The award of the 2006 Nobel Peace Prize to Muhammad Yunus focuses attention on how a series of small, practical steps by one person has helped alleviate poverty in Bangladesh. It also offers an opportunity to discuss with students the links between peace, ending poverty, democracy, and human rights. The reading summarizes Yunus' work over the past 30 years and suggests an approach for a student project on an issue or problem of serious concern to them.
Muhammad Yunus, the Grameen Bank and Breaking Out of Poverty
"We tried to ignore it. But then skeleton-like people began showing up in the capital, Dhaka. Soon the trickle became a flood. Hungry people were everywhere. Often they sat so still that one could not be sure whether they were alive or dead. They all looked alike: men, women, children. Old people looked like children. Children looked like old people."
This description of the capital city of Bangladesh during a famine in the mid 1970s comes from Banker to the Poor , a book by Muhammad Yunus, an economics professor at Chittagong University. Yunus also described his visit to a nearby village, Jobra, where women made bamboo furniture. The women had to borrow money to buy the bamboo from moneylenders who charged very high interest. Bangladeshi banks would not loan money at more reasonable rates because they thought the women's business was a bad credit risk. The women sold the completed furniture to repay their loans and ended up with just a penny or two of profit.
After Muhammad Yunus heard this story, he took $27 from his pocket and loaned it to the 42 women who were manufacturing the bamboo furniture.
"This created such excitement among the people in the village that I wanted to continue. I said to myself, if you can make so many people happy with such a small amount of money, why shouldn't you do more of it?" But Yunus was unable to convince a local bank to lend small amounts to the poor. Bank officials would not take the chance that they might not be repaid. So Yunus offered himself as guarantor and began a "micro-lending" (small loan) project.
This was the beginning of Yunus' 30-year effort to make the lives of the legions of Bangladeshi poor more livable. Bangladesh is an Asian country about the size of Wisconsin with a population of 146 million. Its per capita income is $456; more than one-third of its people are illiterate.
Yunus started his project by "signing papers, taking money from the bank, and giving it to people for entrepreneurial activities. It worked perfectly," he said. "People were paying back 100 percent without a problem."
By 1983 he thought the project was so successful that he set up his own Grameen Bank (Grameen means "village" in Bangla, the language of Bangladesh) and continued micro-lending. The average amount loaned became about $200. The bank now has 6.6 million borrowers, 95% of them poor women who have borrowed a total of more than $4 billion. All but one percent have repaid their loans. The bank now reaches 70,000 villages in Bangladesh and is majority-owned by the rural poor.
One project stimulated the next. Most of the women's children were illiterate. Muhammad Yunus would not make a loan unless the borrower promised that his or her children would, at a minimum, complete primary school. He says that many of the children have gone much further in school than that.
Most Bangladeshi villagers have no electricity and no telephones in their homes. Yunus thought: Why not provide the villagers with cell phones? And why not build solar panels to recharge their batteries? Now 55,000 villagers are able to communicate by cell phone to promote their businesses as well as to talk with friends.
Bangladesh has many homeless, illiterate beggars. Overcoming their hopeless dependence is a monumental task. What could these people do other than approach people, their hands outstretched? Put something in their hands to sell, thought Yunus. He arranged to provide food, toys, and knickknacks from local stores for beggars to sell. The beggars return unsold items to the stores, and their loans are covered by the bank.
Some analysts, such as economist Robert Pollin of the University of Massachusetts at Amherst, caution that while Bangladesh and Bolivia have very successful microcredit programs, "They also remain two of the poorest countries in the world." About 80 percent of Bangladesh's people still live on less than $2 a day.
Pollin stresses that such rapidly advancing countries as South Korea and Taiwan "relied for a generation on massive, publicly subsidized credit programs to support manufacturing and exports. They are now approaching West European living standards. Poor countries need...to promote not simply exports but land reform, marketing cooperatives, a functioning infrastructure and, most of all, decent jobs." (Alexander Cockburn, "The Myth of Microloans," The Nation , 11/6/06)
And yet, counters P. Sainath, an Indian journalist on economic policy, "a lot of poor women have eased their lives by using microloans."
A recent example of Yunus' persistence in helping the poor has been his direction of a joint venture of Grameen Bank and Groupe Danone, a French food company. In November 2006 the result was Grameen Danone, which opened the first fortified-yogurt plant in Dhaka, Bangladesh.
Yunus was the driving force behind an agreement "to build 50 small, labor-intensive plants rather than one large and highly automated one as [Groupe Danone] does in the rest of the world, so more workers and suppliers would benefit from it." This is yet another example of Yunus' determination to strike at the roots of poverty.
"My position," Yunus said, "has been that poverty has not been created by the poor people. The system has created them—the system being institutions, the concepts or framework of living. That's where the seed of poverty is. Either we pluck them out so that poverty disappears or if this is so involved that you cannot pick them out, you have to create an institution which is free from this virus."
Yunus and his Grameen Bank associates monitor their work daily to see how many of the millions of Bangladeshi who have borrowed money for at least five years are no longer poor. They ask such questions as: Does the roof of their house protect them from the rain? Is their latrine sanitary? Are their children in school? Do they have a mosquito net? A blanket? Warm clothing for the winter? Enough bank savings? Access to safe drinking water? (Vikas Bajaj, "Out to Maximize Social Gains, Not Profit," New York Times , 12/9/06)
Yunus' vision, determination, and know-how have led to programs of entrepreneurship, education, communication, nutrition, and health. In announcing its award, the Nobel Peace Prize Committee stated: "Lasting peace cannot be achieved unless large population groups find ways to break out of poverty. Micro-credit is one such means. Development from below also serves democracy and human rights... Every single individual on earth has both the potential and the right to live a decent life... Yunus and the Grameen Bank have shown that even the poorest of the poor can work to bring about their own development." (www.nobelprize.org)
Stanford Graduate School of Business (www.gsb.stanford.edu)
BBC News (www.bbc.co.uk)
United States State Department (www.state.gov)
New York Times, 10/14/06
1. What questions do students have about the reading? How might they be answered?
2. What seem to have been Muhammad Yunus' basic principles for developing a project?
3. The Nobel Prize Committee in its award statement links "lasting peace" with "large population groups" finding ways "to break out of poverty." Do you see as a connection between the two? How?
4. How might it promote "democracy and human rights" if large groups of people were able to break out of poverty?
5. What evidence is there that micro-loans are not a full answer to the problem of poverty? What more needs to be done, according to Professor Pollin?
6. Consider Pollin's mention of "land reform" and "decent jobs," for example. What barriers do you know of that might stand in the way of realizing such reforms?
7. What do you think Yunus meant when he said, "poverty has not been created by the poor people. The system has created them"? What "system" does he mean? What is a "labor-intensive" plant? How does Yunus' insistence on 50 "labor-intensive" plants, rather than one automated plant, constitute an attack on "the system"?
8. What do you think about Grameen's poverty indicators? What do they tell you about life for the poor in Bangladesh? What other indicators, if any, would you add and why?
For discussion and citizenship
Major world problems like poverty, oppression, racism, war, and global warming feel overwhelming. Yet there have always been—and still are—individuals who act to address such enormous problems.
Consider U.S. history. Name one person who acted and made a difference in the American Revolution, the abolitionist movement, the labor movement, the feminist movement, the civil rights movement.
Keep in mind that besides those whose names and deeds make it into the history books (such as Tom Paine, Frederick Douglass, Mother Jones, Susan B. Anthony, and Martin Luther King), there have been countless others who worked beside them or in their neighborhoods and towns for the same cause. They are likely to have started, like Muhammad Yunus, very small and then, maybe, one thing led to another.
What about your own history? Name someone you know who has acted on perhaps a small but significant, problem and made a difference. Who is this person? What was the problem? What did he or she do? What difference did it make?
What about your neighborhood? your town? your school? What problems, what issues come to mind? Get a conversation going, perhaps in small groups, perhaps in the entire class. What does the group really care about? What project, or perhaps projects, might the group consider? Then go to work.
Some basic considerations in getting started:
1. What exactly is the project? Define it carefully.
2. Who will work on it?
3. What do you hope to accomplish? Create a vision statement with no more than a few simple goals.
4. What will be the work plan? What do you need to find out? How? Is there opposition to what you want to do? Why? What will each person in the group do? When and where will it meet? How will it evaluate progress?
For a comprehensive guide for learning and citizenship see Mark Hyman's discussion on the landmine issue in Chris Weber's book, Nurturing the Peacemakers in Our Students: A Guide to Writing & Speaking Out About Issues of War & Peace, Heinemann, 2006
This lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: email@example.com