A Desperate Man Launches a Movement

Excerpts from talks by Nobel Peace Prize recipient Muhammad Yunus, who spoke at the President’s Breakfast and interacted with a panel of students on campus in February.

Mg74PB14_0249My work, whatever I have done, was not preplanned. It was a spur-of-the-moment action out of desperation. When you are desperate, you don’t calculate. You jump. You don’t know the outcome. I never thought I would ever become a banker. I’m very glad I was honored by a banker today because all I have done is battle with bankers. So this is a special tribute for me.

I left the United States, where I was teaching in one of the universities, in June 1972. Bangladesh became an independent country in 1971, and I said, this is time for me to go back.

In 1974, we had a terrible famine in the country. Here I am teaching elegant theories of economics which I learned in the states. I thought a Ph.D. had given me all the knowledge I’m supposed to have on economics, and I was excited about passing it on to my students. While I was impressed by the elegance of those theories, I saw people dying of hunger. Very soon you start feeling totally empty inside. All your knowledge, everything you have learned, has no meaning whatsoever in the face of people who died right next door to your classroom. Out of that frustration, I tried to feel alive by saying, “Let me try to go to the village, which is just next door to the university, to see if I can make myself useful to somebody, because today I am a totally useless person. Economics doesn’t help me; it doesn’t help anybody.”

My ambition was to make myself useful for one person even for a day. I don’t know if I can do more than that. That’s what I was doing in the village next door to the campus. Then I saw the loan sharking there, and it looked so ugly—tiny little money given as a loan to a poor person, and in return he or she is totally captured by the loan shark. Everything the borrower does belongs to the person who lent the money. I started seeing this is not really lending; this is slavery. You turn people into slaves by giving them money.

I was enraged and didn’t know what to do. Suddenly it came in my mind that it may be big problem, a global problem. I cannot solve a global problem; I’m a small guy. But I definitely can solve the problem of a few people in this village. Why don’t I lend them the money? If I lend them the money, they don’t have to go to loan sharks, so they will be free.

How a Professor Founded a Bank

My first loan was a total of $27 given to 42 people, so you can imagine how small the loan was. I just took the money out of my pocket and gave it to them. It created a sensation. People looked at me as if I had done some miracle. I’m feeling encouraged that it helped them, I’m feeling so happy, I wanted to do more. So I started giving money from my pocket. Every person I gave to was free from the loan shark. I had no idea that it would be known as microcredit, as microfinance.

It was growing. The whole village wanted to take money, and I was running out of my money. So I thought, “Why don’t I go to the bank, which is located on the campus, tell them, ‘Why don’t you lend the money? It works.’”

So I did, and the bank manager almost fell from the sky. He couldn’t believe I said that. “Here’s an economics professor telling me, a banker, to lend money to the poor people. How stupid can you get?” He tried to argue with me and tell me why the bank cannot do that. The more he argued, the more I argued back. But he would not budge. I said, “I understood the bank was created to lend money to people. That’s their job. That’s their business—take deposits and lend money to people. But you’ve created a very strange institution. You lend the money to people who already have money, and you don’t lend money to people who don’t have money. I think the logical thing would have been the other way. You should be lending money to people who don’t have money. Then after you do that, you go to the people who have some money and get more money.”

He laughed. He thought I was so ignorant of banking. But I didn’t give up. I continued to pursue this with all the people I knew in banking in the higher levels. Everybody gave me the same answer.  After eight months of running around, I was getting desperate because I was running out of money. I had to continue this, so I said, “Why don’t you accept me as a guarantor? Your rules permit that. I sign all your papers, I take the risk, and you give the money.” That worked. It took several months to assess how much I am worth. Finally, they agreed. It’s such a tiny amount of money, it will be OK.

I began in 1976, took the money from the bank in 1977, and I was so delighted that it was working. But the bank was becoming more reluctant as we became bigger and bigger. They thought nobody would pay back the money. This is just a temporary phenomenon. It’s impossible. Who ever heard of giving a loan to a poor person who then paid it back?

Again I became desperate. I thought, “Why don’t I create a bank?” Now that I know it works, I can create a bank and continue. I don’t have to go to the banks who do not believe in it. But it was not easy to get the permission of the government and the license. Finally, in 1983, I set up Grameen Bank, the village bank. It kept on expanding and expanding; the rest is history. It created such momentum; it keeps on running by itself. It worked very well. It never faltered.

Today, 38 years later, we have 8.5 million borrowers in that bank in Bangladesh, nearly all of them—97 percent—women. The bank has over 25,000 staff. One of the basic principles of Grameen Bank is that people should not come to the bank. The bank should go to the people. So that’s what we do. We go to 8.5 million borrowers, meet them at their doorstep, and deliver the service.

Grameen Bank, the Anti-bank

I learned from the conventional banks how they do things. I just do the opposite, and it works. They go to the rich; we go to the poor. They usually go to men. In Bangladesh, we focus on women. They want to work at the city center, we go to the remote places, the remote village. Even today, we don’t have a single branch in a city of my country. We’re in the village. They are the ones who are left out; so we go to the left out. Conventional banks want collateral, so we dismissed the whole idea of collateral. Because we don’t have collateral, we don’t have papers. We don’t have any legal papers, so we don’t have any lawyers. Conventional banks are owned by rich people, particularly rich men. Grameen Bank is owned by the borrowers who happen to be poor women.

People said, “Oh, it works in Bangladesh; Bangladesh is a funny country; anything can happen there. But it would never happen outside of Bangladesh.” And then it was replicated in Malaysia. And we said, “Look, Malaysia is doing that.” “Ah, it has something to do with the Muslim religion.” Then we went to the Philippines, a Catholic country. Then they said, “Must be Asian.” There’s always an explanation why it can be done in one place but not in others. It’s difficult to bring in something new when our minds are made up.

Minds are made up in educational institutions, so it’s very sensitive what we teach students so they can keep their minds open. It’s not a place where we seal the mind. I hope we can continue to have educational institutions that let young people think on their own rather than think in line with their professors.

In 1987, the governor of Arkansas, Bill Clinton, invited me to come and create a program in Arkansas. But these things disappear or become weak because nobody pays attention. Every time I come to the United States people say, “Oh, it could never be done in the United States. It was tried and failed. It’s for the developing countries.” I say, “No, it’s for everybody because people need it.”

So in 2008, we launched a program in New York City called Grameen America, and it worked beautifully. It started in Jackson Heights. Now every borough in New York has a Grameen America. We have six branches in New York City and over 18,000 borrowers, all low-income women. The average loan is $1,500, and the repayment has remained nearly 100 percent. We do it exactly the same as we do it in Bangladesh. People ask, “Don’t you adapt it to the locality?” I say, “Why should we? People are the same. Needs are the same.”

14 PB Microfinance Infographic v2 1920x1080So we are invited to Omaha, to Indianapolis, to Charlotte, N.C., to San Francisco and to Los Angeles. The next one is in Westlake. This is a country where payday lending flourishes like it flourished in Bangladesh. It’s addressed to the people who cannot go to the bank, unbankable people. The thought of unbankable people irritated me a lot. I kept saying, “Why do you say poor people are not credit-worthy? Why are you deciding who is credit-worthy? Shouldn’t the people be asking if banks are people-worthy?”

We have to make banking an inclusive institution. Nobody should be falling through the cracks of financial institutions. Credit should be accepted as a human right because it changes a person’s life. You need a dollar to catch a dollar. If you don’t get the first dollar, you don’t catch the next dollar.

Starting a Business to Solve a Problem

There are many other problems in Bangladesh, not just credit: health problems, sanitation problems, water problems, environmental problems. Every time I see a problem, I try to find a way to address it. It became a habit to solve it. Since there are lots of problems, I create lots of businesses. Each one is devoted to a particular problem. But I have absolutely no intention of making money myself. So I own big companies in Bangladesh, but I don’t get a penny out of them. They are self-sustaining, they earn money, and the money goes back into the company itself because it’s devoted to solving problems.

Why should anybody do business and not to make money? People tell me making money is happiness. It is an incentive. If you take away the incentive, they won’t get involved. I say, “Money is not the only incentive. Making money is a happiness. But making other people happy is a super happiness.”

The world of capitalism has misrepresented human beings as selfish beings. All they do is for themselves. I contest that because I feel human beings are not money-making robots. All human beings are wonderful creations. Somehow, the present interpretation of capitalism narrows it down to only money-making. Capitalism is all about options.

Human beings are selfish; I agree. But human beings are also selfless. We express our selflessness by becoming philanthropists and giving away our money. I’m creating a third option. You earn a lot of money and use the money to change people’s lives to change the world—and also give away money as you wish as a philanthropist.

I have created social businesses, such as an eye-care hospital to treat cataract patients in Bangladesh. We invested $2 million, and people able to pay the market price pay it; those who cannot just cover the cost of the lenses and medicine. If you cannot even pay that, you pay something.

It took us four years to break even in the first hospital. So we started the second hospital, which broke even in three years. Then we went to the third hospital. Now the fourth hospital is under construction.

A social business has to return exactly the amount you invest, but you don’t take any more dividend.

We have a big problem in Bangladesh: 70 percent of the population has no access to electricity. So I started a business of solar energy to bring electricity. People said, “It will never work.”

We wanted to sell five solar home systems in a month. It was a problem, but we achieved it. We got excited. Then we wanted to sell 10 solar home systems a month. We pushed it and made it—then 50 a month and 100 a month. Today we sell more than 1,000 solar home systems per day.

People love the light in the darkness of the village. If one home has solar energy, you can see it from 10 miles away. Children say, “Why don’t we have electricity in our home? Why don’t we have television and Internet?” So it’s growing.

In 16 years, we have one and a half million homes with solar energy. It will take only three years to get the next one and a half million.

We run a nursing college in collaboration with Glasgow Caledonian University. How do the girls pay? They come from poor families. Grameen Bank lends them the money, and they pay it back out of their salary.

Dannon became interested in social business. In Bangladesh, nearly 50 percent of the children are malnourished. We decided to produce a special kind of yogurt with vitamins and minerals that tastes good. They made it very cheap so the poorest family could pay for it. We sell it at one price in the village and at another in urban grocery stores. Dannon covered the cost. Their only motive was to solve the problem of malnutrition in Bangladesh. It’s a non-dividend company to solve human problems.

We make mosquito nets because Bangladesh is a country with malaria. We have a joint business with BSF. Big companies are joining hands with us to create social businesses.

Watami is a Japanese restaurant chain, and they run restaurants in Bangladesh villages with good, healthy food for the cheapest price possible. We started spreading this to other countries, including Haiti. After the earthquake, everyone was pouring money into Haiti; I was very impressed by the generosity of the world. Then I started raising a concern. The bulk of this money will be wasted. Haiti does not have the capacity to use it. I told them to put some money in a social business fund and then ask the people in Haiti to come up with business ideas to solve the problems.

So I created a fund in Haiti. When I visited there, I learned all the food served at my hotel was imported. That gave me an idea. I’ll start a restaurant in Haiti and put up a big sign: Everything you eat in this restaurant is produced in Haiti. Now we are producing fish, salt, vegetables and poultry. We have a joint venture with BR Foods of Brazil to sell poultry and eggs produced in Haiti everywhere.

I said, “Let’s reforest Haiti as a social business.” We created Haiti Forestry, and the government allocated us 10,000 hectares. Richard Branson of Virgin Atlantic and the Clinton Foundation became our partners.

Bring your business skills, all your creative powers, to solving a tiny piece of the problem. You don’t have to solve the whole problem. If you solve a tiny piece, you have created a seed others can plant and solve the problem. We have enough creative people to do this. There’s no reason anyone should be poor because everyone’s packed with unlimited capacities to take care of themselves—if you know how to create institutions around them.

Inspiring Words for Students

When people ask me what is the most important thing for your work, I say, “Maybe stubbornness.” Many people said it wasn’t going to work, and I said, “I don’t care; I will do it anyway.” When you feel strongly about something and you’re clear about what you think, you can succeed. Otherwise, other voices will take over, and say, “It’s over. It can’t be done.” I give the example of a bonsai tree. There is nothing wrong with the seed. You put it in a flower pot, and it only grows so big. Poor people are bonsai people. There’s nothing wrong with their seeds, but society never gave them the space to grow as tall as everybody else. So we have to build institutions and policies that let them be tall.

Kristabel Stark ’14 is studying international security and development and became an advocate for microfinance through her experience interning with several microfinance organizations. James Sievers ’14 majors in economics and business with minors in music and religious studies. He helped set up microfinance projects in Haiti during spring break through a Westmont class. Andy Wood ’14 is an English major with a minor in history who grew up in the rural area of Metepez, Mexico. Kha-ai Nguyen ’16, a biology and economics and business double major, intends to pursue a career in health care at a clinic for low-income families.

Kristabel Stark ’14 is studying international security and development and became an advocate for microfinance through her experience interning with several microfinance organizations. James Sievers ’14 majors in economics and business with minors in music and religious studies. He helped set up microfinance projects in Haiti during spring break through a Westmont class. Andy Wood ’14 is an English major with a minor in history who grew up in the rural area of Metepez, Mexico. Khaai Nguyen ’16, a biology and economics and business double major, intends to pursue a career in health care at a clinic for low-income families.

Don’t take anything as impossible. There’s nothing called impossible. It’s a question of how you do it. It’s only a matter of time until you break through things that were impossible 10 years ago and are routine today. If you had said 20 years ago that people would carry phones in their pockets, everyone would think you were crazy. It is a question of designing; it is a question of refining. It can be done.

The young generation today is a very powerful one—the most powerful in the history of mankind. When we were your age, we didn’t have the technology. We could not communicate with each other. Today, communication is instantaneous around the world. We used to spend hours and hours in the library. Now you just click on the exact information you want.  You have books and information at your fingertips.

That makes you a completely different kind of person. You have friends everywhere. You have tremendous power. You must become aware that you are a superhuman. Ask yourself, “What am I going to do with my power?” If you don’t use your power, it will be wasted. Don’t wait for tomorrow. People will tell you, “You are the leaders of future.” Don’t wait for future! You are already the leaders. The world will be very different in your hand. Find out what you want to do today, because it will be too late to do it tomorrow. Today it might look impossible, but the more it looks impossible, the more you will come to make it possible. The distance between the impossible and the possible is shrinking. Take the impossible thing and solve it; then you can say, “I make the impossible possible. That’s my specialty.”

My goal is to get into your mind because you have grown up with the older generation. We are thinking in a prehistoric way, and the future is completely different. So first, you design what kind of future you want. You have to imagine—imagination is the key. Imagine all the things you want to see in the world. Be as bold as you want to be. If you don’t imagine, it will not happen. Imagination is the most critical thing to make things happen—when we start doing that, we are on the right track.

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