Bangladesh: Towards Economic and Women’s Liberation Via Grameen Bank

At the local level, the wealthy rural landowners have control because they own most of the land. The worst legacy of the British in Bangladesh/greater Bengal was to privatize the land and create a class of wealthy landowners (zamindars) who would give the British blind support. To survive, the landless laborers are compelled to take loan from moneylenders at an annual interest rate of 150 percent! At the national level, the government cooperates and colludes with the rural landowners. Hence the poorest of the poor have no solution. They cannot turn to any authority for redress of their grievances. Perhaps most damaging of all is the foreign aid. USAID provides unilateral aid which means, we give you money, you buy our goods. Hence it is aid with a selfish motive. Multilateral agencies like UN, UNESCO, WB and IMF give money. But WB and IMF give with heavy strings attached, that read: “We give you loans, you implement ‘structural adjustment,’ a euphemism to give TNCs and MNCs free reign to exploit, plunder and transfer profits back to their home base. Structural adjustment says, drop tariffs, allow free trade, allow foreign ownership of land/resources, and plant single cash crops for export – so we make money regardless of collateral damage, i.e., you landless people starving on the roadside. Structural adjustment has been devastating by increasing the poverty, increasing the gap between the rich and the poor, and destroying traditional family life. The foreign aid coming in the form of cash goes into government pockets and is used to strengthen the military so as to consolidate and maintain political power. The question looms large: how to raise the masses out of abject poverty?

There is hope. Professor Mohammad Yunus, founder of Grameen Bank, along with a handful of other sincere NGOs are leading the way in bringing relief to millions of impoverished, landless women and their families. Proshika has worked for years expressly to raise social and political consciousness among the poorest of the poor, so that they begin to use the strategy of civil disobedience to demand their human rights. What follows is a detailed study of the Grameen Bank, its effects, limitations and summary of its results for the people of Bangladesh in being able to alleviate poverty, remove corruption, break the grip of fundamentalism and herald a new dawn for the people of this sweet, simple, magnificent land.

Birth of Grameen Bank
The cause, the impetus that created the Grameen Bank Project was the famine of Bangladesh in 1974. At that time, Muhammad Yunus was Professor and Head of the Economics Department at Chittagong University, located at the southeastern extremity of the country. Skeleton-like people began filling the train platforms and bus stations, and then the roads. They were everywhere. Old people looked like children and the children looked like old people. Muhammad Yunus writes:

"The starving people did not chant any slogans. They did not demand anything from us well-fed city folk. They simply lay down very quietly on our doorsteps and waited to die."

Death by starvation happened so quietly, so inexorably, Yunus wrote, and all for lack of a handful of rice! Seeing the mass starvation everywhere around him, Yunus began to question himself, and began to dread his own lectures. What was the use of all his complex economic theories if right outside the classroom people lay on the ground waiting to die? Thus developed in him the desire to understand the practical economics of the poor person’s existence.

Next to Chittagong University was a village called Jobra. Jobra became his laboratory. He and his students went there almost daily to learn about the people in the village. What he learned in the village of Jobra became the foundation for the concept of micro-lending, later known as the Grameen Bank. Little did he realize that the seed had been planted for the “bank for the poor,” today serving 2.5 million people.

Earlier in 1964 Yunus had gone to Vanderbilt University, USA, where he completed his Ph.D. in economics under the guidance of Nicholas Georgescu-Roegen. The lessons he learned from his adviser were to remain with him his entire life. Georgescu-Roegen taught him simple, precise economic models that would later help him develop Grameen. He also taught Yunus that there is no need to memorize economic formulas. Rather, the important thing is to understand the underlying concepts driving the formulas and making them work. He also impressed Yunus that things are not complicated, and economics is not complicated. It is only human arrogance that leads people to give complicated answers to simple problems. Georgescu-Roegen further made Yunus understand that without the human side, “economics is just as hard and dry as stone.”

On December 16, 1971 Bangladesh won its independence, but during the war three million Bangladeshis died and another ten million left the country as refugees. Millions more were victims of rape and other atrocities committed by the Pakistani army. Bangladesh was destroyed economically and socially. Millions of people needed social, moral and spiritual rehabilitation. Yunus knew he had to go back and participate in the process of rebuilding his country. On his return he was invited to head the Economics Department at Chittagong University. And thus, after the famine of 1974, he began his research into the lives of the poor. He and his students went time and again to Jobra, asking the villagers questions: What crops did they grow? Did they own cultivable land? How did the people without land survive? What skills did the villagers have? What did they want to do to improve their lives? How many families could feed themselves and how many could not? Who were the poor, and who were the poorest of the poor? Dr. Yunus also became angry. He realized that the brilliant economists of the world do not spend time discussing poverty and hunger, because they believe that if the right economic model is implemented, poverty and hunger will be automatically alleviated. Economists spend all their time analyzing development and prosperity but hardly any time on the development of poverty and hunger.

The first experience Yunus undertook was growing more food for the villagers of Jobra. He began studying rice – low-yielding local varieties and high-yielding varieties developed in the Philippines. He and his students personally went into the fields and taught the farmers the importance of planting the seedlings at regular intervals and in a straight line, to maximize crop yields. Many local people laughed contemptuously at his efforts. But, it only made Yunus more determined in his passion to uplift the lives of the poor. This was his singular most powerful characteristic – his endless drive to bring a better life to those living in dire affliction. In the winter of 1975 he began studying the problem of irrigation and found unused deep tube wells that lay idle and abandoned by the farmers. He formed an agricultural cooperative with the farmers, saying he would contribute the cost of fuel to run the deep tube well, the seeds, fertilizer, insecticide and technical know-how. The sharecroppers and farmers would contribute their labor. With great difficulty he convinced them to try growing rice in the winter season, and the project ended in success, with a bumper crop of rice for all. As Yunus writes, there is nothing so beautiful as farmers harvesting their crop of emerald green standing rice!

Dr. Yunus continued his research on the poor of Jobra. He learned that it was essential to differentiate between the poor and the very poor, the very poor and the poorest of the poor. A ‘poor person’ could mean a lot of things. Furthermore, when talking about poor people, reference to women and children was not mentioned. Yunus developed three categories of poor to apply to the entire country:

P1 – The bottom 20 percent of the population – “hard-core poor” / absolute poor.
P2 - The bottom 35 percent of the population.
P3 - The bottom 50 percent of the population.

Yunus made many additional subcategories of these three categories, recognizing that definitions of the poor had to be clear and without ambiguity. He analyzed:

"In the world of development, if one mixes the poor and the non-poor in a program, the non-poor will always drive out the poor, and the less poor will drive out the more poor, unless protective measures are instituted right at the beginning. In such cases, the non-poor reap the benefits of all that is done in the name of the poor."

He began concentrating on the poorest of the poor – generally women – who were trapped in their economic category without any chance of exit, because of the moneylenders. These women were dependent on the moneylenders for survival, hence in reality they functioned as bonded laborers or slaves. Usurious rates had been in place for so long that nobody questioned them or how oppressive they were. It was exploitation unnamed, not talked about. Dr. Yunus asked his students to make a list of the poorest people in Jobra and they came back with 42 names who all together needed to borrow a total of less than US $27.00. Yunus was astounded that only US $27 was required to lift 42 women out of abject poverty. He could not sleep. The next morning he went to his bank to ask for a loan for these women. The bank refused, saying they would have to fill out so many forms. Dr. Yunus replied, where is the question of filling out forms when the villagers are illiterate? After more arguing the bank manager told him, we simply cannot lend to the destitute. Finally Yunus took out a loan in his own name, so that he could in turn provide micro-loans to the villagers – whom he now referred to as the “banking untouchables.” He made it his personal goal to prove to the bankers and the community at large that not only were the villagers touchable but they were also huggable! The village women also understood quickly that this micro-credit was the only way for them to break out of the vicious cycle of poverty that chained them. How do the women feel when they receive their first loan from Grameen? Yunus writes:

"When she finally receives the twenty-five dollars, she is trembling. The money burns her fingers. Tears roll down her face. She has never seen so much money in her life. She never imagined it in her hands. She carries the bills as she would a delicate bird or a rabbit, until someone advises her to put the money away in a safe place lest it be stolen.

"This is the beginning for almost every Grameen borrower. All her life she has been told that she is no good, that she brings only misery to her family, and that they cannot afford to pay her dowry. Many times she hears her mother or her father tell her she should have been killed at birth, aborted, or starved. To her family she has been nothing but another mouth to feed, another dowry to pay. But today, for the first time in her life, an institution has trusted her with a great sum of money. She promises that she will never let down the institution or herself. She will struggle to make sure that every penny is paid back."

Professor Yunus became more convinced than ever that micro-credit for the poor was a powerful tool to bring positive change in the lives of the poorest – moving them, to start with, from the category of poorest of the poor to marginally poor. One may also wonder why he directed so much of his attention to the women and oriented his entire project and Grameen Bank towards the women. It all started with the famine of 1974 when he saw skeletal human beings outside his classroom door. He could not bear it. His heart bled and his eyes shed tears at such suffering. His compassion for the suffering was unbounded. The more he studied and researched, the more he understood that the group of people who suffer more than anyone else are the women. If there is shortage of food in the house, it is the women who will go without. It is the women who suffer maximally from malnutrition and anemia. If anyone is being abused in the home, it is the woman – either by husband or by mother-in-law. It took Yunus more than six years to convince the village women to take loans. Yunus points out the rampant financial apartheid towards women in Bangladesh. If a woman wants to borrow from the bank, the manager will ask her, did you ask your husband? Did he consent? Would you please bring your husband with you so that we can discuss this with him? In contrast, when a man wants to take a loan, nobody asks him: Did you ask your wife? Did she consent? Would you please bring your wife with you so that we can discuss this with her? The banking system in Bangladesh (and India) was created for men alone. Yunus turned this practice upside down in the Grameen Bank by giving loans almost solely to women. He further saw that in the family, the woman always wants to help the entire family. She will buy things for the house, for the children, she will buy utensils or a bed. But, when a poor father gets money he will generally spend the money on himself. Thus, Dr. Yunus saw that giving loans to women benefited not just one person but the entire family. Second, giving loans to the women helped to break down the stark inequalities between men and women and made the lives of women dignified. It was not easy in the beginning. Many husbands were furious, and demanded the loans for themselves. The religious clergy were also angry – why? They could not tolerate for women to get a little power and control! And the moneylenders were directly threatened financially. It meant they would lose the business of those formerly destitute women. It is a rare man who will bend over backwards to find ways to better the lives of women. Muhammad Yunus is such a rare man.

In 1983, the project that began in the village of Jobra in 1976 became a formal bank under a special law passed for its creation by the government. It was called the Grameen Bank. “Gram” means “village,” and the adjective “Grameen” means “rural” or “of the village.” Yunus also understood that if the rural poor are lifted out of poverty, they will no longer clog the streets of Dhaka looking for a way to survive. In 1979 Chittagong University gave him a two-year leave of absence upon which he officially joined the Grameen Bank in Tangail District. He never looked back.

Grameen Bank does not train the poor. Instead it trains their staff to become an “elite brigade of poverty fighters.” The new staff are told to go into the villages and find out the unexplored potential of the destitute. The villages of Bangladesh teach the bank staff more than any book could teach them. They are trained to be teachers and problem-solvers and to use their own ingenuity in their work. The potential and ingenuity of the villagers is unbounded, as reflected in the variety of businesses undertaken: husking rice, making ice cream sticks, trading in brass, trading in mustard oil, repairing radios, cultivating and selling jackfruit, selling knick knacks door to door instead of begging, selling milk from the purchase of a cow, fish cultivation, fabric making, rope making, cotton dying, cotton spinning, weaving, embroidery work and livestock raising (cows, buffaloes and goats) . Nowadays there are hundreds of ‘telephone ladies’ in the villages. They are given a Grameen cellular phone and become the hub of the village with residents coming to them to make their phone calls. The list and variety of businesses is endless.

The positive side effects of the Grameen Bank are astounding. An example would be that Grameen Bank borrowers have a birth rate that is half the national average. Once the women get some education, and financial independence, they themselves come forward to learn about family planning. The women become determined to have fewer children and educate the children they do have, so that the children can become full members of the country’s democratic structures. Another positive side effect happened in 1984 at the annual national meeting of Grameen Bank workers who devised initially the Ten Decisions which later expanded to Sixteen Decisions. Today, at every branch of Grameen Bank these Decisions are recited by the members and have had a huge effect on the borrowers. The Decisions are as follows:

1. We shall follow and advance the four principles of the Grameen Bank – discipline, unity, courage, and hard work – in all walks of our lives.
2. Prosperity we shall bring to our families.
3. We shall not live in a dilapidated house. We shall repair our houses and work toward constructing new houses at the earlier opportunity.
4. We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus.
5. During the plantation seasons, we shall plant as many seedlings as possible.
6. We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health.
7. We shall educate our children and ensure that they can earn to pay for their education.
8. We shall always keep our children and the environment clean.
9. We shall build and use pit latrines.
10. We shall drink water from tube wells. If they are not available, we shall boil water or use alum to purify it.
11. We shall not take any dowry at our son’s weddings; neither shall we give any dowry at our daughters’ wedding. We shall keep the center free from the curse of dowry. We shall not practice child marriage.
12. We shall not commit any injustice, and we will oppose anyone who tries to do so.
13. We shall collectively undertake larger investments for higher incomes.
14. We shall always be ready to help each other. If anyone is in difficulty, we shall always help him or her.
15. If we come to know of any breach of discipline in any center, we shall all go there and help restore discipline.
16. We shall introduce physical exercises in all our centers. We shall take part in all social activities collectively.

The women of the villages, most likely because of their simplicity, take these decisions very seriously. While other organizations such as BRAC and Proshika also undertake various kinds of consciousness-raising activities for the poor, the Sixteen Decisions of Grameen Bank involve huge consciousness-raising. They involve a social revolution for the women! The poor always live in dilapidated houses. Point 3 says, don’t live like this. Live in a neat and clean house. Keep it repaired and tidy. Save to build a better house. It is a new thought for the poorest of the poor! Point 6 emphasizes to keep families small. It is another idea that is now embedded in borrowers’ minds. There is no need to force family-planning on the poor. The poor need only understand the simple economic repercussions of bringing more and more children into the world. Point 7 makes the women understand that education of their children is the key to escape from poverty. Education leads to much better jobs and then much better income. Point 8 mentions keeping the environment clean. This has never been a priority in Bangladesh or India. Thousands of tourists have visited and left, unable to bear the dirty physical surroundings - mildewed unpainted buildings, garbage and sewer residue on the roads, small plastic bags littering the entire surface of a town. In making this one of the 16 Decisions, Grameen is changing the entire culture of the people. It is changing their mindset in a super positive direction! Point 9 highlights another big problem in both Bangladesh and India. No bathrooms! In these two countries there are three kinds of bathrooms – western style toilet, a hole in the floor, and no toilet – going in the field or the woods. In the villages it is the third option that is prevalent. Pit latrines are something brand new for the villagers. It is about teaching hygiene and freedom from disease. Point 10 may need amendment in view of the heavy arsenic contamination of deep tube wells. Every sentence in Point 11 is starting a social/cultural revolution. To refuse dowry at their son’s marriage is the beginning of a revolution. It is completely contrary to existing village life and practices. To refuse to GIVE dowry at the daughter’s wedding is still more revolutionary. One also wonders, does this lessen the chance for the daughter’s marriage? By this one Point 11, Dr. Yunus is trying to eliminate the curse of dowry from the country. How much suffering, how many wives and daughter-in-laws have been slaughtered only because they did not bring enough dowry to the marriage!! The final sentence reads, we shall not practice child marriage. This is also breaking an age-old practice. As mentioned earlier, even though mothers suffered heavily when married off at the age of 12 or 13, in spite of this they inflicted the same torture on their daughters, marrying them also at this tender age. It is a custom that badly needs to be broken. Point 11 of the Sixteen Decisions is mind-boggling in terms of the change it can create in the countryside of Bangladesh. Point 12 is critical for getting the villagers involved. Hitherto, villagers and especially the women would have tolerated any kind of injustice or corruption. Point 12 tells them, it is no longer their right to be indifferent. They have to care! Point 13 and 14 are more of the same. Point 15 means, it is everyone’s individual and collective responsibility to maintain strict morality everywhere. If there is a moral breakdown anywhere, everyone is responsible for its correction and rehabilitation. Point 16 means, women are to take care of themselves physically, because they cannot take care of the rest of society if they do not take care of themselves. And where before one woman would neither know nor speak to a single soul outside of her own husband and children, Grameen Bank opened hundreds of doors, and today women know every other woman in the village. There is open dialogue and close friendships and bonds. This is another major part of the social revolution that is taking place in the villages of Bangladesh. In these simple Decisions, the contribution of Muhammad Yunus to the women of Bangladesh is simply mind-boggling if not unparalleled.

While Dr. Yunus insists that the number of decisions remain at sixteen, he realizes that local branches may add decisions that are particularly relevant to that location. He writes:

These decisions are a demonstration that the poor, once economically empowered, are the most determined fighters in the battle to solve the population problem, end illiteracy, and live healthier, better lives. When policy makers finally realize that the poor are their partners, rather than bystanders or enemies, we will progress much faster than we do today.

Today
Initially the government held 60 shares of Grameen Bank and the borrowers held 40 shares. Gradually this was reversed. Today the borrowers own 93 percent of the bank and the remaining 7 percent continues to be owned by the government. 96 percent of the bank’s borrowers are women. The bank exists to serve the poorest of the poor women of Bangladesh. As of April 2004, the total number of borrowers from Grameen Bank was 3.36 million, and 96 percent of these are women. Since its inception, Grameen Bank has seen phenomenal growth, now having 1,229 branches throughout Bangladesh and providing loans to women in 44,636 villages – nearly half the total number of villages in Bangladesh. The total staff employed by Grameen Bank is 11,988.

The Grameen Bank does not require any collateral against its micro-loans. It also does not require borrowers to sign any papers for the loan, since in most cases the borrowers are illiterate. Furthermore, it is against the principles of the Grameen Bank to take poor people to court for non-payment.

While each borrower must belong to a five-member group, the group is not required to give any guarantee for a loan to its member. Repayment responsibility rests on the individual borrower. The five-member group and the Grameen Bank local office oversee that all members of the group behave responsibly so that no one incurs repayment problems.

Loans Disbursed
Total amount of loans disbursed by Grameen Bank since its inception, is Tk (Taka) 197.00 billion (US$ 4.27 billion). Of this amount, Tk 180.32 billion (US$ 3.87 billion) has been repaid. Present outstanding loans are Tk 16.68 billion (US$ 283.26 million). From April 2003 to March 2004, the Grameen Bank provided loans in the amount of Tk. 22.22 billion (US $ 377.19 million). The amount of loans provided during the same period averaged monthly to Tk 1.85 billion (US $ 31.40 million). The payback of loans by the poorest of the poor – who otherwise would have never received such micro-loans – is 98.69 percent – a phenomenal statistic even compared to regular banks that cater to the middle and upper classes only.

Financial Transparency
Another factor that makes the Grameen Bank so highly successful is that it practices 100 percent financial transparency. On its website can be found all kinds of financial data, including the Annual Reports as prepared by outside auditors. As an example, it states that while the Grameen Bank borrowed Taka 3.0 billion (US $61.12 million) from the Bangladesh central bank as well as from commercial banks after the disastrous flood of 1998, in order to be able to provide new loans to borrowers whose meager possessions had been destroyed or swept away by flood waters, all these post-flood loans have already been fully paid off. According to Muhammad Yunus:

Ever since Grameen Bank came into being, it has made profit every year except in 1983, 1991, and 1992. It has published its audited balance-sheet every year, audited by two internationally reputed audit firms of the country.

This total financial transparency, in all its dealings, in its village meetings together with the borrowers, on its website, in its publicized Annual Reports, are the very reason for its success – because all this transparency has had, from the very beginning of its founding, the effect of crushing corruption – not allowing corruption to even come near the Bank. In 1995, the Grameen Bank decided to stop acceptance of any and all donations. While it was necessary in its founding years, the Bank no longer feels the need to take such donations, since the growing deposits are proving to be ample and enough to run and continue regular expansion of its micro-credit program.

Dr. Yunus is skeptical if not cynical regarding donor agencies whose represenetatives come to Bangladesh to give away money. According to him, it is the donors themselves, the consultants, suppliers and potential contractors who benefit the most financially from projects funded by donors. Of the more than $30 billion in foreign aid received in the past 26 years, 75 percent was not spent in Bangladesh. It was spent on equipment, commodities and consultants from the donor countries. In the words of Yunus, “Most rich nations use their foreign aid budget mainly to employ their own people and to sell their own goods, with poverty reduction as an afterthought.” The 25 percent used inside Bangladesh usually goes straight to a tiny elite of local suppliers, contractors, consultants, and experts. The elites use the money to buy foreign-made consumer goods. And much of the money is also used as kickbacks to officials and politicians who have helped them along in their ‘work.’ Yunus also says that the high salaries and cushy benefits that mark many NGO employees tend to “dull one’s compassion for the poor!”

According to Dr. Yunus, development should not be encouraged to raise the GDP of a country. Development is directly a human rights issue, and development funds should be used directly to help the poor. Development, according to him, needs to be redefined to refer only to “a positive measurable change in per capita income of the bottom 30 percent of the population.” When once asked by a journalist what he would do if he were president of the World Bank, he replied:

The overarching objective of the World Bank is to combat world poverty. [It means] the headquarters should be moved to where poverty is at its worst. In Dhaka, the World Bank would be surrounded by human suffering and destitution. By living in close proximity to the problem, bank officials might be able to solve it faster and more realistically.

Revenues and Expenditures
The total revenue generated by Grameen Bank in 2003 was Tk 3.58 billion (US $ 61.25 million). Seventy-five percent of the revenue came from interest on loans. Total expenditure was Tk 3.23 billion (US $ 55.26 million). Salary, allowances and pension benefits accounted for 38 percent, or Tk 1.23 billion (US $ 21.04 million). Interest payment on deposits of Tk 1.10 billion (US $ 18.82 million) was the second largest expenditure (34 per cent). The Grameen Bank had profits of Tk 351 million (US $ 5.99 million) in 2003. Every year the entire profits are transferred to a Rehabilitation Fund created to cope with disaster situations. This is done as a condition of the Bangladesh government in exchange for exempting Grameen Bank from paying corporate income tax. This action also appears to nullify any and all criticisms by some that the Grameen Bank is exploitative in its interest rates. Whatever profits accrue are going straight back to serve the poorest of the poor. Where is the scope for criticism?

Low Interest Rates
The government of Bangladesh has a fixed interest rate for government-run micro-credit programs, which are a flat rate of 11 percent. This comes to approximately 22 percent on a declining basis. Interest rates at the Grameen Bank's are lower than the government rate. There are four interest rates for loans from Grameen Bank : 20% (on a declining basis) for income-generating loans, 8% for housing loans, 5% for student loans, and 0% (interest-free) loans for Struggling Members (beggars). All interests are simple interest, calculated on a declining balance method. This means, if a borrower takes an income-generating loan of say, Tk 1,000, and pays back the entire amount within a year in weekly installments, that borrower will pay a total amount of Tk 1,100, that is, Tk 1,000 as the principal plus Tk 100 as the interest for the year, which is equivalent to a 10% flat rate.

High Interest Rates on Savings
The Grameen Bank offers very high rates for deposits and savings accounts. The minimum interest offered is 8.5 per cent while the maximum rate is 12 per cent. It is a windfall as compared to the near zero interest rates offered on savings accounts in the USA. Really speaking, every NGO working in India and Bangladesh and even elsewhere can learn from the remarkable financial transparency and carefully crafted financial structure of this unique, cooperatively run bank.

Struggling Members Program
One more remarkable program created by Dr. Yunus is the Struggling Members Program. This is for the benefit of all those persons who are completely helpless – the old and disabled, the blind, retarded, the sick and the dying, and others having such an affliction that it becomes impossible for them to earn an income. The program also includes beggars. Presently there are more than 9,000 beggars who are part of the Struggling Members Program. In 2004 Dr. Yunus expects another 25,000 to join. For the beggars, there are special rules or rather lack of rules. For beggars, the normal rules of the Grameen Bank do not apply. The beggars make up their own rules. Loans to beggars are interest-free. If required, the loans are given on a long-term basis. Beggars may take out a small loan to purchase a blanket for the winter months, or a mosquito-net to help them to sleep better at night. They will repay such loans at the rate of perhaps Tk 2.00 or 3.4 cents per week. In addition, beggars are given free life insurance and loan insurance. Through such programs, created by Grameen Bank founder, Dr. Muhammad Yunus, we witness his never-ending determination to help the lowest of the low, the poorest of the poor. More stable five-member groups are asked to take care of beggars living close by in their villages. Every member of the Struggling Members Program is given a badge with her name and photo identification, showing everyone that she is a proud member of the Grameen Bank and is under its protection and care. While the old and disabled are served for life by the Bank, the beggars are encouraged (but not compelled) to take up some kind of occupation, for example, selling consumer items from door to door, so that their life attains more dignity. Meanwhile, the Bank makes sure that the children of beggars attend school and grow up to become Grameen Bank members so that they can lead more dignified and self-sufficient lives and do not have to beg as their parents did.

When Muhammad Yunus talked to others about poverty reduction and micro-credit, World Bank economists as well as journalists assumed that Grameen Bank alleviated poverty by giving loans to small businesses, which allowed them to expand and thus hire more people. This is not what Grameen is about. Grameen is about giving the small loans directly to the poor. This model does not fit the normal theories of development economics, hence it continues to confuse many an intellectual. The worst mistake, however, made by economists is regarding the social power of credit. When credit institutions favor the rich alone, they pronounce a death sentence on the poor people. Yunus calls it financial apartheid. He says, banks should never have gotten away with it. Credit is a human right. Nobody can live without credit, especially the poor. Microeconomic theory looks upon human beings as either consumers or as laborers. It ignores the entrepreneurial potential of the poor. Economists consider large-scale self-employment (such as encouraged by Grameen Bank) to be a sign of underdevelopment. However, Grameen Bank allows people to create their own employment, their own jobs, and hence their own economy. Dr. Yunus calls it “people’s economy.” He states emphatically:

"Any economist with a real understanding of society would have come forward to increase the efficiency of this people’s economy rather than undermine it. In the absence of economists’ support, organizations like Grameen Bank must step into the breach."

Housing Loans
In 1984 Dr. Yunus began giving housing loans to the poor. It cost just $125 to build a house in the village – to purchase leak-proof roofing material and dry space for a family to live in. Previously, without a proper shelter, the village women were severely hampered during the five- month monsoon season, often having to stop work entirely due to rains, floods and no dry place to do their business. While the rich often do not repay their bank loans, the poor invariably repay their loans. They know it is the only chance they have to escape poverty. The housing loan program was a huge success. Conventional banks in Bangladesh tried giving loans to the rich to construct houses, but found the repayment rate so poor that after three years they stopped the practice. Grameen Bank, in contrast, had enormous success with a nearly 100 percent repayment rate of the housing loans. The maximum amount given for a housing loan is Tk 25,000 (US $428), which is repaid over a ten-year period in the normal weekly installments. Interest rate on housing loans is 8 percent. From April 2003 to March 2004, 20,326 houses were built with housing loans from the Grameen Bank.

In 1989 the Grameen Bank housing program was chosen by a group of some of the world’s top architects to receive the Aga Khan international Award for Architecture. At the awards ceremony, renowned architects kept asking Dr. Yunus who was the architect who designed the $300 houses for the villagers. Yunus replied that no architect designed the homes of the poor. The borrowers designed their own homes. They are “the architects of their own fate,” he said.

Micro-Enterprise Loans
For those borrowers who are adept in business and who may have other positive factors like a husband as business partner or proximity to the market, micro-enterprise loans are available. These are larger loans averaging Tk 2.,323 (US $379). These loans are used for purchasing larger items such as trucks, power-tillers, irrigation pumps, transport vehicles and riverboats for transporting goods for sale.

Scholarships and Education Loans
Children of Grameen Bank members receive scholarships every year, with priority given to girls. This is to encourage them to do well in their studies and move on to college and university. Every year more than 13,000 children receive scholarships from the Grameen Bank. Here again, Dr. Yunus demonstrates his one-pointed determination to remove poverty from the face of the earth. Education can go a long way towards removing poverty. Students who require assistance are provided with loans to cover the costs of their education, including tuition fees, cost of living expenses, books and office supplies. Many students are now studying at university level with some in medical school and others in engineering, while being supported by Grameen Bank loans. While ideally higher education should be provided free by the government (as in Germany, for example), until this is implemented by the Bangladesh government, the Grameen Bank is doing wonders to help the children of Bangladesh receive higher education.

Grameen Network
Many spin-off companies have been created with the Grameen name; however, they are independent legal entities, paying taxes like any other company in Bangladesh. A closer look reveals the unlimited imagination of Dr. Muhammad Yunus in starting these companies, which are also working in multifarious ways to uplift the poor of the country. The names of some of these companies are: 1) Grameen Phone Ltd., 2) Grameen Telecom, 3) Grameen Communications, 4) Grameen Cybernet Ltd., 5) Grameen Software Ltd., 6) Grameen IT Park, 7) Grameen Information Highways Ltd., 8) Grameen Star Education Ltd., 9) Grameen Bitek Ltd., 10) Grameen Uddog (Enterprise), 11) Grameen Shamogree (Products), 12) Grameen Knitwear Ltd., 13) Gonoshasthaya Grameen Textile Mills Ltd., 14) Grameen Shikkha (Education), 15) Grameen Capital Management Ltd., 16) Grameen Byabosa Bikash (Business Promotion ) and 17) Grameen Trust. Still more companies created by Grameen Bank as separate companies are the Grameen Fund, the Grameen Krishi Foundation and the Grameen Motsho (Fisheries) Foundation. Two more are the Grameen Shakti and Grameen Motsho (Fisheries) Foundation. Grameen Kalyan is another company which is actually an internal fund called Social Advancement Fund (SAF) and uses funds to carry out social advancement activities for Grameen Bank borrowers, such as educational opportunities, health care and technological advancement (cell phones, Internet access). Grameen Telecom and Grameen Communications have provided loans to 53,237 village women so they can purchase cell phones so that they can run a business offering the use of the phone to everyone in their respective villages. This is one of the more profitable businesses undertaken, and those ‘phone ladies’ certainly become the center of the village! Presently Grameen offers the cheapest cellular rates in the world – 9 cents per minute for airtime during peak hours and 6.7 cents per minute during off-peak hours. A hurdle in using phones in the villages is lack of electricity. Dr. Yunus does not see problems without seeing solutions. He created Grameen Shakti (energy) to develop alternative forms of energy. Now solar energy is spreading through the villages. Dr. Yunus has also started Grameen Cybernet, expecting that the children of current members will in future be able to work for employers around the world from their villages using the Internet. It also means that many businesses such as data entry, data management, secretarial, transcription, accounting, global answering services can all be conducted right there in the villages!

What does Muhammad Yunus say about charity? He says it is not good. It is not the solution to poverty because it takes away the incentive of the poor people. Charity is a copout for the rich because it lets them go on with their lives and forget about the poor. Yunus says, we need a level playing field. Everybody deserves a chance.

Criticisms and Comments
Badruddin Umar, former professor in Bangladesh and presently the editor-in-chief of Sanskriti, a literary and current affairs journal published in Dhaka, criticizes the Grameen Bank (referring to it as the most pernicious of all NGOs), claiming that their interest rates are far higher than the regular commercial banks. The information provided on the Grameen Bank website directly contradicts this assertion. The official website also points out that all profits accruing from interest on loans are transferred to a disaster relief fund, mandated by the Bangladesh government, to be used during times of disaster relief – something that occurs nearly every year in the country. People like Umar also need to understand that the main reason for establishment of the Grameen Bank was that those very commercial banks refused to give micro-loans to the destitute, thus creating, in Yunus’ terms, financial apartheid. Secondly, Umar says that by giving the poor people small loans, it keeps them trapped in a life of continuing poverty with only minute economic improvement, which then crushes the urge in them to fight for major social and economic changes. Hence, he says, the NGOs work as reactionary and counter-revolutionary agents in the country. A response here could be that the Grameen Bank puts a big emphasis on education – education of borrowers and particularly of their children. Muhammad Yunus knows that the key to real change lies in educating the people. He also establishes programs to encourage the poor people to vote in political elections. Yunus’ strategy may not be entirely what the strategy of Umar would be; however, the goal is the same – the economic liberation of the poorest of the poor in Bangladesh.

Islamic scholars, without knowing thoroughly the Grameen Bank structure, will criticize the fact that interest is charged on loans. But, as Dr. Yunus points out, the ban on charging of interest as stated in the Shariah (Islamic code of laws) does not apply to the Grameen Bank because the poor people own the bank. Hence, if the borrowers pay interest to the bank, they are paying the interest to themselves.

Dr. Jamal Anwar, a Berlin-based geologist doing yeoman work in removing arsenic from rural drinking water, on one of his many visits to the villages, saw first-hand a group of village women quarreling with the Grameen Bank representative. They were shouting and saying that they cannot afford to pay the interest, that they want to pay off the loan immediately instead of week by week with 20 percent interest. According to this author, borrowers must be allowed to pay off their loans early if they so choose. They must not be compelled to pay the 20 percent interest by paying weekly installments. Many women cannot afford the 20 percent interest. Their living standard will never go up as a result. Hence, if they wish to pay early, they must be allowed to, just as in the US people are allowed to pay off their mortgages, car loans and credit card debts whenever they like. The option and freedom of choice must be there.

Dr. Shamima Ahmed, Political Science professor at Northern Kentucky University, in her own research learned two things: (1) it has happened in a few instances that when a woman took a loan, purchased items such as a house, cow or goats and then not repaid the loan, the Grameen Bank representatives have gone to the village and repossessed the items she purchased – much as what would happen in the US. Dr. Ahmed said this has created some negative feeling amongst the villagers. Yet, suppose Grameen Bank took no action in such a case, then there would be a strong likelihood that the action of not repaying the loan, if successful, could spread to other women. If other women witness that she suffered no repercussions when defaulting on the loan, certainly some of them would be inclined to try the same. For this reason, it would seem that the Grameen Bank is justified in its actions to repossess the material goods purchased with the loan. (2) According to Dr. Ahmed, it is generally realized that all NGOs in Bangladesh, including Grameen Bank, BRAC, Proshika, World Vision, etc. do not reach the poorest of the poor. Rather, they reach the poor. But, of all the mentioned NGOs, she said that Grameen Bank does the best work in reaching the absolute poorest. The reasons for this could be multifold. The poorest of the poor may not have initiative and hence entrepreneurial skills. The old, sick and disabled poorest frankly are not in a position to become one of Grameen Bank’s entrepreneurs. In his book, Banker to the Poor, Dr. Yunus talks at great length about the innate entrepreneurial ability of every human being to survive and get ahead economically if provided capital in the form of micro-loans. However, he barely mentions the categories of old, sick and disabled – those not able to work. Another category might be those who really do not have a business mind, whose mind instead may focus on art, literature, poetry, or on God-realization. It will be difficult to bring out the entrepreneurial abilities of persons whose minds are completely immersed in non-material or spiritual ideas. Hence it is not clear how these people would be able to pull themselves out of abject poverty, while recognizing that such people also have a valuable function in the society.

The Grameen Bank is often criticized for not providing any training to the villagers. Dr. Yunus firmly believes that the poor are their own best trainers. The poor know about survival. He calls it the survival skill. He believes in maximal utilization of their existing skills. Not only that, when given loans, the women teach each other new skills. They share their knowledge with each other, be it husking rice paddy, raising cows, basket weaving or using a cell phone. Dr. Yunus says, the women are their own best teachers, and they are the best teachers of other women in the village. Yunus writes:

"Government decision-makers, many NGOs and international consultants usually start the work of poverty alleviation by launching very elaborate training programs. [They assume] people are poor because they lack skills…Thanks to the flow of aid and welfare budgets, a huge industry has evolved worldwide for the sole purpose of providing such training. Experts on poverty alleviation insist that training is absolutely vital for the poor to move up the economic ladder. But if you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty. Profit is unashamedly biased toward capital. Why can they not control any capital? Because they do not inherit any capital or credit and nobody gives them access to it because they are not considered credit-worthy.”

Dr. Yunus also points out that formal training or formal education would have frightened off most of their borrowers. It would have threatened the women, made them feel inferior, stupid and useless. It would have also destroyed their natural capacity, intelligence and creativity. Training is good when the women seek it out. If the women want to learn about poultry farming, it is arranged. If they want to learn new ways of storing and processing crops, Grameen brings them the new technology. At present Grameen is bringing cell phones, solar energy and the Internet down to the village level. Soon borrowers will need to know how to calculate the cost of the phone calls, and will need to read the words on the computer screen. When the desire is there to learn, the women learn automatically and with deep desire and satisfaction. The most thrilling part of this entire adventure called Grameen Bank is that it is the women above all who are learning, and coming up economically, socially, culturally and spiritually. They are coming out of the dark caves of dogma, superstition and rigid male chauvinism of their husbands and fathers and bursting forth into a new world of endless opportunities and freedom. This is the unbounded greatness of Professor Muhammad Yunus. For this alone, for bringing freedom to so many millions of women in Bangladesh, he ought to stand in first place to receive the Nobel Peace Prize!

In 1998 the United Nations released a report about micro-lending programs which again raised the question as to whether micro-credit programs can work everywhere or only in certain places, and secondly, can micro-credit really make a dent in global poverty. Reflecting on the remarkable successes of Grameen Bank, one thought comes to mind. Floods undo much of the good work of the bank. Women who were running a good business and repaying their debts regularly are frequently destroyed financially due to floods. They are compelled to take out new loans and struggle anew from a lower rung on the ladder. It does not seem fair. Raising the poorest of the poor who live in abject poverty to the next rung on the ladder is good but they are still in the economic category of marginal poverty – assuming that climate factors and floods have not kept them at the bottom rung. The process of rising out of poverty is just too slow. They should not have to use their loans for medical expenses or for educational expenses. Health care and education through university should be funded by the central government. The financial rehabilitation of the village women after disastrous floods must be borne by the central government. If the government does not take its full share of the burden, it means the economic progress of Bangladeshi women will be at snail’s pace. The poor village women cannot do everything, no matter how hard they work. They cannot beat the losses incurred by climatic disasters. The Grameen Bank also cannot do everything. Really speaking, it is not the responsibility of the Grameen Bank. The bank does keep money in reserve to distribute during times of natural disaster. But it is not enough. It is the responsibility of the government. In fact, the government should be offering low-interest (5 percent) loans to the poor. The government should cover the cost of goods and homes damaged during floods. The government should carry the cost of educating its children, and should underscore the cost of health care for all, with medical clinics in every village and hospitals located close to the people. When in developed countries such as the US young adults are agonizingly weighed under with the loans taken for their college education, when according to the Wall Street Journal medical costs are the single leading cause of bankruptcy in the US – when this is the scenario in the so-called greatest country in the world - where is the question of the villagers of Bangladesh overcoming horrendous obstacles in the form of floods, hurricanes, cyclones, water-borne diseases, pesticide and arsenic poisoning – and pulling themselves up financially? Maybe it is impossible. Maybe it is time to hold the political leaders accountable for their lack of service to the poorest of the poor. Maybe it is time to hold the leaders accountable for the lack of service to the millions of marginal farmers who survive on literally a handful of rice. Professor Umar may well be correct in surmising that by providing a few handfuls of rice and a small mud house with a tin roof, the revolutionary fire in the hearts of the oppressed is snuffed out. Hence it is important for Grameen Bank members to simultaneously pressure and demand their federal government to share their burden in a sincere manner, as do the governments of Germany, Sweden, Norway, and Cuba.

None of the above criticisms, however, can make a dent in the astounding service Muhammad Yunus has done for the poor women, not just in Bangladesh but even in the US. A Grameen Bank replicator program called Women’s Self-Employment Project (WSEP) was started in Chicago specifically for the poor Hispanic women living in the downtown area. In Yunus’ autobiography he recounts speaking with one of the borrowers – a Hispanic woman in her early forties. She lived in a small apartment with her husband in Chicago for 15 years, and had talked to almost no one. Her husband did not like her going out or talking to anyone. But Jenny, a WSEP representative, kept visiting her and finally convinced her to join a group of five, and then to take out a loan to start her own small business. When Dr. Yunus asked her “Are you happy with the income you make?” she became very emotional, and then spoke the following through the interpreter:

"I never expected that I would ever earn money. My husband never gives me any money to spend. We shop together. He pays. I never had money of my own. For the fifteen years that I have lived in America, I have never even had a bank account. Now I have money and I have my own bank account. I have a checkbook. My husband does not know anything about it. I have not dared to tell him yet."

Dr. Yunus, very moved by her reply, then asked her if she thought that forming groups of five was a good idea or not. She again replied very softly. “In the fifteen years I have been here, I never had a friend. I didn’t even know anybody. I was all alone. Now I have many friends. My four friends in the group are like my own sisters. Even if the WSEP did not give us money, I would not leave the group.” The woman then began to weep and she covered her face with both of her hands. It means, her gratitude was unbounded. If just one woman like this woman could come out of that black cave of male patriarchy and domination into the daylight of economic, physical, social and spiritual freedom – then any and all criticisms of Grameen Bank are to be thrown into the dustbin. There is nothing more valuable or thrilling than to witness just one woman coming out of the cave of stifling, torturous oppression into the expansive, exaltative daylight of freedom!

Innovation After Innovation
Dr. Yunus over the years became involved in many other projects. The central government asked him to take over failing fisheries and he did. He studied pisciculture, learned how to clean the ponds and make them productive with baby fish, and created one more success story. While most people know Dr. Yunus in reference to micro-credit loans, but he took other steps for the poor. For example, he insisted that 100 percent of all adult Grameen Bank members/villagers register to vote and that they vote in the general as well as local elections. He did not have to do this. But, his life from 1974 onwards was just a whirlpool of ideas churning in his mind one after the other – new ways to uplift the poor. Nothing could give him more satisfaction than this.

In Bangladesh huge problems and obstacles are simply a part of the life. In 1991 a cyclone hit the southern region of Bangladesh at 2:00 in the morning and killed 110,000 people in just the one night. After recovering from the shock, many Grameen Bank members went out in boats looking for survivors. The bodies of the dead – people and animals – surrounded them in the water, along with remains of the houses. Nevertheless, the Grameen Bank staff and members are there in the villages when disaster strikes, helping in any way possible.

Another example of Muhammad Yunus’ extraordinary vision combined with unbounded compassion and singular determination to make a poverty-free Bangladesh is the bank’s assistance in bigger and bigger projects (and hence loans) for the borrower/members. Yunus said: “We wanted to help them leave the poverty line so far behind that their young children would barely remember what it felt like to be born poor.” Yunus together with his staff members created a new goal for Grameen Bank: it was to make every Grameen Bank member “poverty-free” in a specified period of time. How did they define “poverty-free?” To find out, they interviewed numerous borrowers and came up with the following set of ten indicators:

1. having a house with a tin roof
2. having beds or cots for all members of the family
3. having access to safe drinking water
4. having access to a sanitary latrine
5. having all school-age children attending school
6. having sufficient warm clothing for the winter
7. having mosquito nets
8. having a home vegetable garden
9. having no food shortages, even during the most difficult time of a very difficult year, and
10. having sufficient income-earning opportunities for all adult members of the family.

Having established these goals for a poverty-free Bangladesh, Grameen Bank is monitoring the well-being of their borrowers and has invited outside agencies and international researchers to help them to determine the successes and setbacks of Grameen Bank in achieving this visionary and humane goal.

Muhammad Yunus by this time was keen to convey to other economists that micro-credit enterprise will be successful anywhere when driven by an attitude, which he called “social consciousness.” It meant bringing a social dimension to economics – a human side. In his life Yunus saw that the free market does not give solutions to social problems. It does not help the poor and the elderly nor does it provide health care and education to the people. Despite this, Yunus believes that government should stay out of most things except for the justice system, national defense and foreign policy. Caring for the elderly and the poor, providing health care and education, can all be done in the private sector in the form of collective businesses or cooperatives, owned and run by the people to serve the people. Yunus further does not believe in the welfare system of providing unemployment checks to those without jobs. He says it destroys their dignity and their incentive. Economic structures create poverty. If the economic structure is changed, if it is Grameenized, if micro-loans are given to the poor, they will work hard, they will be creative, and they will pull themselves right out of unemployment, poverty and helplessness. They will lead lives of dignity. And, Yunus says, they don’t need training. They need financial capital. He says, every human being is a potential entrepreneur. If we look upon every human being – even the beggar on the road – as a potential entrepreneur, we will change the whole economic structure. It would mean every person has a choice in whether to be an entrepreneur or a wage earner. In western countries entrepreneurs are taught to think of shareholder profit only, and never to think of societal benefit. This must change. Social values, social consciousness, must become an integral part of economics. Yunus does not support the public and private sector as they are defined today. Rather, he supports the creation of a new sector – the social-consciousness-driven private sector. He says that people can be driven by the desire to serve the social sector – the collective humanity - as much as greed drives capitalists today. According to Yunus, greed and corruption form partnerships quickly based on mutual self-interests. It is time to add social-consciousness as a third contestant in the marketplace!

Muhammad Yunus has ideas that completely differ from mainstream economists, for the simple reason that he rejects those ideas that do not benefit the poor, and he accepts his own ideas because they specifically benefit the poor. Critics say that micro-credit does not enhance the development of a country. Perhaps micro-credit does not raise a country’s GDP. Yunus says that it does not matter. The sole criteria should be, does it benefit the poor? Development in his mind means changing the lives of the bottom 50 percent of the population. To put it more rigorously, he would say, it means changing the quality of life of the bottom 25 percent of the population. There is no reason also why micro-credit enterprises cannot grow and become big enterprises – so long as they remain owned by the people, following the economic structure of the cooperative. The crucial points, according to Yunus, are that the poor be able to realize their unutilized potential and that the social element, the collective social welfare be always a factor when making business decisions.

Muhammad Yunus talks very touchingly about what the future holds for the world. According to him, after 50 years, poverty must become a relic of the past. In his vision, there would not be a single poor person on earth. There would not be a single person unable to meet his or her basic needs. Yunus says that poverty does not belong in a civilized human society. Rather poverty belongs in the museum. In future, he says, when children tour poverty museums with their teachers, they will be horrified to see the sufferings and indignities suffered by people in the 20th and beginning of the 21st century. The reason the problem of poverty continues is because the well-to-do, the politicians, just do not care. They claim that if the poor worked harder, they would not be poor. People need a level playing field. Free trade, says Yunus, must mean free trade for the weakest rather than ‘the strongest takes all.’ We need not just entrepreneurs looking solely to maximize profit. We need social entrepreneurs looking to maximize the well-being of the collective society. This means we need to do a lot of work towards building a society in which this value of serving the collective good is given top place. According to Dr. Yunus, 30,000 children die every day due to hunger and malnutrition. However, if the bottom 20 percent of the world population are given micro-credit, they can become wage earners and wage spenders.

There is Hope
On February 2-4, 1997, the first Microcredit Summit was held in Washington, D.C. 3,000 delegates from 137 countries attended. The stated goal of the summit was to reach 100 million of the poorest families by 2005. When Yunus stood up to speak, he told the delegates that the summit represented the end of a long era of financial apartheid, and that credit is a human right. He said the summit was about unleashing the potentialities of millions of poor people, and that it was a celebration of the success of millions of destitute women who had transformed their lives with micro-credit. Yunus is adamant that poverty does not belong in the real word but in the museums.

Muhammad Yunus is a great personality for what he has achieved in life, for his work with the poor, but especially for his tremendous compassion and caring for those who suffer economically and his burning desire and determination to do something concrete to change the economic conditions of the poor people. He has a simple, clear and highly educated mind that he used to develop the micro-credit system for uplifting the poorest of the poor. This is his greatest legacy to Bangladesh and to the world. Essentially, Muhammad Yunus started a glorious trend, which is the business cooperative – first on a small scale, then also on a big scale. It is the cooperative business structure which can change not only the economic welfare of the people but also the culture and mentality of the people, moving the mindset from a self-centered individualistic one to a mindset that thinks first and foremost of the collective welfare of the society.

Cooperatives “combine the wealth and resources of many individuals and harness them in a united way. To … achieve this … cooperatives should be structured so that individual interest does not dominate collective interest.” In the cooperative system, the owners/members will make all decisions regarding when and to whom to sell, and at what price. The members/owners will be local people only. People of all and varying skills will be utilized with the expansion of cooperatives. During times of economic recession or depression, all members’ labor and contribution will be accordingly reduced, so that no one suffers from the stigma of being without a job. This will also help the economy to pick up to a healthy level of activity. It is a clear example of the humaneness of the cooperative system as compared to the capitalist economic system where thousands or millions of people are laid off with the snap of a finger. It also contrasts sharply with the Marxist/commune system wherein the structure still entails a master-servant relationship, or supervisor and supervised