For the father of microfinance, life is not all about money and fame
Originally Published: April 11, 2010
Prof Muhammad Yunus is clearly the poor man’s banker. Simplicity is the hallmark for the father of microfinance as we know it today.
At first sight, little about the five-foot eight-inch, grey-haired professor will strike you. He is not imposing and has the uncanny ability to blend into whatever crowd he is part of.
He dresses in a cream, sleeveless cotton jacket, a panjabi (Bangladeshi traditional attire that looks like a long shirt or a short kanzu) that is loose enough to allow free movement but tight enough to reveal a slight bulge around his mid section, and khaki pants, the sole accessory being a brown leather-strap watch on his left wrist.
Prof Yunus, who won the Nobel Peace Prize in 2006, rubs shoulders with world renowned leaders, yet he never loses focus of his cause of uplifting the poor.
When he visited Kenya recently to attend the microcredit summit in Nairobi, he also toured the Mathare slum in the city’s Eastlands to meet the needy people and find out if microfinance has had any impact on their lot.
The Bangladeshi professor is credited with the founding of Grameen Bank, which he used to fight poverty by advancing credit to the poor who were under the mercy of ruthless shylocks. This worthy cause earned him and the bank the Nobel Peace Prize three decades later.
Fame and recognition is not one of the things Prof Yunus pursues in life. His wish it to see a world where the poor are breaking the shackles of poverty and getting empowered.
An elite professor of economics, the don began his cause in 1974 after a nine-month famine rattled him from the comforts of his near perfect world in a Bangladesh university.
Before it ran its course, the famine claimed more than a million lives and destroyed what had been left of a majority of the Bangladeshi economic base.
Farms and property were destroyed and the little hope that the country had been hanging onto after a two-year liberation war with Pakistan was quickly disappearing from the many faces around him.
“I quickly realised that all the elegant economic models I had learnt, and was passing on to my students, had little meaning in practical life. Most of them began and ended in the textbooks,” he told Lifestyle in Nairobi last week.
Then, he discovered his life should have much more purpose. Before the famine, Bangladesh was grappling with devastated infrastructure in the aftermath of the war.
From April to July of 1971, the country had been hit by heavy rains and devastating floods. The estimated death toll put forth by various scholars stands at 1.5 million people.
“There was immense suffering among the people. It was evident something had to change,” says the Nobel laureate.
From his day-to-day interactions with residents of a village neighbouring the campus he was teaching, he stumbled upon an idea that would not only help in lifting the lives of millions from poverty. It is the same idea that would earn him the coveted Nobel Peace Prize.
“The only people who seemed to be coping with life well after the famine were loan sharks. I was attracted to them because of their ruthlessness.
“I could not understand how so few people would set out with the aim of making as much money as possible from the poorest people of society,” says the professor.
He decided to look for the people who had gone to the sharks for money in order to understand their reasons for doing so.
“More than 40 people had collectively borrowed slightly more than Sh2,000 from the shylocks. I was surprised at this seemingly small amount, but shocked at the repercussions that would plague one should he default on a payment,” he says.
He paid off the shylocks and absorbed the families’ debts.
“The difference that little gesture made in their lives was unbelievable. For once in their lives, they had been provided with an opportunity. That made me feel good,” he says.
But feeling good was not enough. Thousands more could not access the credit facilities they needed. So he approached some of the commercial banks to plead the case of the poor. None listened.
“They only agreed to lend them money after I offered myself as a guarantor,” he says.
While traditional banks were not interested in giving out small loans at reasonable interest rates to the poor due to high repayment risks, he believed that, given the chance, the poor would repay the borrowed money.
This, he thought, was a viable business model. It would not only be a source of income for them but also a way out of poverty.
“The intervention of microfinance bears fruit with time. The original beneficiaries of the loan may not live the life they may wish for, but their relative success creates a sound base for their children,” he says.
Lack of options
He adds that poverty is neither permanent nor a creation of the poor. Instead, he says, it is a lack of options in a select group of society.
And its remedy? “Provide an opportunity for them and they will move to the next level.”
In 1976, he secured a loan from the government and formed Janata Bank to provide loans to the poor in his home district.
By 1982, the bank had 28,000 members. On October 1, 1983 the pilot project began operations as a full-fledged bank and was renamed the Grameen (village) Bank.
But his quest for social change was not without hitches. At some point, conservative Bangladeshi clergy told women they would be denied a Muslim burial if they borrowed money from Grameen Bank. But, together with colleagues, he soldiered on with the cause that has earned him a special place in world history.
Prof Yunus recalls vividly the events in the lead-up to the Nobel Peace Prize.
“Someone from a Norwegian television channel called me. He told me that the Peace Prize would be announced within 10 minutes and requested me to hold the line. They then told me the name was about to be read, and that I’d better hear it on live TV,” he says.
But for a man who believes in simplicity and humility the company he keeps speaks volumes of the respect he commands the world over and, for his peers, the Nobel was long in coming.
“Because of his efforts, millions of people, most of them women, have had the chance to improve their lives and we are all better off as a result. I have thought for years that he deserved the Nobel Peace Prize. The committee could not have selected anyone better,” said former US President Bill Clinton upon hearing of Prof Yunus’ recognition.
Born in 1940, the third born of nine children in a Muslim family, he spent his early childhood in the village before his family moved to the city when he turned four.
After years of study in universities both abroad and in the then Pakistan, he became a lecturer of economics at Chittagong College. He then proceeded to the US for his postgraduate studies on a scholarship.
Sojourn in US
During his sojourn in the US, revolutionary ideas concretised in his mind. During Bangladesh’s liberation war, he founded an organisation aimed at raising support for the liberation and autonomy of the Bangladeshi state.
His efforts earned him a position in the new Bangladesh government’s Planning Commission, a position he did not hold for long.
“The job was boring, so I returned to my first love – teaching,” he recalls.
The fame and fortune brought about by the glamour of the Nobel prize has had a toll on him.
In 2007, Prof Yunus gave in to pressure from friends and countrymen to play a bigger role in his country’s leadership. He heeded the calls and formed a political party originally meant to fill the then existing political vacuum. Two months later, he disbanded it.
“The same corrupt officials the party was supposed to counter started aligning themselves to us. Plus, those who nudged me towards politics were not ready to play an active part in it. It is then that I knew it was time to abandon that ambition,” he explains.
During his secondary and college years, Prof Yunus was quite an actor, bagging numerous awards at various competitions. Though he wouldn’t mind getting on stage, he has no time for it.
“My schedule doesn’t allow me to do it. All my time is gobbled up by microfinance. That is my life,” he says.
In his 70 years of life, love has not been very kind to him, as it has dished out both pleasure and pain. His first marriage ended within months of the birth of his first daughter.
At that time, the young family had relocated to Bangladesh, but the move proved too harsh for his wife, who opted out saying Bangladesh was not a good place to raise a baby. He later remarried and raised a family in his motherland.
He wishes many more people in the world would understand that the belief that life is all about money is “the flaw in society’s architecture”