Friday, February 4, 2011

Creating a World without Poverty


"Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime.” This phrase is simply mean that having a good job is better than giving someone a handout.

This is an inspiring story of Dr Muhammad Yunus (read his biography), the recipient of 2006 Nobel Peace Price for his creation, the Grameen Bank, to help the poor people in Bangladesh. Grameen Bank provides small loans through a micro-credit (small loans for self-employment) scheme to millions of poor families in Bangladesh to start and grow their own business. Since its establishment the Grameen Bank has helped almost half of them work their way out of poverty.The repayment rate was said to be more than 98%. "You cannot get a dollar without a dollar in your hand", he said. Dr Muhammad believes the concept of Grameen can end world poverty: "There is no reason why poverty should be here. This is a rich country - 120 million energetic, hardworking, intelligent people. They can change the world", he said.

One of his greatest challenges was to convince the bank to lend money to the poor people. "It can't be done,it can't be done - they are not credible, they will not be able to pay back", said the bank manager. He failed to convince the bank even after a few pilot projects  (after he agreed to become the guarantor) were successful. That was when the idea came up - why don't we have a bank for the poor people? "The conventional banks are for rich people but Grameen Bank is for the poor. It offers interest-free loans to the destitutes to help them improve their lives," he said. "Never give up when people said it could not be done," he said, adding that everybody had to face the challenge if they wanted to succeed.


Interestingly, over 90% of the bank's customers are women.This is because Dr Muhammad noticed earlier on that the loans were most effectively administered when it was the woman of the house the one who control the budget. He explained, "Money that went to the family through woman brought so much more benefit to the family because she knew exactly how she's going to make business with that - she get the best mileage out of that money and children become the beneficiaries of the mother's income directly".

Grameen bank and its microcredit model has spread to many countries, especially in the developing world, through thousands of microcredit institutions launched by  nonprofit organizations, government agencies, and business entrepreneurs seeking to emulate the success of Grameen, serving tens of millions of the world's poorest citizens. For example, Jessica Jackley, inspired by the initiative of Dr Muhammad and the success of Grameen Bank, co-founded Kiva.org with her colleague, Matt Flannery. Kiva uses a peer-to-peer model in which lenders sort through profiles of potential borrowers -- be they a farmer in Cambodia, a pharmacist in Sierra Leone, or a shopkeeper in Mongolia -- and make loans to those they find most appealing. Watch her TED Talks presentation, "Poverty, money -- and love".

In his Nobel Prize Lecture (read full text here) entitled "Poverty is a Threat to Peace" Dr Muhammad said that peace is inextricably linked to poverty - poverty is a threat to peace. He provided the startling statistics of the world's income distribution: 94% of the world income goes to 40% of the population while 60% of people live on only 6% of world income. Half of the world population lives on two dollars a day. Over one billion people live on less than a dollar a day. "This is no formula for peace", he said.

On the initiative and idea of Grameen Bank, Dr Muhammad Yunus said this in his lecture:
"In 1974, I found it difficult to teach elegant theories of economics in the university classroom, against the backdrop of a terrible famine in Bangladesh. Suddenly, I felt the emptiness of those theories in the face of crushing hunger and poverty. I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease. That brought me face to face with poor people's struggle to find the tiniest amounts of money to support their efforts to eke out a living. I was shocked to discover a woman in the village borrowing less than a dollar from the moneylender on the condition that he would have the exclusive right to buy all she produced at the price he decided. This, to me, was a way of recruiting slave labor".

Dr Muhammad was awarded the 2006 Nobel Peace Prize in recognition of his efforts in setting up Grameen Bank to address poverty in Bangladesh. He also received the Honorary Doctorate in Economics from Universiti Sains Malaysia in the university's 36th convocation. 

Dr Muhammad Yunus has written a book, "Creating a World without Poverty - Social Business and the Future of Capitalism". I hope to get my hand on this book soon and share with you the summary - and the spirit of the true intellectual of Dr Yunus. 

To get a quick overview of the Grameen project, watch this video clip "Banking On The Poor - Bangladesh", produced by ABC Australia and a documentary produced by the nobelprice.org. Watch also Dr Muhammad Yunus's talk (about 1 hour 7 minutes) at UCSD about the microfinance revolution around the world, and the launch of Grameen America, which will bring microcredit to the U.S.

On the fate of the so-called "bottom billion", you might want to listen to a talk by Professor Paul Collier on the huge gap between the rich and the poor. He is also the author of a book "The Bottom Billion" (read the book review in the New York Times, London Book Review.com, and The Sunday Times). Other links to TED Talk on the issue of poverty is given below:

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