Muhammad Yunus was speaking at Bookpeople yesterday about his loaning practices that led to his Nobel Peace Prize in 2006.
Yunus started his bank after a long stint of frustration. He found village after village of poor people in Bangladesh being taken advantage of by loan sharks. There was one case of 40 people who were loaned a total of US$27 (all loans under $1 for mostly emergency needs) but the ridiculous interest rates of the loans kept them in a stressful financial situation. There was no hope of bettering themselves or creating their own business. Banks do not loan to poor people. Yunus tried to convince the banks to give it a try but the system is too well established for only loaning to those already rich.
And so Yunus created his own bank, the Grameen Bank, that believed there could be a new model for business–not just to maximize profits, but also to do good. Since opening, the bank has issued millions of micro-loans (usually $100-$200) to the poor for starting a business, improving a house, bettering their lives. They have maintained a 98% repayment rate and have allowed millions of poor families to escape poverty, while requiring the children of the families to attend school.
It’s a system that works and should be adopted by other businesses–a form of social business, where the bottom line is not the only driving force. Because as humans, making money should not be our only goal in life. There are worthy causes and needs outside of our own self-interest, but they will only be addressed if we can look outside of ourselves.
Yunus was a humble, cheerful man who presented his discovery as a process of seeing a problem and dedicating his efforts to fixing it.
His new book is entitled Creating A World Without Poverty, and he truly believes this is possible. He believes because he has seen first-hand again and again that people are living in poverty not because they can’t offer anything, but because the system we’ve created never allowed them the opportunity.
It was a moving and inspiring hour to hear him speak–and made me want to be even more active in my own personal microloaning through Kiva.org.
I’ve incorporated giving back in the form of making Kiva loans with 40% of the profit from my exhibits.
