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2008-02-12

Nobel Laureate and "Banker to the Poor" Muhammad Yunus on Micro-Lending, Its Critics and the Bush Administration’s Negative Impact on Global Poverty

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Guests

Muhammad Yunus, founder and managing director of Grameen Bank and the winner of the 2006 Nobel Peace Prize. He is author of the bestseller, Banker to the Poor. His latest book is Creating a World Without Poverty: Social Business and the Future of Capitalism.

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Muhammad Yunus won the 2006 Nobel Peace Prize for pioneering a microcredit program that helps hundreds of thousands of impoverished Bangladeshis — mostly women — by providing small unsecured loans, which are then repaid. He is author of the new book Creating a World Without Poverty: Social Business and the Future of Capitalism. [includes rush transcript]

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: “Banker to the poor,” Muhammad Yunus is the Bangladeshi economist who was awarded the 2006 Nobel Peace Prize. Yunus shared the Nobel with the Grameen Bank, which he founded three decades ago. The microcredit program he pioneered has helped hundreds of thousands of impoverished Bangladeshis, mainly women, by providing small unsecured loans, which are then repaid. Yunus accepted the Nobel award in Oslo a little over a year ago.

    MUHAMMAD YUNUS: Poverty is the absence of all human rights. The frustrations, hostility and anger generated by abject poverty cannot sustain peace in any society. For building stable peace, we must find ways to provide opportunities for people to live decent lives. The creation of opportunities for the majority of the people — the poor — is at the heart of the work that we have dedicated ourselves during the past thirty years.

AMY GOODMAN: Muhammad Yunus is the first Nobel Peace Prize winner from Bangladesh. He has just come out with a new book called Creating a World Without Poverty: Social Business and the Future of Capitalism. Muhammad Yunus joins us for the rest of the hour in our firehouse studio.

Welcome to Democracy Now!

MUHAMMAD YUNUS: Thank you.

AMY GOODMAN: Before we talk about microloans, I wanted to deal with this terrible issue that has just arisen in East Timor. A fellow Nobel Peace Prize laureate, Jose Ramos-Horta, now in the hospital in Australia, he has survived an assassination attempt, two bullets to his chest and his stomach, though he’s in very serious condition. You know Jose Ramos-Horta.

MUHAMMAD YUNUS: I know him very well. He’s a very good friend. I have known him long before he received the Nobel Peace Prize. He was a very enthusiastic supporter of microcredit. He has been pleading with me to come to East Timor to start a program, and I did when he was the prime minister. And then, this is still running. I was shocked to hear this news, and I sent him a message, and we are all praying for his life so that he comes back to full health.

AMY GOODMAN: For those of you who may have missed it, the president of East Timor, Jose Ramos-Horta, as well as the prime minister, both, there were assassination attempts on their life. Xanana Gusmao was not hit. Jose Ramos-Horta was.

Well, Muhammad Yunus, explain microcredit. Explain the whole idea behind the Grameen Bank.

MUHAMMAD YUNUS: The idea is, an overflowing majority of the people in the world don’t have access to financial services from the conventional financial institutions, the banks, so they’re left to the loan sharks, moneylenders. So we know about moneylenders, loan sharks, all the time. We read about them, we hear about them, but don’t do anything about them. So it continues, it flourishes.

So in one of my experiences in Bangladesh, I saw an extreme situation in a village, where money lending was still going on and people are becoming victims, so I wanted to address that issue in that village level. So I made a list of people who were borrowing from loan sharks. When my list was complete, there were forty-two names on my list, and the total money they borrowed was $27. This is back in 1970s, early ’70s. And I was shocked that for such a small amount of money, people have to go through such a horrible experience. So I thought I can solve the problem. It’s very easy. If I give this $27, they can return the money to the loan sharks, and they’ll be free. And that’s what exactly I did. And it created such a sensation among them.

I thought if you can make so many people so happy, such a small amount of money, why shouldn’t you do more of it. So I wanted to do more of it by linking them with the bank. Bank said, no, bank cannot lend money to the poor people. So I’m with this issue: why can’t the bank lend money to the poor people? So for months I was struggle. Finally, I persuaded them by offering myself as a guarantor. I said, “I’ll sign all your papers. I’ll take the risk. And you give the money.” That was the beginning in 1976. And it worked.

So gradually expanded the program, but banks were not very enthusiastic about it. So I thought, why don’t I create a separate bank for them? So I created a separate bank, Grameen Bank, or Village Bank, and then expanded and expanded. It doesn’t need any collateral, first thing, no guarantee, no lawyers, no legal papers between the lender and the borrower. It’s a trust-based banking. People, particularly women, take small loans, who never did before had any experience of handling money. But for the first time, she takes a little amount of money that she has a — she can organize her courage to do that, and then go into earning money by investing this money, raising chicken, doing some handicrafts and so on, and pay back the bank in weekly installments. That’s what the microcredit is all about.

AMY GOODMAN: Why women?

MUHAMMAD YUNUS: I was complaining against the conventional banks. I said, “Why men?” 100 percent, nearly 100 percent of the borrowers of conventional banks in Bangladesh are men. So I raised the issue. They are not only wrong by rejecting poor people; they are also wrong by rejecting women of all class. So when I began, I wanted to make sure half the borrowers in my program are women. So this is how I started.

And it took a long time, because women themselves said, “No, don’t give the money to me. I don’t know anything about money. Give it to my husband.” I said, “No, that’s not what we want. We want you to look at that.” And we worked very hard to break the fear, because it’s a fear that she was supposed to — I mean, she was hiding behind, because she didn’t want to touch money, this is trouble. So, gradually we peel off the fear and build a confidence in her to try out with small money, $20, $30 of loans. And it worked. She got very excited. She wanted more and continued in it.

Once we achieved that goal of fifty-fifty, then we saw money going to the family through women brought so much more benefit to the family compared to the benefit when you lend the money through men. Women took good care of the money. Women transferred the benefit to the children immediately, improved the household and going towards a better life for themselves in a long-term vision. Men were mostly to enjoy right now, not in a long-term way, in a kind of a readymade way, so that sort of thing. So we changed our policy: we started focusing on women. Today, we have seven-and-a-half million borrowers in Grameen Bank in Bangladesh. 97 percent are women.

AMY GOODMAN: And who runs the bank? The bank is a for-profit?

MUHAMMAD YUNUS: Bank is a for-profit. It’s owned by the borrowers, so the profit goes back to the borrowers again, so that way it’s a full circle. It’s a corporate body. It has a management team, and I head the management team. There’s 27,000-plus employees, the staff of the bank, which go around around the country to serve these seven-and-a-half million borrowers and meet them physically within a week, because we do the business at the doorstep of the borrowers, so they don’t have to come to our office. Office, for us, to keep the records, not for our business. So we do the business at the doorsteps, so women feel very comfortable. She doesn’t have to go any place. She do the business at her place, and so on.

AMY GOODMAN: You have an interesting comparison in your book, Creating a World Without Poverty, to get a sense of the population density of Bangladesh. You squeeze all the people of the United States into Wisconsin, and it’s still not as dense as Bangladesh.

MUHAMMAD YUNUS: That’s fact, yes. It’s amazing how density of population can happen in Bangladesh. Another way I explain, if you take the whole world population, bring it to the United States, the density that you will create by putting six billion people in the United States, today density in Bangladesh is slightly higher than that. So you can imagine how much the density is.

AMY GOODMAN: And yet, since the Grameen Bank has been established, has the level of poverty changed in Bangladesh?

MUHAMMAD YUNUS: It has. It has. Poverty has been declining in Bangladesh very steadily. During the ’90s, poverty has declined on an average of one percent per year.

AMY GOODMAN: About half the people are poor?

MUHAMMAD YUNUS: Used to be more than that, 80 percent poor, and gradually it’s declining. We are one of those countries, I would say lucky countries in the world, which will be meeting the Millennium Development Goal number one, to reduce poverty by half by 2015. So between 2000 and 2015, the poverty level in Bangladesh will be reduced to half. And if we can continue with our progress, most likely that we’ll achieve that goal before 2015. So that’s a tremendous kind of excitement for us.

AMY GOODMAN: Muhammad Yunus, what was the effect of winning the Nobel Peace Prize, you and the Grameen Bank, on the work that you do?

MUHAMMAD YUNUS: It’s a wonderful thing. Of all the prizes in the world, Nobel Prize is unique in its position, the tremendous amount of excitement it generates in the whole world about the prize. The moment the prize is announced, every single newspaper in the world makes it a front-page news. Every television station, it’s a main news item. And people get interested to know what you do, how you got it, what is it that you have done over years. So it creates a lot of attention and awareness.

We have been trying to explain why microcredit is so important for poor people to change their life, improve their income, but not too many people paid any attention to it. The moment the Nobel Peace Prize was announced, everybody wants to hear you, what you did, how you did it. And everybody asks, how can we do more? Can we do something about it? So all the doors which you tried to knock and never opened suddenly open, and people are willing to talk and go from there. So I’m taking, too, advantage of that, and now that I have the opportunity to discuss and explain this so important piece in reduction of poverty, so I’m doing that, and I’m getting good response from people.

AMY GOODMAN: We’re talking to Muhammad Yunus. He’s the Nobel Peace Prize winner, founder and managing director of the Grameen Bank. This is Democracy Now!, democracynow.org, the War and Peace Report. We’ll be back with him in a minute.

[break]

AMY GOODMAN:

Nrityanchal is a Bangladeshi dance troupe that performed in Oslo when our guest, Muhammad Yunus, won the Nobel Peace Prize in 2006. His latest book is called Creating a World Without Poverty. He is the managing director of the Grameen Bank, which gives microloans to women in Bangladesh. He established it more than thirty years ago.

Well, while everyone praises the cause of helping poor women in Bangladesh, some critics say microcredit is being misconstrued as a way of ending poverty. After you received the Nobel Peace Prize last year, we spoke with Vandana Shiva, the world-renowned environmental leader, physicist, ecologist. I wanted to play just an excerpt of what she had to say and then get your response. This is Vandana Shiva.

    VANDANA SHIVA: I’m very happy that the Grameen Bank and Yunus got the Nobel Peace Prize. I would only say, let us not think this is a solution to every situation that creates poverty. It’s a solution in a particular context. But it cannot be the solution when land is being grabbed from the peasants and leaving them in poverty. For example, in this whole land grab under the special economic zones that’s taking place in India right now — and foreign direct investment in real estate is part of the driving force for this — that cannot be solved by microcredit. It needs a solution in terms of respecting the land rights of the peasants and not treating land of the poor as something that can be grabbed by the rich.

    The recent report of Helsinki actually gives worse figures than Muhammad Yunus gave: one percent of the world’s wealthy are owning 80 percent of the world’s wealth. And I would say, they are then turning that wealth into owning 80 percent of the world’s resources, real material natural resources, the land, the water, the biodiversity, the forests, the minerals.

    I think there’s a second context in which microcredit could actually create a problem, and it’s the kind of context in which we have been forced to work. As credit for unaffordable seeds moves nonrenewable seeds, genetically engineered seeds, hybrid seeds into rural areas in India, we are seeing a new kind of debt trap created.

    Farmer suicides, of which there have been 150,000 in the last decade of market opening made possible because of credit, micro and macro. 150,000 is a large number of peasants being wiped out. I have called this a genocide. And it’s being made possible by putting money available, credit available, so that they could get seeds of Monsanto. In fact, it’s a debate, old debate, I’ve had with Yunus, because there was a time he was going to use microcredit to move GM seeds and Monsanto seeds to the Bangladeshi women. And we had to have a debate, and thank goodness he backed out of that agreement. [...]

    Credit, loans, money circulation cannot solve the problems of alienation of participating in earth democracy. Privatization of water leading to a high cost of water could be financed by flows of credit, but the solution to access to water is rights to water. Rights cannot be substituted by credit. Rights need to be recognized as rights and collective rights to the common wealth of this planet—the atmosphere, the water, the seeds, the biodiversity. That needs a rights solution. Credit can come after that rights solution has been offered.

AMY GOODMAN:

That is Vandana Shiva. Muhammad Yunus, your response?

MUHAMMAD YUNUS:

Well, there are several things, and that one is — it’s a misinterpretation of microcredit. We are not saying that this is the solution for all poverty. We are saying this is an important item in solving poverty. Poverty is multidimensional thing; it’s not a single thing. So microcredit is a fundamental issue in bringing financial services to the poor people. What about the education? What about the health? What about the political rights? What about the human rights, and so on? So all these things have to be brought in. We deal with only one aspect: microcredit. And we are saying microcredit should be accepted as a human right. It’s so fundamental, so basic thing to it.

About GMO, about the —- we never did that. This is -—

AMY GOODMAN:

The genetically modified seeds.

MUHAMMAD YUNUS: Genetically modified seed. This was also a misinterpretation. We were accused that we are giving microcredit to buy the genetically modified seeds. Garmeen Bank works with women, with the landless families, extremely poor. They are not farmers. We deal only with women, 97 percent women, only with landless people, extremely poor people. They are not anywhere near farm owners, the farming. They don’t buy seeds in the market. So we have no reason why we should give microcredit to them to buy the seeds, when they don’t have own land at all. So this is an extension to accuse Grameen Bank that they are doing the wrong thing.

AMY GOODMAN:

But the idea that others would embrace it as a way to say this is bringing justice to very poor people, when she says it’s about access to water, not credit, that counts.

MUHAMMAD YUNUS:

I was saying that everything is important. Access to credit is important. Access to water is important. Access to health is important. Access to education is important. Nothing is unimportant. I’m saying we do everything we can. Don’t ignore the others. Just because you do one thing, it’s not because the others are not important. Everything is important. So let’s do it all together. That’s what my new book, Creating a World Free from Poverty, is talking about. It’s creating a different kind of system.

Poverty is not a created by the poor people. Poverty is created by the system. The system includes everything, the institution, the concept, the policies and everything. So we are saying we have to address those things. We are — in our work, in Grameen Bank, we are addressing the financial system. But there are many other systems which needs to be addressed.

AMY GOODMAN:

Explain your idea of social business.

MUHAMMAD YUNUS:

Yes, and I am saying that the conceptual framework of capitalism itself is at fault. That’s what created all the problems. So we have to address that also. And the concept of business, for example, only way the concept of business is defined in a capitalist theory is a business to make money. Profit maximization is the sole mission of business.

And I’m saying this is a misinterpretation of a human being. Human being is not a machine. Human being is not a robot. It’s not a money-making machine. A human being is much bigger than making money. Money-making is an important part of a human being, but certainly it’s not the totality of human being. Human being is much bigger than that. It’s also caring being. It’s a sharing being, wants to make a difference in the world. That part is not included in the business world, in the economic world.

AMY GOODMAN:

Explain the example you begin Creating a World Without Poverty with, and that is the Grameen-Dannon relationship.

MUHAMMAD YUNUS:

Sure.

AMY GOODMAN: That’s Dannon yogurt.

MUHAMMAD YUNUS:

That’s right. So I’m saying there should be at least one more type of business in order to justify the totality of human being. This is a business dedicated to others, not to yourself. The current business is all dedicated to “myself,” everything. I am the center of my business. I gain. So I’m reversing that, creating another business calling, social business, that’s dedicated to others completely and nothing for me. So it’s kind of coming together. We can create those kind of businesses, where it’s a non-loss, non-dividend company with a social objective.

We created several companies, one of them that you mentioned, Grameen Dannon Company. Dannon is a big yogurt company and big water company and so on. But we created a small company in Bangladesh in collaboration with Grameen. This is designed as a social business. The company produces yogurt, but for a specific purpose, to bring nutrition to the malnourished children of Bangladesh. All the micronutrients which are missing in those millions of children in Bangladesh are put into this yogurt, the vitamin, iron, zinc, whatever is missing, into the yogurt — and it’s a fortified yogurt — and make it very cheap so that the poorest children can afford it. And once they eat this as a snack, because it’s a delicious snack that they eat — they love it — so, gradually they will regain their health. The company promised that they will not take any dividend. Grameen will not take any dividend out of it, and Dannon will not take any dividend out of it. Entire thing is dedicated to the social objective. So this becomes an example of social business.

We can create healthcare programs. For example, in the United States, 47 million people don’t have health insurance. We can create a social business to bring social — health insurance to those people, because money profit-maximizing companies don’t want to get there, because they have better alternative to make money, rather than giving health insurance to the people who cannot afford it. So we said this is a case for a social business.

Many people don’t receive healthcare programs in many, many countries around the world. We can create social businesses. There are many diseases in the world, very tough diseases like cholera, typhoid, where the vaccines are available in designs. The whole invention has been made. But it’s not produced because it doesn’t make money. So with a social business, we can create the cholera vaccines, we can create the typhoid vaccine. There are six such what they call orphan diseases, where the vaccines are available in designs, but nobody produces it, because it doesn’t serve the poor people — I mean, it doesn’t serve the interest of the businesses.

AMY GOODMAN:

And those diseases are?

MUHAMMAD YUNUS:

I cannot give you the whole list. I can mention two: one is typhoid, another is cholera.

AMY GOODMAN:

In this country, are there social businesses that you’ve been involved with?

MUHAMMAD YUNUS:

Not yet. Just beginning. One, we created, Grameen America, it’s a social business, because we want to bring the financial services to people who go to the check-cashing companies. Millions of people in this country cannot open a bank account, because banks will not consider them worthwhile to open a bank account for them. They are too small for them, so they cannot open a bank account. When they receive a check from their employer or from the government, they have to go to the check-cashing companies and pay very dearly to get their check cashed. Their thousand-dollar check should have generated $1,000. That doesn’t do it now, because they cannot have a bank account. So we want to open that.

And there are many, many payday loans. You see the advertisements and the commercials in the newspapers and televisions. Payday loans don’t have to be. And you pay high interest rate on payday loans. This is another way of ripping you off, so — because financial institutions, formal financial institutions don’t come into it. There are lots of pawnshops around. So we said we’re going to address that by designing a financial system and social businesses, and address that. So we created this Grameen America and started in Queens, in Jackson Heights in New York.

Once we developed a prototype, we can take it everywhere. That’s what we’re looking for. And there are many more social business funds. We are creating a social business fund. Those who would like to invest in social businesses in the United States, elsewhere, in terms of health insurance, in terms of microcredit, in terms of financial services, in terms of housing, this is the fund, will be available, whoever can come up with the brilliant idea, because it’s a question of designing an innovative idea in a social business, to address all the problems we see around us.

AMY GOODMAN:

Muhammad Yunus, I wanted to switch gears a bit. In your acceptance speech for the Nobel in Oslo in 2006, you said poverty is a threat to peace. You also criticized the Bush administration’s so-called war on terror.

    MUHAMMAD YUNUS:

    ’Til now, over $530 billion has been spent on the war in Iraq by the USA alone. I believe terrorism cannot be won by the military action. Terrorism must be condemned in the strongest possible language. We must stand solidly against it and find all the means to end it. We must address the root cause of terrorism to end terrorism for all time to come. I believe that putting resources into improving the lives of the poor is a better strategy than spending it on guns.

AMY GOODMAN:

Muhammad Yunus in Oslo, receiving the 2006 Nobel Peace Prize. The effect of the war in Iraq?

MUHAMMAD YUNUS:

Yeah, it’s — my first comment would be, we started this millennium, 2000, with a tremendous amount of euphoria, tremendous amount of excitement. Cold War is out, and things are taking to shape. Now we can put our resources, our attention, our policies to solve the problems of poverty, diseases and all those things. And we adopted in the Millennium Summit in New York City the Millennium Development Goals, beautiful goals. For the first time in human history, all the nations of the world got together and decided that we want to reduce poverty by half by 2015, in fifteen years’ time. It’s a tremendous amount of exciting decision. And that was a starting point.

And a few years later, couple of years later, we start with war, war on terror, and all our resources, all our attention, all our discussions are concentrating on terrorism. Forget about what it’s all about. So we derailed ourselves completely about creating a new millennium, creating a new society, changing the world with the technology coming in, with all kinds of brilliant things on the table. We could have done that, but we completely removed ourselves. Billions of dollars went into a war, which we have not achieved anything. Terrorism didn’t disappear.

I said terrorism — we have to address the basic issues of terrorism. If there’s a frustrations among people for something — either it’s an economic frustrations or it’s a political frustrations or some sense of deprivation that we are not being listened to, terrorism — it will be good breeding ground for terrorism. So why don’t we address those issues, political issues, economic issues, rather than bring the gun? Gun cannot stop terrorism. It only put the terrorism underground for awhile. It will come back in a more frightening way. So instead of trying to conquer it by guns, why don’t we go as a human problem, solve it in a human way, address those issues and solve them one by one, piece by piece? It could be done. With all the good will in the world, we could do that. So this is what I would say the most damaging thing that we have done so far.

AMY GOODMAN:

What is your assessment of President Bush’s effect on the world?

MUHAMMAD YUNUS:

Well, he has created a very negative image of the United States. People have not much respect in the rest of the world about the leadership, because you — like it or not, United States is the leader of the whole world, because of your technology, because of your financial power, your leadership and innovations and so on. And people look forward to you to lead them, lead the whole world.

Now, people don’t look forward to look at you, because you led them into wrong things. So people are kind of looking at United States in a very suspicious way. Is it good for us, or they are leading us to more difficult things? So that’s how I think the Bush administration will be remembered, that it has created a lot of question marks in people’s minds around the world about the leadership of the United States.

AMY GOODMAN:

Well, we’re going to have to end on that question mark. I thank you very much for being with us, Muhammad Yunus, Nobel Peace Prize laureate. He has written a new book. His first was Banker to the Poor: Micro-Lending and the Battle Against World Poverty. His new book is called Creating a World Without Poverty: Social Business and the Future of Capitalism. Muhammad Yunus, thanks so much.

MUHAMMAD YUNUS: Thank you.

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