Banker to the Poor by Muhammad Yunus
April 17th, 2008Title: Banker to the Poor
Author: Muhammad Yunus
Publisher: PublicAffairs (2003)
Do you know what micro-lending is? Basically, micro-lending is when a person or organization lends a very small amount of money to a poor person. Then that poor person uses that loan to start a business in hopes that the business will pull them out of poverty. As it ends up…micro-lending is extremely effective. Banker to the Poor: Micro-Lending and the Battle Against World Poverty by Muhammad Yunus is an autobiography and the story of how Grameen Bank got its start. Grameen Bank was the first organization to attempt microlending as a vehicle to end poverty.
In very poor areas of the world, like Bangladesh…where this book takes place, it is very difficult to get out of debt and into a cycle of self-sustainability. Loans are available to people by local “lendingmen”, but they generally charge extreme interest rates making it nearly impossible to be relieved of a poverty stricken life. That’s where Grameen comes in. They offer the villagers loans at 20% interest…with no collateral or previous credit. They also do not require the borrowers to pay back at any particular time. Of course, they set up a program for the borrowers to follow, and if they do not repay the loans at all, they can’t borrow again. But Grameen boasts over a 98% repayment rate, which is outstanding.
These loans allow for the villagers to start their own businesses doing what they already know how to do. They weave baskets, make food, etc.. These loans allow the borrowers to purchase raw materials and make a profit…and repay the loan. There are plenty of success stories where people have broken the poverty cycle and now live self sustained lives.
One interesting aspect of Grameen Bank is that they lend predominantly to women. This causes some issues in these poor villages because women are not generally considered worthy of handling money or running businesses. They are pretty much second class citizens. But what Grameen found out was that lending to a women had a much larger impact than when they lent to men. Yunus said that when a man would make extra money he would spend it on himself. But a women would spend the money on her family or housing improvements. For some reason, when I told my wife that story…she wasn’t surprised. Weird.
The book is actually Yunus’ life story and how he came to start Grameen Bank. Yunus is a fascinating person, and I would venture to say that by creating the micro-lending culture, he has done more to alleviate world poverty than all the governments combined. He is an amazing man, who was recognized as such when he won the Nobel Peace Prize in 2006.
If you are interested in reading more about micro-lending…read this book. I also recommend getting involved with Opportunity International, a US based micro-lending organization. I believe you really are changing lives when you donate your time or money to these organizations.
Rating: 5 out of 5
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April 17th, 2008 at 6:50 pm
Christian missionaries have historically helped the people where they were serving: agriculture; language development; etc. I know of some missionary organizations (epecially CBMC) that are using microlendin in the same way.
July 23rd, 2008 at 2:51 pm
I was at the UIA conference in Torino on July 2/2008 where I heard Mr. M.Yunus speak to a large audience of Architects from all over the world. I was extrermely fascinated with his achievements through his life. The world needs many more like this formidable man. I had heard about his good work before but listening to him in person was a wonderful experience for me.
Congratulations and continued success to Yunus
Edward Cuhaci
Architect
Ottawa Ontario Canada
November 14th, 2008 at 9:20 am
[...] their efforts to create economic and social development from below.” He is the author of Banker to the Poor and a founding board member of Grameen Foundation. He is one of the founding members of Global [...]
April 17th, 2009 at 2:41 am
[...] in poor countries (I recommend reading what Muhammad Yunus has to say on such things; I found “Banker to the Poor” quite [...]
October 4th, 2009 at 1:58 pm
[...] Partly because he told the story of Muhammad Yunus’ Grameen Bank, which I also wrote about in my review of Banker to the Poor. This chapter discusses the health care “90-10″ rule: for every dollar spent worldwide [...]
October 15th, 2009 at 7:03 am
i will like to now more about micro loans;how it how it started till date;