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Muhammad Yunus

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Muhammad Yunus, born 1940, is a Bangladeshi banker, economist and the developer and founder of the concept of microcredit, i.e. the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. Yunus is also the founder of Grameen Bank.

Education and early career

Born in Chittagong, Yunus studied in Chittagong Collegiate School and Chittagong College. He got his Ph.D. in economics from Vanderbilt University in 1969. Later, he joined Chittagong University as a professor of economics. Yunus first got into the business of fighting poverty during a 1974 famine in his Bangladesh, one of the poorest countries in the world. Yunus discovered that very small loans could make a significant difference in a poor person's ability to survive.

His first loan consisted of $27 from his own pocket which he lent to women in the village of Jobra-near Chittagong University who made bamboo furniture. They sold these items back to moneylenders to repay usurious loans that they had take out to buy the bamboo. With a net profit of 5 Bangladeshi taka (.02 USD), the women were unable to support themselves or their families. However, traditional banks were not interested in making tiny loans to poor people, who were considered poor repayment risks.

Founding the Grameen Bank

In 1976, Yunus founded the Grameen Bank to make loans to poor Bangladeshis. Since then the Grameen Bank has issued more than $3 billion in loans to approximately 2.4 million borrowers. To ensure repayment, the bank uses a system of "solidarity groups". These small informal groups apply together for loans and its members act as co-guarantors of repayment and support one another's efforts at economic self-advancement.

As it has grown, the Grameen Bank has also developed other systems of alternate credit that serve the poor. In addition to microcredit, it offers housing loans as well as financing for fisheries and irrigation projects, venture capital, textiles, and other activities, along with other banking services such as savings.

The success of the Grameen model has inspired similar efforts throughout the developing world and even in industrialized nations including the United States. Many, but not all, microcredit projects also emulate its emphasis on lending specifically to women. More than 94 percent of Grameen loans have gone to women, who suffer disproportionately from poverty and who are more likely than men to devote their earnings to serving the needs of the entire family.

Quotes

  • “One day our grandchildren will go to museums to see what poverty was like.” - quoted in "The Independent", 5 May 1996

Awards

References

  • Banker to the Poor: The Autobiography of Muhammad Yunus, Founder of Grameen Bank, by Muhammad Yunus, Oxford University Press, ISBN 0195795377

External links

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