Monday, June 09, 2008

Breakfast with the Banker

It was a privilege and honour to be part of an inspirational and illuminating session this morning that featured as the key note speaker, Dr. Muhammad Yunus – Economist, creator Mico-crdit Loans and winner of the 2006 Nobel Prize for Peace. 

At first glance, Dr. Muhammad Yunus does not look like a Noble Prize winning economist. He doesn’t look like an economist at all – rather like someone’s Uncle or Gandpa who wandered into the conference in error. He is a small man, almost diminutive in comparison with the typical North American male. Dressed in traditional Bangladeshi clothes that seem rather out of place in the setting for the Top Employers Summit, I watched as Dr. Yunus chatted with some of the top brass executives just before his key note address. When Dr. Yunus came up to the podium and started to speak, his voice and mannerisms matched his looks. After the booming tones of Mayor David Miller who gave the introductory speech, Dr. Yunus’ voice was almost soft in comparison. He was quick to point exactly what I had been thinking; that he’s no typical banker.

“When people hear about my work, and learn about the title of my book “Banker to the Poor”, they then to have this expectation of the tie wearing, briefcase wielding Corporate banker. The reality is I am no Banker. In fact, I don’t even know too much about the banking industry! Perhaps, that is what made my venture successful in the first place.”

In the tradition of the Bangladeshi people, Dr. Yunus proceeded to tell us about his work in the age old form of storytelling in a manner that captivated his audience as he lead us down the path of discovery over how a simple idea changed millions of lives.

In 1972 when the country of Bangladesh was formed, Dr. Yonus was a professor of economics at Middle Tennessee State University. Wanting to help rebuild his country that had suffered so much during the war for independence, he moved back to his home town of Chittagong and was appointed into the economics department. Two years later, the country was hit with a devastating famine and hundreds of thousands were dying every day. Dr. Yunus recalls that “elegant theories of economics are but empty words when outside the classroom death, poverty and misery rein.” He wanted to do something more than theorize about change, and thought, “why not go outside the classroom and help? Not as an economist – but as a human being, reaching out to another human being.”

It was a visit to a village near his native town that proved to be the spark that fueled his now world famous concept of microcredit. The over 6.9 billion that the Grameen bank (that Dr. Yunus founded) has given out since its inception all started when Dr. Yunus handed out what basically amounted to $27 to a few women in the village who were weighed down with the burden of their loans.

Dr. Yunus says, “When I first wanted to start this process, I spent a lot of time talking to bankers. Each time, they listed to my idea and then showed me to the door. I was confident that my idea was viable, so the next time I went back I began to speak to them in their own language – banker talk – offering myself as a guarantor for the loans. This time, they listened and agreed to my plan even though they warned me that I was a fool and like the proverb would probably soon be parted from his money.

People often ask me how I came up with the principles and objectives by which the Grameen bank is run. As I mentioned before, I am no banker. So what I did was look at the lending patterns of traditional banks - and then do exactly the opposite! For example, traditional banks assess you on how much you have before they decide how much to give. With us, the less you have, the more you qualified for a loan. The poorest people who had nothing at all were considered the best candidates! So also, traditional banks typically lend to men; with Grameen bank about 97% of the loans are taken out by women.”

Dr. Yunus firmly believes that poverty exists not in the person, but in the circumstance. He gives the example of Bonsai trees. They are grown and cultivated from the very same seed as a regular tree. But because they are constantly manipulated by external sources, and given a very specific growth space, they never achieve the full height or potential as a normal tree. “There is nothing wrong with the seeds,” he says. “There’s just not enough space for them to grow.”

Not content to sit by and rest on the laurels of the success of the Grameen bank, Dr. Yonus was always thinking about the next battle in the war on poverty. He was the mastermind behind a radical plan to turn the beggars of Bangladesh into a new breed of sales force. And slowly, but surely, his plan worked. From about the 9,000 beggars who had first signed up for this plan, many have since stopped begging altogether. When one of the Grameen bank’s administrators said that it was a shame that not all the beggars had gotten self reliant, Dr. Yunus asked to give them time. “After all,” he quipped to the audience, “they are in the process of a major restructuring of their business!”

Although Dr. Yunus has created a business model in which social good, not profit, is the objective, in 2003 alone Grameen Bank made more than $11 million, proving that the two goals are hardly mutually exclusive. “Business and Charity need not be at odds,” Yunus states. “In fact, marry the two and you’ll have a match made in heaven”. Yunus then went on to briefly mentioned other "social business entrepreneurship" ideas, such as the creation of a "social stock market" in which the primary goal of the shareholder is not to obtain greater dividends but rather to support organizations that are helping reduce poverty, clean up the environment, improve health, and accomplish other worthy goals. Yunus explains that most people are already in tune with social responsibility – a fact cemented by the abundance of funds raise through charitable donations each year. “People already are willing to give away money, so why wouldn’t they continue to give in the same amount if we ask that they “invest” it instead?” Dr. Yunus explains that this is what lies at the core of Social Banking. He goes on to state that in fact money invested – not donated – under the norms of Social Banking give back ten fold than that of a regular donation. The same amount of money can be recycled on multiple occasions as a new loan each time.

Dr. Yunus concluded his remarks with these sentiments. “The pundits propose that the concept of Micro-credit is great, but that it will work only in poor countries. I disagree. People everywhere are the same. They all need help, and they would like to live in dignity. We have seen that this system works, and more like it will also work if taken up and championed by leaders in the community such as yourselves. The only place where poverty belongs – is in a museum.” 

1 comment:

Anonymous said...

How amazing to have seen Dr. Yunus in person...great summary of the talk as well.

Penguin Pal

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