- Susan Davis
she helped to found and is now chairwoman of the Grameen Foundation. She is also chairwoman of the Ashoka Global Academy for Social Entrepreneurship and an adviser to the International Labor Organization. She just returned from Oslo, where she attended the Nobel award ceremony for Muhammad Yunus. Last month, she was in Halifax for the annual Microcredit Summit.
Bangladeshi economist Muhammad Yunus accepted the Nobel Peace Prize on Sunday for his pioneering program of giving microcredit loans to the poor. Yunus is the first Nobel winner from Bangladesh. The prize committee said the award also was intended to build bridges between the West and Islamic countries. We play an excerpt of his acceptance speech in Oslo. [includes rush transcript]
AMY GOODMAN: Bangladeshi economist Muhammad Yunus accepted the Nobel Peace Prize on Sunday for his pioneering program of giving microcredit loans to the poor. Yunus shared the award with Grameen Bank, which he founded 30 years ago. The bank has helped hundreds of thousands of impoverished Bangladeshis—mostly women—by providing small, unsecured loans known as microcredit, which are then repaid.
Grameen Bank is an interest-charging, profit-making business that’s almost entirely owned by the very women who borrow from it. Yunus is the first Nobel winner from Bangladesh. The prize committee said the award also was intended to build bridges between the West and Islamic countries.
In a few minutes, we’ll discuss the significance of naming Muhammad Yunus for the award and look at the concept of microcredit with the chair of the Grameen Foundation, Susan Davis, as well as Vandana Shiva. But first, let’s hear Muhammad Yunus in his own words. The “Banker of the Poor” delivered his acceptance speech on Sunday in Oslo. In his address, Yunus spoke about poverty and peace.
MUHAMMAD YUNUS: By giving us this prize, the Norwegian Nobel Committee has given important support to the proposition that peace is inextricably linked to poverty. Poverty is a threat to peace.
World’s income distribution gives a very telling story. Ninety-four percent of the world income goes to 40 percent of the world population, while 60 percent of people live only with 6 percent of the world income. Half of the world population lives on $2 a day.
The millennium began with a great global dream. World leaders gathered at the United Nations in 2000 and adopted, among others, a historic goal to reduce poverty by half by 2015. Never in human history had such a bold goal been adopted by the entire world in one voice, one that specified time and size.
But then came September 11 and the Iraq War, and suddenly the world became derailed from the pursuit of this dream, with the attention of the world leaders shifting from the war on poverty to the war on terrorism. ’Til now, over $530 billion has been spent on the war in Iraq by the U.S.A. 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.
Peace should be understood in a human way, in a broad social, political and economic way. Peace is threatened by unjust economic, social and political order, absence of democracy, environmental degradation and absence of human rights.
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 30 years.
I became involved in the poverty issue, not as a policymaker or as a researcher. I became involved because poverty was all around me, and I could not turn away from it. In 1974, I found it difficult to teach elegant theories of economics in the university classroom, in the backdrop of a terrible famine that was raging in Bangladesh. Suddenly, I felt the emptiness of all those theories in the face of the crushing hunger and poverty.
I wanted to do something immediate to help people around me, even if it was just one human being, to get through another day with a little more ease. That brought me face to face with poor people’s struggle to find the tiniest amounts of money to support their efforts to eke out a living.
I was shocked to discover a woman in the village, borrowing less than a dollar from the money lender, on the condition that he would have the exclusive right to buy all she produces at the price that he decides. This, to me, was a way of recruiting slave labor.
I decided to make a list of the victims of the money lending in the village next door to our campus. When my list was complete, I had names of 42 victims, who borrowed a total amount of $27. I was shocked. I offered this $27 from my own pocket to get these victims out of the clutches of the money lenders.
The excitement that was created among the people by this action got me further involved in it. If I could make so many people so happy with such a tiny amount of money, why shouldn’t I do more of it? That’s what I have been trying to do ever since.
The first thing I did was try to persuade the bank located in the campus to lend money to the poor. But that didn’t work. They didn’t agree. The bank said that the poor are not creditworthy. After all my efforts for several months, when it failed, I offered to become a guarantor for the loans to the poor.
When I gave the loans, I was stunned by the result I got. The poor paid back their loans on time, every time. But still, I kept confronting difficulties in expanding the program through the existing banks. That was when I decided to create a separate bank for the poor. I finally succeeded in doing that in 1983. I named it Grameen Bank or Village Bank.
Today, Grameen Bank gives loans to nearly 7 million poor people — 97 percent of them are women — in 73,000 villages of Bangladesh. Grameen Bank gives collateral-free, income-generating loans, housing loans, student loans and micro-enterprise loans to the poor families and offers them a host of attractive savings, pension funds and insurance products for its members.
Since it introduced them in 1984, housing loans have been used to construct 640,000 houses. The legal ownership of these houses belongs to the women themselves. We focused on women, because we found giving loans to women always brought more benefits to the family.
In a cumulative way, the bank has given out a loan totaling about $6 billion. Repayment rate, 99 percent. Grameen Bank routinely makes profit. Financially, it is self-reliant and has not taken donor money since 1995. Deposits and own resources of Grameen Bank today amount to 143 percent of all outstanding loans. According to Grameen Bank’s internal survey, 58 percent of our borrowers have crossed the poverty line.
Grameen Bank was born as a tiny homegrown project run with the help of several of my students, all local girls and boys. Three of these students are still with me in Grameen Bank, after all these years, as its topmost executives. They are here today to receive this honor you gave us.
This idea, which began in Jobra, a small village in Bangladesh, has spread around the world. There are now Grameen-type programs in almost every country in the world.
AMY GOODMAN: Nobel Peace Prize winner Muhammad Yunus, an excerpt of his acceptance speech on Sunday in Oslo. We have to break. When we come back, we’ll be joined by the chair of the Grameen Foundation, Susan Davis.
AMY GOODMAN: Muhammad Yunus and the Grameen Bank were awarded the prize for the pioneering program of giving microcredit loans to the poor. For a closer look at microcredit, we’re joined by Susan Davis. She helped to found and is chairperson of the Grameen Foundation. She’s also chair of the Ashoka Global Academy for Social Entrepreneurship and adviser to the International Labor Organization. She has just returned from Oslo, where she attended the Nobel award ceremony for Mohammad Yunus. Welcome to Democracy Now!
SUSAN DAVIS: Thank you so much, Amy.
AMY GOODMAN: We didn’t get a lot of coverage of the events this weekend here in the United States, so why don’t you just describe — you blogged on your website the whole experience.
SUSAN DAVIS: Right. Sorry that people didn’t get that much coverage of it. It was an incredible event, really exciting. And there was world media from all over at the press conferences and covering the event in Oslo. So I don’t know why Americans were denied the opportunity. But I guess they can go online and see it.
It was a really moving moment, where Muhammad Yunus and Taslima Begum, on behalf of the Grameen Bank, accepted the Nobel Prize. I don’t know if you realize, but Taslima Begum is one of the 12 members of the board of directors. She’s also one of nine village women who are also borrowers. So Taslima is one of those people that we talk about—the poorest of the poor trying to use microcredit to lift themselves out of poverty. Well, she actually did that. And she, like many of the other board members, were victims of child marriage, married at nine, remarried at 12, had a life of — it was very hard. They’ve had to work for everything they’ve got. So when she spoke out at the Nobel Peace Prize, I just lost it.
It was one of those moments where you think, you know, we talk about empowerment, but this was it. It was the spirit of empowerment just ringing through her body. And for the first time, I think, the world heard a Nobel laureate who is from the poorest of the poor.
AMY GOODMAN: Now, explain exactly how it works, though Muhammad Yunus did go through it. How did she get the money in the very beginning? What is she given? What is a woman given?
SUSAN DAVIS: Microcredit is a poor woman’s survival strategy that Yunus systematized and created a way to make it scalable and sustainable. So it’s a little loan without collateral. She would form a group with four other peers. So, together as a group of five, they would work with eight other groups in a center of 40. They would then have a Grameen Bank worker come to them, to their village. They do a lot of the discussing of whether this is a good idea or not. Does she know how to make tasty sweets? Will they sell? Can she actually raise, you know, goats or cows or sell the eggs from chickens? Is it a good idea? So they do that screening.
Then, they conduct all their business in public. Now, when’s the last time you heard about banking being conducted completely in public? But transparency creates accountability. No one rips off anybody, because they all see all the loans given, they see all the loans being repaid right in front of themselves. They may not be literate or even numerate, but they know how to watch and count when it comes to their own money. So they take little loans. Now they can do it from as short as three months to as long as three years. Usually, right now, they’re averaging about $120. They’ve made loans to 7 million women in Bangladesh, and they’re also shareholders.
AMY GOODMAN: And why is women the case?
SUSAN DAVIS: Well, they started off in the early days just trying to get to 50/50 between men and women. And there are still, you know, 300,000 or 400,000 male borrowers. But after they got to 50/50, Yunus realized that women were actually better fighters of poverty, because all of the disposable income that they earned went right into the mouths of their kids and family to improve their health and nutrition. They then wanted a better roof over their head, you know, to prevent the rain from coming in or the cold.
So, they’ve lent now, from 1984 'til now, over 640,000 housing loans at a very low interest. And these are houses for a maximum of like $300. Yunus told that story Monday night at the concert, in fact, of what it means for a poor woman to have a house of her own. And I thought it's just like Virginia Woolf, you know, talking about women needing a room of one’s own.
AMY GOODMAN: Talk about what else happened over the weekend.
SUSAN DAVIS: It was the first time the king and queen came, and they had to turn up to the Nobel ceremony and the banquet, because Yunus had invited Queen Sofia of Spain to come. She has been a total champion. And this is one of the ways that celebrities and personalities and people in political office that do choose to use their power on behalf of the poorest have been able to support and champion the microcredit movement.
Now, from the 7 million borrowers in Grameen Bank, and if you look at the work of Grameen Foundation supporting the like-minded institutions around the world, there’s probably a Grameen replication in almost every country in the world now. And we all just had celebrated the Global Microcredit Summit in Halifax a couple of weeks ago, where we’ve now reached 100 million of the world’s poorest families with credit for self-employment and other services, the first time in 10 years the world’s been able to set a collective goal and achieve it, and, in large part, due to the leadership of Muhammad Yunus and the people he’s been able to bring into this movement. And that’s what people were talking about.
AMY GOODMAN: I wanted to read you a quote from an article by Alexander Cockburn, editor of Counterpunch, who cites the Indian journalist P. Sainath, who says the interest rates that micro-indebted women are paying in India are far higher than commercial bank lending rates. Cockburn writes, quote, “Today the World Bank and the IMF, along with state-owned and commercial banks are diving into microfinance. The microloan business is fast becoming a gigantic empire, bringing back into control the very banks and bureaucracies women have been trying to bypass. Microcredit is becoming a macro-racket.” Can you respond to the issue of these high interest rates and how the global institutions like the World Bank and the IMF are beginning to use microcredit?
SUSAN DAVIS: Sure. In fact, Yunus talked about interest rates at the Nobel ceremony. The rate that Grameen charges is 20 percent simple interest. So that’s not compounded. It’s on a declining balance. It will average then in real terms about 12 percent. The key thing of whatever rate is charged, it is covering the cost of actually bringing credit to the borrower over and over and over again, sustainable for a lifetime. In the case of the rates where the women actually own the bank or they own the cooperative, then any profit earned is going right back to them. If you look at the extra cost to bring little loans to a lot of people, you actually have to have slightly higher rates. That’s why credit cards will charge a higher rate than, in fact, making one $100 million loan to a big corporation. But you always need to ask what’s the prime rate, what’s inflation, and what’s the cost of delivery?
What Grameen Foundation has been trying to do, and we’re committed to doing, is bringing the cost of microfinance always down by improving efficiencies. So if you can use technology to automate or to be able to increase the cost effectiveness of delivering lots and lots of little loans, then you can pass that on to customers. It’s not to say everybody in the microfinance field does it. But the majority do.
In India, the interest rates for really good microfinance institutions are not that high. You’re really looking at between 15, 18, 20 percent. And the key evidence is, what’s the alternative for women? Do they come back loan after loan after loan? Do they feel that it’s actually helping them build assets in their lives, get their kids in school, put more meals on their table so that they eat at least two, if not three meals a day with protein at least once a week. That’s what these interest rates or service charges, as some call them in the Muslim world, mean.
AMY GOODMAN: You lived in Bangladesh for years.
SUSAN DAVIS: Yes.
AMY GOODMAN: Why did you go there? What first drew you there, and know Muhammad Yunus for decades?
SUSAN DAVIS: I’ve known Yunus for over 20 years now and was really privileged to get a chance from the Ford Foundation to go there and — I’ve said it was like the Wall Street of development, because they had all the problems and all the solutions packed in there. And that’s when I realized that if you can get behind a really great social entrepreneur like Muhammad Yunus who’s built not only the Grameen Bank, but 24 other institutions, some for-profit some not-for-profit, but all of them either potentially owned by those poor villagers themselves or will be owned by them, as he converts the final pieces of the strategy.
It’s a way to get behind and recreate another kind of capitalism. You know, it’s one thing to critique it. It’s another thing to construct the alternative. And that’s what I witnessed in Bangladesh, and that’s why I got behind their leadership. And if you look at this world now post-9/11 — and I think the Nobel committee also underscored this — this is recognition of a Muslim leader in this world, where usually you hear the word “Muslim” branded with “terrorist.” Here, this is Muslim leadership that the world has been following on the path for peace.
AMY GOODMAN: We’re talking to Susan Davis. In a minute, Vandana Shiva will also join in this discussion. But first, let’s go back to Muhammad Yunus’s Nobel acceptance speech on International Human Rights Day on Sunday.
MUHAMMAD YUNUS: It is 30 years now since we began. We keep looking at the children of our borrowers to see what has been the impact of our work on their lives. The women who are our borrowers always gave topmost priority to the children. One of the 16 Decisions developed and followed by them are to send children to school. Grameen Bank encouraged them, and before long all the children were going to school. Many of these children made it to the top of their classes. We wanted to celebrate that, so we introduced scholarships for talented students. Grameen Bank now gives 30,000 scholarships every year.
Many of these children went to the higher education to become doctors, engineers, college teachers and other professionals. We introduced student loans to make it easy for Grameen students to complete their higher education. Now, some of them have even Ph.D.s. There are 13,000 students on the student loans. Over 7,000 students are added to this number annually.
AMY GOODMAN: Nobel laureate Muhammad Yunus speaking in Oslo on Sunday.