Posted by: pgprm08 | December 8, 2009

Review of the book “Banker to the Poor”- by MUHAMMAD YUNUS- by LG 9


ABOUT THE AUTHOR:

Prof. Mohammed Yunus is a Bangladeshi banker and economist. He previously was a professor of economics where he developed the concept of microcredit. These loans are given to entrepreneurs too poor to qualify for traditional bank loans. Yunus is also the founder of Grameen Bank in 2006; Yunus and the Grameen bank were jointly awarded the Nobel Peace Prize, “for their efforts to create economic and social development from below.” Yunus himself has received several other national and international honors.

REVIEW OF THE BOOK:

Banker To The Poor is an astonishing story of how a man with a vision, strong values and tremendous patience could change the status quo and how he established a completely new and revolutionary institution of Micro Credit in the form of his Grameen Bank.

Yunus begins the book with describing the things which motivated him to start the Grameen Bank and how he analyzed the root cause of the misery of the rural women of Bangladesh who work hard day and night and are still not able to get out of the clichés of poverty, thanks to the middle men and money lenders. So he found out that how a meager loan can free the whole village from the poverty. Then he has taken a critical view on the donor system that prevailed at that time. He has discussed in detail his conflicts with the World Bank. He has justified his views against the system of donor funding with the help of the case of a beggar and how a person paying him few pennies is spoiling his life. He rejected huge amount of loans from World Bank and his success also influenced the senior leadership of World Bank to change their views.

Then he talked about his childhood and student life experiences. He had undergone lots of contrasts in his life. At one point of time they were a very happy family before his mother suffered from a mental illness which worsened with time. He was very close to his mother and he felt she had lots of influence on his life. He also admires his father. His father never accepted defeat and struggled a lot to make things better for the family. His father valued education a lot and he made sure that all his children got the best of it. He also talks about how he proved himself by successfully starting a business of packaging material. Then he shares his experiences in America where he pursued his PhD. He has analysed the differences in his country and America. He has also talked about two of his teachers who he admired a lot. One was from Chittagong College and one was the Romanian professor in his American university.

Yunus has given a detailed account of how he participated in the political movement for the formation of Bangladesh. At that time he was teaching at Middle Tennessee State University. On 25th March 1971, the liberation war started in Bangladesh and Yunus’ earlier plans to return to Bangladesh were cancelled. He started keeping a close watch on the events in Dhaka. He had always felt for his motherland and always wanted to do something for it. The incidences back home provoked him to take action. He formed a local community of Bengalis and gave interview to the press urging American government to put pressure on Pakistan government. Through this community he did everything he could to bring this issue to the notice of international community. Later, on 16th December 1971, Bangladesh won the war of independence but the country was ruined by then. The economy was shattered. Many people were killed and many were residing in the refugee camps of misery. At this moment, Yunus decided to go to Bangladesh to participate in nation building.

Yunus returned from America in 1972 with a lot of idealism and hope. He joined the planning commission but felt dissatisfied with his work. Therefore, he decided to join Chittagong University as a professor.

Out of his genuine concern about the world around, he kept asking many “how to” questions as well as many “why” ones. His approach was always that of a problem solver. When he discovered that on-campus housing is leading to a waste of precious asset like university after 2 pm till next morning. He wrote a report after proper research and gave it to the press and the secretary of education. When 1974 famine occurred, he became agitated. He went to the Vice-Chancellor of University and asked him to write a statement to the press so that people start talking about it. His logic was that the Vice-Chancellor was a respected man and his words will catch the attention of the intellectuals.

He did not like to sit idle about something he felt needs to be changed. Even before trying the Grameen model in the village near his university, Yunus had experimented with many innovative ways which he thought would bring a change to the life of the villagers. These experiments included the experiment of farming to demonstrate to the farmers how to grow more in each cycle which he carried out with the help of his students and setting up a new type of agri-cooperative called the Three Share farm experiment. Some of these experiments were a success, some were not. Yunus invested in these experiments on his own though he suffered a loss at times. This shows the entrepreneurial and risk taking qualities in him. But he realized that the benefits of these land based experiments are not reaching to the real poor of the society. This made him look for a model that would maximize the profit for the poorest. This led him to devise new definition of poverty where it could be precise and dependent on all the possible indicators including gender.

He had once given $27 as loan to 42 people and he had experienced the happiness that such a small sum could bring to so many people. He thought of organizing an institutional arrangement so that the poor ones could get credit when they needed and this made him visit the Janta Bank’s branch near the university campus. There he realized that the branch manager was resistant and had a long list of vague reasons for why the poor could not avail the loan. The most prominent reason was that the poor did not have any collateral against which they can avail the loan . Yunus found it ironical. The one who has money will get loan and one in real need will not because he does not already have it. He met with regional manager as well but the situation was no different than the local branch. He finally got him agreed to grant a loan of 10,000 Takas and he agreed to act as a guarantor. This was when he understood the basic exploitative principle of banking and this led him to devise a new credit delivery mechanism all together.

Yunus points out his reasons for following the strategy of lending to women and why lending to women is more than just making credit available. It should be seen as a developmental tool and can bring about significant changes in society and play a very important role in touching lives and upliftment of the poor.

Here, we would like you all to go through the following excerpt from the book in which Yunus describes how a group is formed by Grameen members and how they have to go through a test before joining. This unconventional criterion of an “entrance test” for being the member of the bank introduced by Grameen was answer to the question faced by them as to “How to ensure that only the real poor and needy joined the bank?”

Page no. 106 ………..It is not easy to form a group. What happens is that a prospective borrower has to take the initiative to form a group and to explain how the bank works to a second person (not a member of the family), and she has to convince the second to want to join. If this is the first time Grameen has entered the village, it will not be easy. Usually, the first will have to try various friends who will be terrified, or they will have excuses, or their husband will not allow them, or they are simply against the idea of being indebted to any one, ‘No, I can’t, this is terrible.’ But eventually a friend will have heard what Grameen did for other households and will say, ‘Okay, let me think about it, come back tomorrow.’

Then the two will go out and each one will seek out a third member, and a fourth, and a fifth. And finally when they are ready, it often happens that one of the five members comes to her friends and says, ‘No, my husband has changed his mind, he won’t let me.’ So the group falls back to four, or three, or sometimes back to one. And that one has to start all over again. Then each prospective borrower has to go through a lot of training so that they fully understand what we are about.

Often the night before a borrower is accepted into Grameen she is so worried and nervous that she goes and prays to Allah to help her out; she promises to light a candle in some saint’s shrine. And some are so nervous that they cannot stand the pressure, and even the night before passing the entrance test, it often happens that a prospective member will tell her friends in the group, ‘No, I cannot do this, I want to drop out.’ And then the four remaining ones have to request that Grameen give them a later date for the test by which time they will have a fifth member for the group. But finally on the day selected, each of the five members in the group are separately tested on what they have learned about Grameen. They know that if they fail, they will let down not only themselves but also the others in their group. They have to answer questions like: ‘What is the group fund?’

They don’t have to write anything down – most of them don’t know how to read and write – but it must be clear that they understand what they are saying. If a prospective borrower fails to answer correctly, the bank worker will tell the group to study some more. Others in the group will tell her, ‘For God’s sake, even this you cannot do right! You have ruined not only yourself but us as well.’

This process assures us that only those who are really desperate and tough will become members of Grameen.

A poor woman in Bangladeshi society is forever insecure and hence given the smallest opportunity to pull herself out of it, she grabs it. It only reiterates the fact that the poor and marginalised when given the opportunity can and do grab it to pull them out of the vicious circle. Yunus also goes on to outline some of the obstacles that he faced in reaching out to the women and that brings us to our “how to” question.

There was opposition from the Husbands, the local money lenders and to make matters worse, from the Government officials. As a reader the point that struck us here was that Yunus had unwavering faith in his belief that lending to women was the way ahead. That is one of the hallmarks of an entrepreneur, the ability to believe in yourself and your idea, when the whole world questions it.

Yunus is candid enough to admit that he made certain mistakes when trying to deal with the opposition that he faced. It is however, his ability to first recognise the mistake and then to be able to learn from it that has a lesson for us.

A major challenge for Yunus was to get women interested in the model in the first place. This could not simply be achieved by publicity campaigns. Then provides a very interesting description of how this challenge was over come. There were some cultural issues as well like the “purdah” system and how it was an obstacle to reaching out to women. Yunus narrates some wonderful stories of the kind of fear that women had about borrowing and the taboos that had created a fear of achievement in their minds. Yunus also touches upon perhaps what is the single biggest reason for Grameen’s success, the ability to look at their customers as human beings, rather than as mere sources who need credit. One of the excellent features of this book is Yunus’s ability to cite stories from his personal experiences to highlight the problems that were faced by him and the simple but effective means that he employed to solve them. This ensures that the reader gets engrossed completely in the book and also makes some very entertaining reading.

In his beautiful manner of storytelling, Yunus describes how Grameen Bank started operating successfully with its first branch at Jobra and then at the district Tangail. He describes in detail how the Grameen managers differentiated themselves from the government officials with their simple lifestyle and hardworking nature. In the chapter 19 of the book, Yunus has narrated the stories of Grameen managers handling the opposition by conservatives. He writes that impact made by Grameen on rural women was evident through the increased percentage women in voter turnout in 1996 elections. Yunus has also touched upon the strategy followed by Grameen considering the vulnerability of the region to natural disasters.  Yunus has also elaborated a lot about the transparent recruitment procedure, policy to hire only freshers and rigorous training, openness to criticism by trainees that are main reasons behind the innovative and creative manner in which Grameen functions. Grameen also hired some underground fighters as Grameen workers in the villages considered unsafe for working. The decision was innovative and risky but it worked.

He has written about the events that took place and how he had to struggle with government patiently to speed up the passage of his proposal of to make Grameen an independent bank. He has always given emphasis on deliberately progressing gradually. Grameen followed a clear policy of taking the final decision regarding setting up a branch in new village with the consultation of the villagers. He believes strongly that if the idea is genuine and strong, people will themselves overcome the resistance and lend their support. Then he goes on to narrating his experience in implementing the Grameen Model in different countries.

He finds no difference between the poor in different countries, the problems and consequences of poverty are same, the poor are very creative; they know how to earn a living, even how to change their lives, they need opportunity and credit brings that opportunity.

During the replication, Yunus emphasized on 100 per cent recovery, because according to his view it is not merely the money which is reflected through the recovery rate, it is the discipline which speaks loud and clear through this recovery experience. He suggested starting experiment always with the bottom 25 per cent of the population and focusing on the poorest women. Also he emphasised that before starting implementation of Grameen model there should be a thorough understanding of Grameen’s works, its philosophy and procedures. He believes in practical innovations and modifications when applying Grameen model in different parts of the world.

Yunus has also described his Philosophy on free market, capitalism, economic opportunities for the poor, government bureaucracy, microcredit and on the Grameen Model. He has discussed on self employment and its advantages and population problems. He discussed how the present credit systems (banks) failed to address the poor.

According to his view, Poverty is not created by the poor; it is created by the structures of society, and policies pursued by society.  He believes that the poor are potential entrepreneurs like all other people only thing is that they had not got an opportunity. He emphasised on utilising existing skills of the poor rather than teaching new skills and giving credit access allows them to utilise their own skills immediately.

Yunus has explained how Grameen Bank has expanded to cover many functions which have little or no relation to do with their profit margin. Yunus does not only have a commercial motive, but he has a social motive too. So Grameen bank has expanded into other areas like health insurance, housing loans, fishery sector, and education loans to improve the quality of life of its borrowers, as well as that of the community in general. He was looking at market oriented ways of improving the social infrastructure which the Govt. is not providing, or is providing inadequately. But it was not an easy shift for Grameen Bank & they faced many difficulties.

In the last chapter of this book he has explained how people’s mind has been changed & more number of people has started giving support to the poorest. Most of the people have also realized that microfinance is a strong tool for poverty eradication. He also mentioned that for a poverty free world easy access to information & free flow of commodities, finance & people are very much important. He ends with his idea of a poverty free world and how it could be achieved.

As a reader, it was amazing to note that throughout the book, Yunus has never left a single opportunity to acknowledge the efforts and support of his colleagues and members of Grameen in the whole journey of Grameen Bank. If we look at the book from the point of view of Social Entrepreneurship course, it definitely offers various lessons for aspiring social entrepreneurs like us. One of the very important lessons to be learned from Yunus’s story is that a future “social entrepreneur” always keeps on questioning the status quo to come with a promising idea. He has to try out endless number of experiments before finally arriving at the best way to operationalise his idea and thus we should keep in mind that there are no shortcuts to such experimentation. We should also learn from Yunus that when we face social resistance in implementing any idea- what we should have in plenty is patience! Lastly, we should be courageous enough to recognize our mistakes and wise enough to learn from them.

To give a concluding comment on the book, our group felt that thought the book is written in a very narrative style and the story telling manner actually makes it very interesting to read but for an entrepreneur or manager who would like to learn a few things from Yunus about how he handled the various technicalities and how he took the strategic decisions at various points of time during the journey of Grameen Bank, the book does not provide much inputs in this regard. Yunus has definitely touched upon these things but probably he has not dealt with them in detail.

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