Interview with Professor Muhammad Yunus, Founder of Grameen Bank

By-
Editorial Board

Editor

Dr Toh Han Chong

Deputy Editor

Dr Tan Yia Swam

Members

Prof Chee Yam Cheng

Dr Martin Chio

A/Prof Daniel Fung

Dr Hsu Liyang

Dr Lim Boon Leng

Dr Jeremy Lim

Dr Tan Poh Kiang

Dr Tan Wu Meng

Dr Teo Eng Swee Cuthbert

Ex-officio

Dr Wong Chiang Yin

Dr Abdul Razakjr Omar

Editorial Manager

Ms Krysania Tan

Editorial Executive

Ms Gracia On

Date – 12^th DECEMBER 2008

Dr Toh Han Chong:

Microfinancing has been a

socio-economic revolution in bringing the poor in

Bangladesh towards a better and more meaningful

life. Briefly, how did this revolution begin?

Professor Muhammad Yunus:

I w a s te a ch i n g

economics at Chittagong University after the war

which resulted in an independent Bangladesh in 1971.

A terrible famine took place in 1974, and all our hopes

for a bright new Bangladesh were challenged.

I felt useless teaching theories of economics in

the classroom when in the villages around my

university people didn't have enough to eat, and

people were dying in the streets of Dhaka. I decided

to go outside the classroom to see how I could be

useful to just one person. That is when I came across

the phenomenon of loan sharking. I was shocked to

discover that people in the villages were enslaved to

loan sharks who lent money to them at exorbitant

rates of interest. I decided to make a list, and found

42 people who were trapped in a terrible situation

for having borrowed a total of US$27. Not knowing

what to do, I offered US$27 from my own pocket to

free them from the clutches of the moneylenders.

Those 42 people were overjoyed; and when they

were able, they repaid me every cent. I thought to

myself, if I can make so many people so happy with

so little, why shouldn't I do more of it? That was

the birth of Grameen and microcredit.

THC:

It seems that even among the urban poor

in the United States, the Grameen model has been

transformational. How can such a microcredit

system be sustainable outside a society that is

homogenous in religion, ethnicity and cultur such

as Bangladesh?

M Y:

The Grameen system has been implemented in

many contexts around the world including the United

States, and has proved to be effective in very different

cultural, ethnic and socio-economic settings. The

issue is that if you can design a user-friendly system of

affordable finance for people who currently don't have

access, then there is no reason it should not work. As

you mentioned, we have a very successful Grameen-

type microcredit program operating in Jackson

Heights, New York which is working very well.

THC:

Why the focus on women, especially in

traditionally Asian societies where men are

meant to be the key providers?

M Y:

When we started out, we lent to both men

a n d w o m e n e q u a l l y. O v e r t i m e w e n o t i c e d

something interesting. The loans that went to

the families through the women appeared have a

greater developmental impact on the family. They

tended to use the increased income towards the

welfare of the family ; such as on their children's

education, food and health. We then shifted our

focus to women, and today 97% of our borrowers

a r e w o m e n . B e c a u s e o f o u r e x p e r i e n c e i n

Bangladesh, microcredit programmes all around

the world have given priority to women.

THC:

I hear that the then-Governor of Arkansas,

Bill Clinton, was a huge suppor ter of bringing

the Grameen movement to the United States?

M Y:

Bill and Hillary Clinton were early supporters

of our work. When he was Governor of Arkansas,

Bill Clinton set up a Grameen-ty pe programme

in his state called the Good Faith Fund which

still exists today. He and Hillary remain strong

s u p p o r t e r s o f o u r w o r k , a n d b o t h c a m e t o

Bangladesh to see our work first-hand.

THC:

Surely the poorest in societ y would use

b or rowe d m on e y to buy m ore fo o d , cl o t h i n g

and other consumer goods than to use it for

micro-enterprise?

Professor Muhammad Yunus in his youth.

(Photo credit: www.muhammadyunus.org)

the dynamism of the market in to solve social

problems, I think the world would move in the

right direction. I discuss these ideas in my book

"Creating a World Without Poverty" which came

out early this year.

THC:

O n e c r i t i c i s m o f s o m e m i c ro f i n a n c i n g

o r g a n i s a t i o n s i s t h e h i g h i n t e r e s t r a t e s t h e y

are charging as lenders. For example, Mexico's

Compartamos is run as a sophisticated for-profit

market-driven bank. Is this antithetical to the

spirit of microfinancing or a natural shift towards

a more efficient, realistic and workable model?

M Y:

For Grameen Bank, microcredit is intended

to help poor people work their way out of poverty.

We set out to replace the moneylenders profiting

off poor people's misery. I have spoken out

against high-interest microfinance programmes

which are just new generation of moneylenders.

You can have healthy and sustainable microcredit

programmes without being exploitative.

THC:

Who have been your influences in shaping

your beliefs and passion in social enterprise and

working for others?

M Y:

My inspirations are the women I have met

in the villages, who despite all the odds against

Professor Muhammed Yunus with the borrowers and their children. (Photo credit: Grameen Bank)

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December 2008 Vol 40 (12)

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Page 5

M Y:

The pre-condition to receive Grameen's loan

is to use it for income generating purposes, and

our outreach workers check onsite that the loan

is invested for the pur pose it was taken. That

will ensure that borrowers will be able to repay

the loans and increase their income. Microcredit

has been shown to help households manage their

finances better.

THC:

Is the Grameen philosophy one of

" g r e e d l e s s C a p i t a l i s m " o r " S o c i a l i s m w i t h

individual empowerment"?

M Y:

I would not say the Grameen philosophy

falls into either of the above. I have descr ibed

capitalism as it exists today as being incomplete;

meaning it now only has space for profit-

maximising businesses. I argue that if the

capitalist world could also accommodate social

businesses, then we would not see the problems

that we se e to day. I define so cial business as

non-loss, non-dividend companies designed to

address a social goal. We have created a few in

Bangladesh to address malnutrition in children,

safe drinking water for rural areas, and others.

There are many people who want to change the

world, but the marketplace is not open to them.

They have to do good things for society through

charities or non-profit organisations. If we bring

them, strugg le daily for dig nit y and to create

a good life for themselves and their families. I

discovered through my work about the hard work

and creativity of the poorest people, who only find

themselves in the situation they are in for a lack of

opportunity. I believe that if we can just provide

the opportunity to poor people, there is no reason

for poverty to remain a part of our societies.

THC:

S o m e o f t h e c h a l l e n g e s t h a t w i l l r i p

through the poor and lower middle classes w ill

b e health and natur al disasters. How did the

Grameen model overcome these obstacles?

M Y:

The poor people of Bangladesh have to face

natural disasters regularly because our country is

particularly vulnerable to cyclones, tidal waves and

floods. But over the years, they have developed the

capacity to cope with these disasters. For example

Cyclone Sidr which struck southern Bangladesh in

November 2007 resulted in much less loss of life

than expected. Grameen Bank as I mentioned before

is an organisation dedicated to the welfare of its

members. In times of disaster we turn ourselves into

a humanitarian organisation dedicated to help the

families of our borrowers overcome the disaster.

You are r ig ht to mention healthcare as being

the most imp or tant chal lenge for us. Studies

have shown that it is healthcare issues that can

erode the gains that borrowers make through the

microcredit activities. For this reason, Grameen

i s n ow em b a r k i n g on s om e m a j or h e a l t h c a re

init iat ives in B ang ladesh w hose pr imar y go al

will be to improve access to healthcare for the

rural poor.

THC:

Healthcare and

pharmaceutical companies are

largely profit-driven, and free

market forces and competition

seem to be key drivers of

p r o g r e s s a n d i n n o v a t i o n i n

h e a l t h c a re . How t h en do we

address access to health across

social classes?

M Y:

If healthcare and

p h a r m a c e u t i c a l c o m p a n i e s

w e r e d e s i g n e d a s s o c i a l

businesses which I descr ibed

before, I am sure this could be

addressed to a large degree. The main outcome

would be drugs being available at a price close to

its costs instead of the high prices that they are

currently available at.

THC:

Do you feel that it is right to trade in live

human organs like kidneys at all, or should it

be endorsed w ithin a regulated marketplace to

reduce exploitation?

M Y:

I oppose the trading of human organs. While

it may bring some income for the poor people, I

think it will be difficult to prevent exploitation.

Sometimes people are moved on humanitarian

grounds to donate organs. If organs are turned

i n to co m m o d i t i e s , t h i s w i l l b r i n g d i s a s t ro u s

results to the poor people. Out of necessity,

exchange of human organs w ill continue to take

place. Instead of banning it, it should be done

under government super v ision in ver y specific

places and in transparent ways.

THC:

What is the mission and vision of Grameen

Healthcare?

M Y:

Grameen Healthcare's mission and vision is

to deliver radically affordable, sustainable and

world class quality healthcare for all.

THC:

Can you describe Grameen's health care

plans?

M Y:

We a r e e s t a b l i s h i n g G r a m e e n H e a l t h

(GH) with the aim to extend the success of

microfinance to healthcare. The mission of GH

i s to e s t a bl i s h su s t a i n a bl e b e s t pr a c t i ce s i n a

broad range of healthcare ser v ices for a broad

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SMA News

December 2008 Vol 40 (12)

Page 4 – Interview With Professor Muhammad Yunus

Page 6

Dr Toh Han Chong and Professor Muhammad Yuus (second and third from left) discussing

socially responsible healthcare over breakfast in Dhaka.

Page 5 – Interview With Professor Muhammad Yunus

market including the poor. GH w ill enable the

p o or to b e s e l f - su f f i c i en t i n a d d re s s i n g t h e i r

healthcare needs such that they can accept but

n o t re q u i re o u t s i d e a s s i s t a n ce . T h i s m i s s i o n

w i l l b e d e ve l o p e d i n a n u m b e r o f w ay s t h a t

complement one another:

Firstly, GH will design and develop a bottom-up

healthcare infrastructure that takes lessons from

successful effor ts around the world and improve

upon them to deliver the highest quality health

care in an efficient and sustainable manner,

primarily to the poorest of the poor but also to

the non-poor, who may pay a little more than

the target population.

We plan to create an integrated health network,

combining a leading academic university and

h o s p i t a l c e n t e r " h u b " i n c l u d i n g a n u r s i n g

college, with a network of primar y and specialist

clinics such as a Mother and Child Clinic that

prov ides care in critical focused areas and rural

clinics that bring health care to the doorsteps of

patients. These clinics w ill be modular so that

they can be built step by step once sustainability

has been demonstrated.

In addition, we would like this integrated health

network to include information architecture such as

electronic medical records, telemedicine, decision

support and other IT tools for physicians, nurses,

technicians, other health professionals and patients

at the point of care. This information architecture

will feed into existing public health education

programme, including formal health training and

informal education opportunities designed like

the regular weekly meetings between microfinance

banks like Grameen and their borrowers.

Everyone will pay something for their care at the

point of service, but no one will be turned away

because of an inability to pay. Payment at the point

of service is important because it establishes the

value and sustainability of the service and affirms

the rights and self-respect of patients and providers.

Those who are unable to pay w ill be asked to

promise some payment at a future date, but no

one will be turned away. There will be tiered pay

schemes, catering to several levels of income.

We are currently looking for local and

international par tners to work w ith us on the

Grameen Health initiatives.

THC:

Operating costs of setting up medical

centres fully loaded with medical specialists and

technology in rural areas must be more difficult

than even rural banking systems?

Professor Muhammad Yunus talking to borrowers at one of the Grameen Bank Centres in Bangladesh. (Photo credit: Grameen Bank)

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December 2008 Vol 40 (12)

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Page 6 – Interview With Professor Muhammad Yunus

M Y:

While it is challenging to set up a sustainable

healthcare system at the grassroots level, it is not

impossible. We already have 38 rural healthcare

cl i n i c s t h a t a re op e r a t i n g o n a n i n c re a s i n g l y

sustainable basis. We hope to extend this system

to other par ts of Bang ladesh and to link to a

system of other hospitals and medical centres

at the urban level.

THC:

Is globalisation good for the world's poor?

M Y:

Globalisation, if steered properly, can bring

more benefits to the poor than its alternative.

We have to create a level playing field so that the

poor, and not just the rich and well-connected,

can benefit from globalisation.

THC:

What is most rewarding so far as a pioneer

of the global microlending revolution and socio-

economic development?

M Y:

It is rewarding to see work we have done

r e c o g n i s e d b y t h e No b e l Pe a c e Pr i z e , w h i c h

h a s g iven e ven g re a ter v i s i bi l i t y to o u r wor k

a n d m e s s a g e . T h e r e a r e n o w G r a m e e n - t y p e

programmes in nearly every country of the world.

We are contacted by people from many countries

and fields wanting to work with us to change the

world. This, to me, is most rewarding.

THC:

In these uncertain times when the world’s

financial system is facing its deepest crisis after a

series of poorly regulated financial and banking

practices, does the free market capitalism

model of today need more or less government

intervention?

M Y:

Right now I don't see any alternative to a

government bailout of these banks. But bailouts

and government inter vention is not a long term

solution for market problems. A market must

have built-in mechanisms to protect itself from

the occurrences of such crises. A market must be

developed as a self-cor recting system. It cannot

be left as a wild party of some money-hungry

people and organisations.

I am not a big supporter of over-regulation,

but clearly there is something w rong w ith the

regulator y system as it is today. The regulator y

system could not grow in step with the market;

while the businesses in the financial market

became more complex and opaque, regulators

remained helpless in bringing transparency into

the system. The market turned into a casino.

I am not arguing for more regulation, I am

insisting on dev ising appropr iate, efficient and

focused regulation.

 

Source - http://news.sma.org.sg/4012/Feature.pdf