The reasonable man adapts himself to the
world: the unreasonable one persists in trying to
adapt the world to himself. Therefore all
progress depends on the unreasonable man.
George Bernard Shaw
Muhammad Yunus is a
very unreasonable man. He grew up
in arguably the poorest nation on the face of the
earth, East Pakistan. In February 1972, after a
nine-month civil war, Yunus homeland became
Bangladesh. Yunus received his PhD in economics from
Vanderbilt University and after the war of
liberation, he returned to Bangladesh to help build
the new nation.
Observing the suffering
and extreme poverty of his people and noting the
deadly migration of poor people to the cities of
Bangladesh, Yunus developed an incredibly
unreasonable idea: the Grameen
Bank. Grameen derives from the Bangla word gram,
meaning village. Yunus created the specialized bank
to meet the capital needs of impoverished, rural,
would-be business people. Over the past twenty years,
the bank has provided poor village people in
Bangladesh in excess of $1.5 billion with half of
that amount being distributed since 1994. The bank
operates more than 1,050 branches serving over 2
million clients, 94 percent of whom are women.
Yunus believes in
bubble up economics, as opposed to
the more familiar (at least for Americans)
trickle down. By infusing the
economy of Bangladesh with capital from the bottom
up, the entire economic system receives stimulation.
More importantly, micro-businesses acquire small
loans needed to allow their efforts to thrive. For
example, a typical rickshaw operator can expect to
clear two cents per day after covering leasing
expenses. With a small loan the same operator can
purchase a rickshaw and begin making a livable wage
as a transportation vendor.
The loan qualifications
at the Grameen Bank appear
unreasonable as well. Applicants
must be landless with no material collateral. Social
collateral is more important at Grameen. At the same
time, the bank operates with high expectations: all
loans must be repaid and repaid on time, the bank
charges interest rates at four points above the
commercial rate, it never forgives loans and each
borrower must agree to save a portion of earnings
each week. While the bank receives grants and cash
infusions from foreign nations and investors, the two
million borrowers control ninety percent of the
banks shares. Each borrower must join a group
of five other persons who have made loans with the
bank. If anyone in the group of five defaults on a
loan, the entire group loses the right to make future
loans. Each group joins a center
made up of six groups. The social
accountability has helped the banks default
rate remain under 3%.
The principles developed
by Yunus and his amazing Grameen Bank provide
Americans concerned about the future of poor, inner
city residents plenty of food for thought. Even more
important however, Yunus illustrates the fact that
unreasonable ideas and people change the world.
Have an unreasonable,
crazy, against the grain, seemingly unworkable idea?
Stay with it. You just might be on to something
important. By all means, keep dreaming.