Professor Muhammad Yunus

I recently had the privilege of being part of the audience for a lecture held by Monash alumni on the 11^th October 2014, and given by the 2006 winner of the Nobel Peace Prize, Professor Muhammad Yunus. He is an angelic visionary whose microcredit banking system lifted millions globally out of abject poverty.

Professor Yunus graduated MA in economics from Dakar in 1961 and taught mostly at universities in Bangladesh, until receiving a Fulbright scholarship to study microcredit at a PhD level in the USA at Vanderbilt University. He became Assistant Professor at Middle Tennessee State University, from 1969 to 1972, while also completing his PhD in 1971.

Microcredit became Professor Yunus’s passion in the early years of teaching economics at Chittagong University. It was 1974 that Professor Yunus led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a negative profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.

Realizing that economics is and needs to place more focus on social science, such as those that inspire people to lift themselves out of poverty, Yunus realized that there was something terribly wrong with the economics he was teaching. So he took matters into his own hands and began lending money from his own pocket. Therefore, with these small loans it becomes possible not only to help some potentially impoverished small business people to survive, but also to create the spark of personal initiative and enterprise necessary to help them pull themselves out of poverty.

Professor Yunus acknowledges that by some prevalent images of microcredit coincide with certain social-economic theories that sound more like fairy tales. Some are very eager to oppose non-traditional theories, believing they don’t actually help people in reality. Such an approach assumes that we should think of human beings as perfectly rational and that their actions are governed by the demands of a particular system.

But instead, to develop his theories concerning microcredit, Professor Yunus decided to reach out to the people rather than assume that they should come to him. Thus he began lending money to people from his own pocket. This increased a demand for food and created a spending-spree among people, as they acknowledged money was not as scarce as it had been in the past. At one point he spoke to a bank manager seeking capital to lend to the poor. The bank refused to lend indicating it would be against the bank’s policies, regulations and rules. After several negotiations, he spoke their language and asked whether it would be allowed for him to be the guarantor in any loan money specifically earmarked for the such loans to poor people.

From there, Professor Yunus envisioned creating a bank on his own. This took him 2 years and was established in 1983. This has today become the world famous microfinance organisation and community development- bank, known as Grameen Bank. How was this bank created? He simply observed what the conventional banks did and proceeded to do the complete opposite. Conventional Banks (CB) go to rich, he went to the poor, CB were located in city centres, while the Grameen bank worked in the village. In Grameen’s philosophy, the more remote you are more attractive you become.

How then does the bank find the poorest person? Well you never talk to your client in your office. You need to go to the client’s house. When a Grameen bank representative goes to the client’s living place, he looks at the dwelling and assesses the client’s ‘poor-ness’, whether they are eligible. He is looking for the extreme poor; no furniture at all and the ‘client’ sleeps on the floor. If the client fits in with the pre-specified criteria then the bank has found the person the bank need to help. Today, there are 8.5 Million clients in Grameen Bank and the bank lends 1.5 billion annually.

If you want to join Grameen Bank, you have to open a savings account and deposit money weekly. These deposits have expanded exponentially today, thus this money is lent out. This year the total money of deposited exceeded the money lent.

The key reason why he got involved in banking was because he knew nothing about banking; not knowing can be a blessing. You learn on your own.

Social Business

Professor Yunus noticed a common ailment working against the young people of Bangladesh. That is, the children become blind when the sun goes down, they suffer from night blindness. So he spoke to doctors and identified that this was caused by a deficiency in vitamin A. The doctors recommended the distribution of vitamin A tablets and the addition of vegetables to the diet.

So Yunus taught and encouraged the growing of vegetables, also, the feeding of children. Professor Yunus made arrangements to bring the seeds for the people for planting, and this, in turn, became a very popular social business. At one point he became the largest seed seller in Bangladesh, as the seeds were of high quality and grew in most environments. This was also understood  as an attempt to put children first in aid.

Another problem Professor Yunus discovered was that people in Bangladesh have poor sanitation.  Professor Yunus made the covering of faeces by digging holes an eligibility requirement for joining the Grameen Bank and so sanitary practices were improved and this became standard practice.

In the provision of electric supply Yunus initiated a business to improve the service. The aim is to ensure that every home has the hygienic standards provided by electric sanitary. But 70% of Bangladeshis have no electricity, so he looked at solar panels. But experts said it is not for Bangladesh and disregarded it. However, Professor Yunus insisted.

Professor Yunus argued that solar panels were needed for the entire country. By promoting solar panels for the entire Bangladesh population, they had to overcome buyer resistance. But now Grameen energy sells 1000 solar energy systems every year. It took only 7 years to have 1.5 million houses with solar energy systems.

Economic theorists, assume human beings want to make money. Theories are supposed to reflect on what we do. But in reality, theory has decided what we should be. All organisations focus on maximising profits. The more money you make, the more successful you are. Humans are multi-dimensional, free and selfless, and this can also be shown in business dealings.

Professor Yunus called his business a social business aiming to help people, and unlike philanthropist’s money for business initiatives where the money comes back to investors. This money becomes the biggest incentive in the world to the person/s in receipt, but it’s not the only incentive. However, money can be identified as making most people happy. But making other people happy is even better.

Grameen bank encourages children to go to school and pursue higher education. But once they reach that stage students then complain of being unemployed. ‘Who told you that you must have a job? Getting a job is a pre-historic idea, prepare yourself to be a job giver rather than a job seeker. Be an entrepreneur!’ Through such strategies Grameen Bank will assist youth to set up a business and work together; to avoid so much unemployment in the world.

Unemployment is a feature of a system that has rejected individual skills and abilities. The system relies on someone else to make the decision over an individual getting the job. One may ask:  why not me? Shouldn’t I make the decision of my life? These systems create conditions such as poverty, diseases, environmental hazards, inflation etc…

The concept of a Social Business questions the prevailing system. Poverty is not created by the poor, but by the system itself. Professor Yunus compared poor people to a Bonsai plant, where the plant doesn’t have base like the forest. There is nothing wrong with the seed, but with the base.

Social Businesses are designed to solve this problem. They encourage using the capacity of creators (current generation) as decision makers, not the ones taking orders. Even you can do something to avoid poverty. Unemployment is artificially imposed. We should create a world without unemployment and we will find that it is safer.

‘Imagine the world you want, not the possibility.’

Awards

Apart from the Nobel Peace Prize in 2006, Professor Muhammad Yunus has received many prestigious awards from around the world, for example, the ‘Independence Day Award’ in 1987, World Food Prize in 1994, Volvo Environment Prize in 2003, Presidential Medal of Freedom in 2009 and the ‘Congressional Gold Medal’ in 2010, along with being presented with over 50 Honorary Doctorates from Universities around the world.

People with disabilities in Australia

As a disabled and researcher of people with disabilities, I could not be more overjoyed by attending this phenomenally passionate and inspirational lecture concerning microcredit and its flow on effects. People with severe disabilities are among our most impoverished, due to their low and unsustainable socio-economic status. Do Professor Yunus’s pragmatic theories offer any sustainable answers for people with severe disabilities?