Grameen Bank
A Brief History:
Soon after Bangladesh gained independence in 1971, Middle Tennessee State University Economics Professor Muhammed Yunus returned to his native land to take a similar position where he found Bangladesh suffering from extreme poverty and famine. In 1976 after extensive study of how to alleviate the suffering, he was able to lift 42 people from the village of Jobra out of debt servitude from moneylenders with just $27. This proved to be a success, but since banks were not interested in conducting business this way, because poor people of Bangladesh had no collateral, no credit history, no ID’s, and were mostly illiterate, he had to co-sign for additional loans to continue with his pilot project.
Out of necessity, Professor Yunus started Grameen Bank in 1977 with some of his students as bankers. He soon realized women would be the most reliable borrowers and the bank began to grow steadily. Through years of trial and error, successful patterns were developed and gradually growth and success grew to numerous awards culminating in the 2006 Nobel Peace Prize to “Banker to the Poor” Mohammed Yunus.
Micro-credit / Micro-loans
Grameen loan officers measure success not in terms of profit, but by how well people pay back their loans [Borrowers don’t fail, the bank does - Repayment is now 98.15%.], how many children of Grameen families attend and complete school, how well borrowers follow guidelines for better living, and how many people are able to pull themselves out of poverty.
The goal of Grameen bank, which is owned by Grameen Bank members, is to reduce poverty. 65% of all borrowers have risen above the Grameen Bank’s own 10-point poverty line measurement. Only 20% of Grameen members live below the poverty line, whereas 56% of non-members live below the poverty line, This averages out to 45% below poverty for all of Bangladesh.
Borrowers, who are 97% women, have to offer their own business plans for use of their loans. They become part of a peer group that meets regularly to discuss ways of helping each other succeed. When someone dies, their debt dies with them. Originally loans were given for small businesses, but have expanded to health, education, housing, transportation, and other purposes.
Grameen has grown to 7.45 million borrowers at 2,499 branches, in 81,334 villages, covering more than 97 percent of the total villages in Bangladesh. Interest free / no repayment loans are even given to beggars, turning 78,000 beggars into merchants.
Grameen has now branched out into sister businesses created to help society through education, health services, cell phones, renewable energy, knitting, housing, and even internet services. By working with women, births per family in Bangladesh have been reduced from 6.3 children per household in 1975 to 3.3 in 1999.
What a blessing for one of the most densely populated countries in the world, endowed with few natural resources, prone to frequent natural disasters, and politically unstable.
The micro-loan concept has now spread throughout the world, inspiring similar institutions in third-world countries & even some affluent ones.
The latest book by Mohammed Yunus is Creating a World Without Poverty [c. 2007]
Perhaps the Triple Bottom Line (People, Planet & Profit) is best, but “Two out of Three Ain’t Bad!”
