I first heard about Muhammad Yunus in an Economics class. The professor was Barry Brownstein, a rare gem of an educator who doesn’t just teach, but intrigues. Rather than using traditional textbooks he’d assign us a wide range of articles and chapters out of wildly thought-provoking books whose authors I’d never heard of. Less than a week into class I had to open a GoodReads account just to keep track of all the books he mentioned, because I wanted to go back and finish all of them. This one was at the top of the list.
Muhammad Yunus is a Bangladeshi Economics professor who transformed the theories he taught into a global micro-lending movement that has now helped more than 7 million people in 40 countries work their way out of poverty. His company, Grameen Bank, has created a whole new realm of socially-conscious enterprises that are proving that success and altruism aren’t mutually exclusive. In an industry known for defaults, Grameen’s loans have a more than 98% repayment rate.
By seeking ways to help those around him, Yunus has fundamentally changed the way that governments and non-profits approach the fight against poverty. If you’re ever feeling cynical, reading this book will help to restore your faith in humankind.
The best parts of Banker to the Poor:
“I never intended to become a moneylender. I had no intention of lending money to anyone. All I really wanted was to solve an immediate problem. Out of sheer frustration, I had questioned the most basic banking premise of collateral. I did not know if I was right. I had no idea what I was getting myself into. I was walking blind and learning as I went along.”
“My work became a struggle to show that the financial untouchables are actually touchable, even huggable.”
“My mind would not let this problem lie. I wanted to help these forty-two able-bodied, hard-working people. I kept going around and around the problem, like a dog worrying a bone. People like Sufiya were poor not because they were stupid or lazy. They worked all day long, doing complex physical tasks. They were poor because the financial institutions in the country did not help them widen their economic base. No formal financial structure was available to cater to the credit needs of the poor.”
“To my surprise, the repayment of loans by people who borrow without collateral has proven to be much better than those whose borrowing is secured by assets. Indeed, more than 98 percent of our loans are repaid. The poor know that this credit is their only opportunity to break out of poverty. They do not have any cushion whatsoever to fall back on.”
“Policy makers tend to equate job creation with poverty reduction and economists tend to recognize only one kind of employment—salaried employment. And economists tend to focus their research and theories on the origins of wealth in the former colonial powers, not on the microlevel reality of poor people in Third World countries.”
“It is not by chance that women constituted less than 1 percent of all the borrowers in Bangladesh prior to Grameen. The banking system was created for men. It was my anger about this situation that initially prompted me to commit to having at least 50 percent of our experimental project loans granted to women. But we soon discovered new socioeconomic reasons to focus on women. The more money we lent to poor women, the more I realized that credit given to a woman brings about change faster than when given to a man.
When a destitute mother starts earning an income, her dreams of success invariably center around her children. A woman’s second priority is her household. She wants to buy utensils, build a stronger roof, or find a bed for herself and her family. A man has an entirely different set of priorities. When a destitute father earns extra income, he focuses more attention on himself. Thus money entering a household through a woman brings more benefits to the family as a whole.
UN studies conducted in more than forty developing countries show that the birth rate falls as women gain equality. The reasons for this are numerous. Education delays marriage and procreation; better-educated women are more likely to use contraceptives and more likely to earn a livelihood. I believe that income-earning opportunities that empower poor women and bring them into organizational folds will have more impact on curbing population growth than the current system of “encouraging” family planning practices through intimidation tactics.”
“Micro-credit is not a miracle cure that can eliminate poverty in one fell swoop. But it can end poverty for many and reduce its severity for others.”