Banker to the Poor: Micro-Lending and the Battle Against World Poverty

One of the best ways to development is to encourage the social-objective-driven entrepreneur, or “social entrepreneur,” who “competes in the marketplace with all other competitors but is inspired by a set of social objectives.” This is only one of the interesting points of Prof. Muhammad Yunus in his book Banker to the Poor: Micro-Lending and the Battle Against World Poverty” (PublicAffairs, 1999, 2003). You may have heard of Prof. Yunus, the founder of Grameen Bank (literally means “Rural” Bank). Both Prof. Yunus and Grameen Bank are joint winners of the Nobel Peace Prize.

The Grameen Bank focuses on microcredit, providing banking and other services directly to the poor, mainly women. The movement is not limited only in Bangladesh, where it was started by Prof. Yunus, but had spread out to other parts of the world, including the Philippines (Prof. Yunus mentioned the Ahon sa Hiral [ASHI] in Laguna, the Project Dungganon in Negros, and the Landless People’s Fund of the Center for Agriculture and Rural Development [CARD]).

Anyway, here are other interesting insights from the book:

1. To me, an entrepreneur is not an especially gifted person. I rather take the reverse view. I believe that all human beings are potential entrepreneurs. Some of us get the opportunity to express this talent, but many of us never get the chance because we we made to imagine that an entrepreneur is someone enormously gifted and different from ourselves. (p. 207)

2. The fact that the poor are alive is clear proof of their ability. They do not need us to teach them how to survive, they already know how to do this. So rather than waste our time teaching them new skills, we try to make maximum use of their existing skills. Giving the poor access to credit allows them to immediately put into practice the skills they already know xxx. (p. 140)

3. “The poor,” I said, “are very creative. They know how to earn a living and how to change their lives. All they need is opportunity. Credit brings that opportunity.” (p. 184)

4. When I talked about micro-credit in the 1980s xxx most people assumed that I was trying to alleviate poverty by lending to small businesses that would then expand and hire the poor. It took people a while to see that I actually advocated lending to the poor directly. (p. 149)

5. “What you are really doing,” a Communist professor told me, “is giving little bits of opium to the poor people, so that they won’t get involved in any larger political issues. With your micro-nothing loans, they sleep peacefully and don’t make any noise. Their revolutionary zeal cools down. Therefore, Grameen is the enemy of the revolution.” (p. 204)

6. … the birth rate among Grameen families is significantly lower than the national average. Once they have increased their incomes through self-employment, Grameen borrowers show remarkable determination to have fewer children, educate the ones they have, and participate actively in our democracy. (p. 134)

While I agree with some of these insights, I’m also bothered by some which I can’t entirely agree with. For instance, I always thought that training is indispensible, which, as noted by Prof. Yunus, is also the view of many international “development” organizations. Being bothered, however, is not bad, as it leads one to re-examine if an existing belief is wrong. (Of course, you may have your own views that you may want to share with the community through the comment section below.)

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