©Entrepreneur Goddess, 2008
Dr. Muhammad Yunus, Grameen Bank
Winner of the 2006 Nobel Peace Prize

Today I had the good fortune of being able to see Dr. Muhammad Yunus of Grameen Bank and winner of the 2006 Nobel Peace Prize speak in person! He spoke in Monterrey, Mexico at the Technológico de Monterrey on “Diminishing poverty through microcredit.” I’m a huge fan of Grameen Bank and the work they’ve done for entrepreneurial women in Bangladesh and around the world.

Important points:

* ALL HUMAN BEINGS ARE ENTREPRENEURS, but some don’t show it because of their circumstances.

* Poverty is created by systems, institutions, policies, and concepts that, by design, hold the poor back.

* Poverty is artificially imposed on a person.

* It is easy to undermine the capacity of others and make decisions that may negatively impact their lives.

* By providing microloans to women, you help entire families and communities.

* Poor people are credit-worthy.

The concept of business is to make the maximum profit monetarily. However, Dr. Muhammad Yunus has created a different concept to help the world’s poor. Grameen Bank steps away from traditional approach and instead acts as a social business that makes financial resources available to the poorest women on the planet.

Dr. Muhammad Yunus never wanted or intended to be a banker, but instead reacted to circumstances beyond his control. While teaching economics at Chittagong University, near a rural village in Bangladesh, he began to really take notice and understand why poverty was so prevalent in the village.

Loan sharks were taking advantage of women in the village, charging them huge amounts of money, interest, and exclusivity for their creations. He spoke with a woman who was dressed in rags, living in horrendous circumstances, yet making beautiful bamboo stools. The loan shark was charging her 25 cents per day for bamboo and at the end of the day; she had to sell her stools back to him. She was only making two cents per day. It was quite clear to Yunus that she was not an entrepreneur, but a slave to the loan shark.

Yunus soon realized there were others in her situation and began thinking about how he could improve their lives through business. He could give the women money, but he decided that would not solve the collective problem and in the end they’d be right back to where they started. A few days later, he gathered a group of poor women, who collectively needed a grand total of $27 for their businesses. This is when he made his first loan to women in a rural village of Bangladesh. The look on the faces of the women and their gratitude was what eventually led to the launch of Grameen Bank. To this day, seeing how much Grameen Bank’s loans help people is what drives Yunus to continue helping the poor.

Realizing that banks should be lending money to these people, Yunus went to a bank and asked them to loan the village women money for their small businesses. The bank said there was no chance of that happening. Instead, Yunus convinced the loan officer to personally loan him the money so that he could, in return, loan the money to the women. It took some convincing, but the officer finally relented. In the end, 100 percent of the money Yunus loaned to these women was repaid. So, Yunus went out to loan money to women in another village, and another, and another. Again, every single penny was repaid.

Today 27,000 staff members at Grameen Bank bring the bank to 7.5 million of the poorest borrowers in Bangladesh. Taking the bank to the people is the reason why so many women are able to be involved with microcredit. It’s a system that works because of the conservative and shy society where women are traditionally not supposed to be seen and told it is a man’s job to handle money. Grameen Bank has a payback rate of above 90 percent.

In the beginning, Grameen Bank’s goal was to have a 50/50 ratio of male/female borrowers. When they reached this goal, they realized that they money they lent to women was put to better use in families and communities. Today they focus on giving these loans exclusively to women.

Every woman who has a loan with Grameen Bank is also required to open a savings account and place a certain percentage of her earnings into this account. This rule has made women comfortable with the banking system and enables them to save for their children’s education. “If you join Grameen Bank, your children will go to school,” states Dr. Yunus, “in fact many of the children are the best performing in their class.” This is phenomenal considering they come from the poorest of the poor families in Bangladesh. Not only is the new generation attending school, but also Grameen Bank has found several of these children from illiterate families moving on to higher education.

By 2030, Grameen Bank intends to eliminate poverty in Bangladesh by improving life circumstances for women through these microloans.