers herself. So the Grameen Bank is more about self-discovery than just a lending operation.”
Apparently the payback rate on these loans is high, according to the Grameen Bank—in the 90 percentile range. This concept of microcredit is a revolutionary method of social welfare which increases the quality of life for poor and desolate families who often believe that they were “born into” these indigent situations. Take notice of how in areas where governments have failed the people, smaller organizations and grassroots groups will step in and come to the rescue.
Muhammed Yunus started small. With his students, he set out to help the poorest of the poor. Famine had swept through Bangladesh after the country gained independence from Pakistan in 1971. The previous government collapsed, and of course, through all the craziness that happens when a country becomes its own, wealth and resources didn’t extend out to people living in rural areas. (There’s no excuse for people not getting the basics of life, though. This is just pure greed, on many levels.)
Yunus describes the horrific scene in his country during that time: “You could see skinny people all around…skeletons…either walking or sitting.” He said that it was difficult to tell whether or not the starving person on the ground next to you would ever get up again. Imagine villages of zombies—children, grandfathers.
The gravity of the situation in Bangladesh at that time captured worldwide attention. Some non-governmental groups, individuals, and musicians began to organize. “The news reached me of an unfolding humanitarian crisis in my homeland of Bengal,” said Ravi Shankar, in 1971. “I expressed my concern to George Harrison. He knew about the turmoil of my mind and a concert to raise funds was initiated. An enormous amount of money was collected and this could never have been achieved without the help of dear George.”
The concert became known as George Harrison’s Concert for Bangladesh, which generated more than $240,000 in aide money for UNICEF. The album sales, however, which were said to be in the $15 million range, somehow got locked into an IRS account for years because the concert organizers “had not applied for tax-exempt status.” George Harrison was said to have been “disgusted” by this.
Five years ago, award-winning documentary film maker Holly Mosher traveled to Bangladesh to start filming her latest passion project, “Bonsai People—The Vision of Muhammed Yunus.” When she arrived, she was deeply moved. “Being in Bangladesh made me feel like I’d gone back a hundred years in time. [The villagers] were often at home doing chores that took hours because they still have to do everything by hand.”
The film peeks into the lives of several Bangladeshi women who have become self-employed and empowered by microcredit loans. One of the heroes in the film is Aroti (now an elected councilwoman in her village), who has received and paid back several Grameen loans, including an education loan for her son. She laughs as she talks about staying productive and working, “not seven hours a day,” but “twelve hours.”
At first, Aroti took out a small loan and bought a motorized irrigation pump. Her irrigation project was successful, she says, as she proudly walks us through the stream. Three years later, she took out a housing loan which allowed her to build three homes on her property. She rents two of the houses out to other families.
“Twelve years ago we didn’t have electricity. The difference [now] is the ground to sky,” she says. Now her family sleeps “in peace under the fan.” And they used to have to pedal a rice husker by foot, she says, but today, with adequate tools, “it only takes five minutes.”
Director Holly Mosher, an NYU Tisch School of the Arts honors graduate, said that she was “amazed by Grameen’s capacity to come in and provide help during natural disasters.” She was there “during one of the worst cyclones they had had in years.”
Her film depicts the challenges poor people living in rural areas face when the system repeatedly neglects them. This heartfelt documentary compels us to look deeper into the potential that all humans possess, but aren’t given the opportunity to explore.
In the film, Dr. Yunus says, “My position has always been [that] all human beings are born as entrepreneurs. It’s part of being a human being. But unfortunately, many of us [have] never had the opportunity to unwrap that part of our life, so that talent is hidden. That’s the fault of the environment and the society we live in, not the person. They are very hardworking, they are sweating their life off, and the money they make is so little because no one gives them a fair share of their work.”
If you’ve been in countries where people are hungry, or if you’ve seen immigrants working here in the United States, you might have noticed this to be true. It seems like the harder these (poorer) people work—often physically grueling labor—the less money they make.
Microcredit as a Model
Conventional banks reject poor people and women. “This is unjust,” says Yunus. In the microcredit structure, however, they do the “opposite” of what conventional banks do. They even go directly to the people, to their homes, instead of having them come to the bank. This makes sense, especially in these rural areas.
“When a client gets into difficulty, conventional banks get worried about their money and make all efforts to recover it, including taking over the collateral.” This isn’t the case with Grameen, says Yunus. The support groups and financial assistants make efforts to “help her regain her strength and overcome her difficulties.”
Maslow’s concept of the Hierarchy of Needs (derived from the works of the late doctor of psychology, Abraham Maslow) suggests just that the needs at the bottom of (what’s depicted as) a pyramid are of a human’s basic physical requirements—the need for food, water, sleep, and warmth. A person’s “lower-level needs” have to be met before they can move on to the next level of needs, which are safety and security. This applies to poor people who have nothing. How can they reach their potential when they don’t even have their lower needs met? (The needs at the top are psychological and social.)
The Grameen Bank is not a punisher bank, they say. In our society banks don’t care if we’re stuck somewhere in those lower realms (although how many of us ever really are?). They want their money. In unwavering attempts to recover it, they’ll call you every day, twice a day, even on Sundays. They’ll take over your collateral, whatever it was you put down as security for the repayment of the loan. And your “credit report” will now show that you have defaulted on your loans, so then you’re blacklisted from potential opportunities like the “good” house or apartment you wanted, a decent auto insurance premium (yes, your credit is taken into consideration on that one these days), and you might just kiss that dream job away as well if you have a less than satisfactory financial history. (During my research for this article, I came across several people who said they couldn’t get certain jobs because of their credit.)
When Muhammad Yunus came up with the idea to provide microloans to the poor so that they could acquire adequate tools needed to achieve self-sufficiency, his concept was ridiculed and criticized. People said it was “a crazy thing to do…how can you loan money to poor people? They will never pay you back.”
Thirty-five years later, Yunus and the Grameen Bank have successfully loaned to one out of every thousand people on the planet by, in essence, harnessing the power of the free market. Muhammad Yunus well deserves his 2006 Nobel Peace Prize for his effort to, as the Nobel Committee stated, “Create economic and social development from below.”
Vision Magazine admires the work of Dr. Muhammad Yunus (and of other characters mentioned in this story). We feel his system to be a great example of social justice and an exceptional avenue for change.
And before we go, we’d also like to mention that Yunus received the Presidential Medal of Freedom from President Barack Obama in 2009, and that this October he’ll be awarded the Congressional Award.
Only seven people in history have received all three distinctions—Martin Luther King, Mother Teresa, Nelson Mandela, Norman Borlaug, Aung San Suu Kyi, Jr., Elie Wiesel, and now, Muhammad Yunus who says, “There is no shame in starting small.”
Holly Mosher is now screening her film locally and internationally. Check her Web site, www.hollymosher.com, for dates and locations. Don’t miss a special screening in Long Beach in late September of not only Bonsai People, but also her award-winning film, Hummingbird, about how two nonprofits in Brazil use the pedagogy of affection to help street kids and women break the vicious cycle of domestic violence. Visit http://bonsaimovie.com/ and http://www.hummingbirdmovie.com/.