Banker To The Poor: Micro-Lending and the Battle Against World Poverty [Paperback]

Muhammad Yunus (Author), Alan Jolis (Contributor)

Book Description

Release date: October 14, 2003

Muhammad Yunus is that rare thing: a bona fide visionary. His dream is the total eradication of poverty from the world. In 1983, against the advice of banking and government officials, Yunus established Grameen, a bank devoted to providing the poorest of Bangladesh with minuscule loans. Grameen Bank, based on the belief that credit is a basic human right, not the privilege of a fortunate few, now provides over 2.5 billion dollars of micro-loans to more than two million families in rural Bangladesh. Ninety-four percent of Yunus's clients are women, and repayment rates are near 100 percent. Around the world, micro-lending programs inspired by Grameen are blossoming, with more than three hundred programs established in the United States alone.

Banker to the Poor is Muhammad Yunus's memoir of how he decided to change his life in order to help the world's poor. In it he traces the intellectual and spiritual journey that led him to fundamentally rethink the economic relationship between rich and poor, and the challenges he and his colleagues faced in founding Grameen. He also provides wise, hopeful guidance for anyone who would like to join him in "putting homelessness and destitution in a museum so that one day our children will visit it and ask how we could have allowed such a terrible thing to go on for so long." The definitive history of micro-credit direct from the man that conceived of it, Banker to the Poor is necessary and inspirational reading for anyone interested in economics, public policy, philanthropy, social history, and business.

Muhammad Yunus was born in Bangladesh and earned his Ph.D. in economics in the United States at Vanderbilt University, where he was deeply influenced by the civil rights movement. He still lives in Bangladesh, and travels widely around the world on behalf of Grameen Bank and the concept of micro-credit.

Editorial Reviews

Review

"An inspiring memoir of the birth of microcredit, written in a conversational tone that makes it both moving and enjoyable." -- Election2004.com

"An interesting story of beginning and hope...I would recommend this book to anyone interested in the problem of poverty..." -- Gracious Rants, May 24, 2007

"lays out a convincing argument fro the need to nourish and better understand the `people's economy'...A hopeful and inspiring read" -- Vision Magazine, January 2007

About the Author

Muhammad Yunus was born in 1940 in Chittagong, a seaport in Bangladesh. The third of fourteen children, five of whom died in infancy, he was educated at Dhaka University and was awarded a Fulbright scholarship to study economics at Vanderbilt University. In 1972 he became the head of the economics department at Chittagong University. He is the founder and managing director of the Grameen Bank.

Product Details

• Paperback: 273 pages
• Publisher: PublicAffairs; Later Printing edition (October 14, 2003)
• Language: English
• ISBN-10: 1586481983
• ISBN-13: 978-1586481988
• Product Dimensions: 8.3 x 5.6 x 0.8 inches
• Shipping Weight: 11.4 ounces (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (101 customer reviews)
• Amazon Best Sellers Rank: #21,587 in Books (See Top 100 in Books)
  • #1 in Books > History > Asia > Bangladesh
  • #15 in Books > Business & Investing > Economics > Development & Growth
  • #16 in Books > Business & Investing > Industries & Professions > Banks & Banking

Most Helpful Customer Reviews

58 of 60 people found the following review helpful

5.0 out of 5 stars A good idea that led to great results January 3, 2005

By Vincent Poirier

Format:Paperback|Amazon Verified Purchase

In the 1970s Professor Mohammed Yunus had a great idea on how to help the poor of Bangladesh and he made it work. He invented micro-credit, or lending very small amounts to the poorest of the poor, without asking for collateral. This, rather than simple handouts, would help the poor become self-reliant enough so that they could lift themselves out of poverty. He concentrated on women. He relied on peer support to motivate repayment of the loans by making loans to one member of a group of women who would have access to credit only if the entire group had a good credit record (when a group started, they were assumed to have good credit). Professor Yunus's organization, the Grameen Bank, is a cooperative owned mostly by its members and boasts a repayment rate over 98%.

In the 30 years since Professor Yunus's first loan of 27 dollars, Grameen has now lent out billions to millions. It has liberated women in small villages, it has brought capitalist market mechanisms to the economic bottom 2% of the world population.

This first hand account by the American-educated Bangledeshi founder of Grameen Bank might not win any literary prize and it might end with a (I think) slightly naive vision of social work, but it effectively presents a simple story about a practical man who has made millions of the world's poorest people significantly better off.

43 of 46 people found the following review helpful

4.0 out of 5 stars The pioneer of microlending... March 1, 2004

By Ted

Format:Paperback

The story of the Grameen bank is an excellent example of how social change initiatives can be combined with government and private industry support to acheive a greater outcome than the organization could acheive by itself. Yunus provides an excellent chronicle of his bank's formation as well as explaining its principles. Highly recommended for anyone interested in social entrepreneurship or social change. The only shortcomings are: 1) as a finance person, I would like to have read more about the operational side of the banks relative to their commercial competitors - what specific factors enabled them to be so successful (other than the broad social factors he identifies)? 2) Need more information about how these types of programs can be applied to industrialized nations such as the US.

28 of 30 people found the following review helpful

5.0 out of 5 stars Book Summary -- Banker to the Poor November 26, 2004

By Justin Belkin

Format:Paperback

Founded in Bangladesh by Muhammad Yunus in 1976, the Grameen Bank is one of the most successful attempts ever to employ capitalist principles to achieve social goals. By approaching poverty from a different tact, Grameen seeks to reconcile the inequalities inherent in capitalism by mobilizing the "informal sector" of society-the self-employed poor. By addressing the root cause of poverty (i.e. lack of access to capital) Yunus has succeeded where many others have failed. Often, well-intentioned governments fail to solve the issue of poverty because of "misguided development" policies and bloated bureaucracies. Similarly, many international financial institutions, such as the World Bank, have failed because their heavy-handed top-down approach excludes those most in need of aid. Yunus writes, "I have always believed that the elimination of poverty from the world is a matter of will" (248). Grameen succeeds where others fail because they appeal to the most downtrodden, the poorest of the poor-the bottom 50% of those already below the poverty line.

A precocious child and avid reader-especially of comicbooks-Yunus was one of fourteen children born to devout Muslim parents. The family lived on the second floor located above the jewelry store that his father owned and operated in Chittagong, the largest port-city in Bangladesh. His mother, despite her later mental illness, instilled a sense of charity early on in her son that would last a lifetime. While the seeds of the Grameen Bank were planted when Yunus was a child, they were certainly nurtured while studying under the tutelage of professor Nicholas Georgescu-Roegen in America. Yunus left to attend Vanderbilt University as a Fulbright scholar in 1965 after opening a successful packaging business in Bangladesh. The professor encouraged Yunus to question traditional economic theory, and to adopt a more pragmatic and social perspective. These influences resurfaced when Yunus returned to Bangladesh in 1972 to chair the economics department at Chittagong University.

Yunus experienced an epiphany one day while lecturing to his students. Amidst his moribund surroundings, Yunus became compelled to confront the obvious incongruence between the high theory he was espousing and the omnipresent reality of daily-life, "What good were all my complex theories when people were dying of starvation on the sidewalks and porches across from my lecture hall? Nothing in the economic theories I taught reflected the life around me" (viii). Yunus at once realized that he had an obligation as both a Bengali and a college professor to help alleviate the rampant starvation that wracked Bangladesh at the time.

After much contemplation Yunus decided that the best way to improve the material condition of the poor was to offer them a hand-up, rather than a handout. Yunus concluded that the poor were quite capable of prospering if only they were given the credit necessary to break out of poverty. He writes:

"But if you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty (141)."

The limited access to capital kept the poorest of the poor enslaved to usurious rates charged by moneylenders whose strict terms affected the ability of the poor to ever repay. However, the very fact that the poor had managed somehow to survive is proof-positive that they too could become successful entrepreneurs if given the opportunity. With access to capital the poor can compete and retain control over profits.

In fulfilling its promise to raise the rural poor out of poverty Grameen has expanded its original income-generating loans to now include housing and education loans. The interest rates for each of the aforementioned loans are calculated based on simple interest and are 20%, 8%, and 5%, respectively. Proof of the strength of the Grameen project lies in its 98% recovery rate. Yunus attributes this success to making 95% of its loans to women. He believes that women are more likely to share the benefits of the opportunity with their family than are men. Unfortunately, this approach continues to meet strong opposition from conservative forces that view Grameen as a threat to their religious and traditional values. Nonetheless, the passion and commitment shared by villagers over the opportunity offered by Grameen eventually overcomes all local resistance.

The program requires a group of five to operate. As required by Grameen, an interested borrower must first pass an exam and also enlist others by explaining the program to them. Once they form a group, a chairman and secretary are elected. Then, two of its members requests a loan, typically for $25 each. Grameen encourages these groups to deposit 5% of each loan in a group-fund that can later be loaned out to members interest-free. After six weeks of successful repayment two more members may request a loan. Yunus writes:

"This is the beginning for almost every Grameen borrower. All her life she has been told that she is no good, that she brings only misery to her family, and that they cannot afford to pay her dowry. Many times she hears her mother or her father tell her she should have been killed at birth, aborted, or starved. But today, for the first time in her life, an institution has trusted her with a great sum of money. She promises that she will never let down the institution or herself. She will struggle to make sure that every penny is paid back (65)."

Despite all the good accomplished by Grameen, its micro-credit program represents only one element of a multi-pronged strategy needed to one day eradicate poverty from the surface of the earth, relegating it once and for all as an artifact of an unenlightened past.

Yunus envisions a more comprehensive program that would expand the notion of economic development to include "improving the general standard of living, reducing poverty, creating dignified employment opportunities, and reducing inequality" (72). He argues that the goal of such development should be measured by a new set of objective criteria, such as the "per capita income of the bottom 50% of the population" (146). The efforts of Grameen and others committed to fighting poverty culminated in the first ever "Micro-credit Summit of 1997" co-chaired by Hillary Clinton. Yunus believes that future success will require a new breed of "social entrepreneurs" who are driven by social goals rather than maximizing profit. The Grameen Bank's success has created an abundance of opportunities for social entrepreneurs to serve the needs of this emerging market.

Despite its demonstrated successes, Grameen still suffers attacks from its critics. Undeterred, Yunus embraces this criticism, "innovation can only sprout in an atmosphere of tolerance, diversity, and curiosity" (102). Pejoratively referred to by some as "poverty banking," Grameen has proven that its success is no fluke. Since making its first micro-loan of $27 to a Bengali basket weaver the Grameen Bank has grown to over 11,000 employees committed to ending world poverty. Grameen now operates in nearly 100 countries, originating over $4 billion in loans made to approximately 2.6 million borrowers worldwide. Much like its founder, Grameen continues to grow and meet the constantly evolving needs of its borrowers.