Nobel Peace Prize Goes to the Poor/Dr Yunus, Western Banks and the Little Girl From Foy’s Lake

Nobel Peace Prize Goes to the Poor
By A.K. Enamul Haque PhD

On October 13, 2006 Bangladesh came was in the mainstream media as the Nobel Committee announced Professor M Yunus as the recipient of this year’s Nobel Peace Prize. This was great news for a country bogged down in a political feud for decades. Many of my readers might have heard about Professor Yunus and his Grameen Bank for the poor. I believe the Nobel Committee has done a tremendous service to the world by recognizing the fact that working for the poor, for alleviation of poverty is synonymous as working for peace. This was needed for this world, where the popular belief is that peace is only achieved through mediation – be it political or be it military. Such a simplistic view on peace often overlooked the root cause of peace and as such peace becomes short-lived.

Before discussing the importance of removing poverty to bring peace, let me also share my personal pride with you. Professor Yunus was a Professor of Economics in the Chittagong University from where I received my first degree in Economics. At that time, he was on his way to lead the Grameen Bank and so he did not teach us directly in the classroom but he was a frequent visitor in our department. Some of the senior students often explained how he was and what his teaching objectives were. Professor Yunus’s commitment for the Grameen Bank was so deep that when his name was being discussed by the academia to be the next Vice Chancellor of Chittagong University (when I was the student), he flew back to Chittagong from Dhaka and requested them not to push it any further as it would completely destroy his “bank”. His request was heard and I remember that his name was subsequently dropped from the list of potential candidates.

The issue that I would like to discuss here is how closely “poverty” is linked to “peace”. I have written on many occasions in this column that poverty is a major problem of the world and all of us must work together to fight it. However, let us understand the causes of poverty. The major factors causing poverty are a) natural disasters, b) human conflicts, c) unequal access to resources, d) illiteracy e) discrimination based on gender, religion, color and creed, and e) unequal rights on resources. In any society if these types of injustices prevail then society becomes violent and conflicts begin. Under these circumstances it is the duty of the government to address these issues as quickly as they can to bring peace.

Peace between blacks and whites was possible after removing the injustice based on the color of their skin. However, there are other kinds of injustices that are hard to see with our naked eyes. For example, because of lack of access to education two persons could end up in two different social strata even though they have the same color, religion and gender. So access to education became a “civil right” and education is regarded as one of the basic human rights in modern society. The premise is that education will empower the individual to ensure “equality in opportunity” and so it is important that society provides education for all.

Professor Yunus went a step further. Living in Bangladesh he realized that it is not education but also access to capital is an important element that perpetuates injustice in a society. As an economist, he also quickly realized that our current formal banking system excludes millions of individuals who have all the right qualities but assets to access credits from a formal institution like a bank. As such they end up being exploited by the usury moneylenders who charge an exorbitantly high rate of interest from these excluded millions. Seeing no other alternatives, these people resort to such borrowing and eventually fail to get out of the poverty cycle. This, to him, a social injustice prevailed in many societies because the current rules and procedures are not fair to them.

Dr Yunus began is fight against such exclusion and brought millions of poor people into the fold of his bank – the Grameen Bank. He left his job at the university to practice what he believed and organized the Bank with his students. The bank became a success and has become an integral part of rural society in Bangladesh. 50% of all people living in rural Bangladesh are now involved with such banks. The success? – Millions of women became empowered in rural Bangladesh. Millions of families realized that girls are not a liability but an asset to a family. It has led to a social change in Bangladeshi society and has become the informal safety net for millions of poor households. I think what he did is to bring a lasting peace in our society. Professor Yunus and Grameen Bank have shown the world a different route for peace and for this he deserved the award. We are all proud of him.

Dr Yunus, Western Banks and the Little Girl From Foy’s Lake 

By Philip Shaw M.Sc.

20 years ago when Enamul and I were roaming the halls of the University of Guelph, I heard bits and pieces of this Professor Yunus. In the broken English of the time I didn’t always pick up what Enamul was talking about. However, over time I learned. Not only were Dr. Yunus and the Grameen Bank doing something revolutionary. For many of us in western society, we wondered why “micro-credit” the wunderkind of Dr. Yunus could be not be done here.

For those of you lost in this debate keep in mind it seems like every few years Canadian (Western) banks come out with record profits. Little nuisances like Enron are only a blip on the periphery. When those losses are spread out over a deposit base laden with service charges, it doesn’t take long to make up the difference. The banks respond by saying a strong banking system is essential for a strong economy. They have a responsibility to their shareholders. In both instances they are correct. I suppose the debate should be over what constitutes a strong banking system and how does this impact the economy?

In 1993 my wife and I visited the campus of the University of Chittagong, Bangladesh. At the time I was told again that a former chairman of the economics section, Dr.Muhammad Yunus, had started a special bank called “Grameen”. Dr Muhammad Yunus had returned to Bangladesh after independence to teach at the University of Chittagong. He wanted to find a practical way to use “economics” to help poor people in Bangladesh. What Enamul didn’t say was he simply strolled out of campus into the villages.

Dr Yunus came across a woman who made only two pennies a day by making bamboo stools. She made two pennies because she borrowed money from a trader who was the final buyer of her stools. She took the “trader credit” to buy the bamboo. The trader only offered her enough to cover her meager costs. With no other credit available, she simply was a slave to the system for two pennies a day. Dr. Yunus thought this to be a despicable state of affairs. He approached the banks to see if they could help these people

The banks responded by laughing. No collateral was there buzzword. Dr. Yunus decided to set up a bank on its own. It took seven years cutting through red tape. In 1983 the Grameen bank was formed. This bank works only for lending money to the poorest people in Bangladesh — landless, asset less people. Today they have 6.61 million borrowers in this bank, 97% of them women. It works in 71,371 villages. They have 2226 branches. And this bank not only lends money to the poor people, it is owned by the poor people. The people that it lends money to, also become the shareholders of the
Bank and own the bank. Average loan size is less than $100 dollars US. To learn more go to http://www.grameen-info.org/

After visiting Chittagong University we spent the balance of the day at Foy’s Lake Foy’s Lake is Public Park in the city. A little girl dressed in rags approached us. She wasn’t begging, but asking us in Bangla whether we wanted something to drink. She toddled off into the crowd only to return minutes later with our drinks. She had forgotten the bottle opener. She toddled back into the crowd. After returning with the bottle opener she toddled back into the crowd. An hour later she returned. At that time we gave her the money for all her products and services. She toddled off into the crowd to pay the vendor. She couldn’t count so we made sure she knew how much was hers. My friend Enamul leaned over to my wife and I and said; you see Phil, we just made a complete transaction without capital. It was an obvious example of people living without a banking system.

Banks with their billion dollar profits in regulated western economies grow more common with each year. You would think that with billion dollar profits there would be “cash back” for every depositor. What could Grameen and Nobel Prize winner Dr. Yunus do with “billion of dollars” in profits? Something tells me that little girl, malnourished, dirty and wanting might have a life.