Yunus walks the talk on poverty

By Muhammad Yunus
Public Affairs, 261 pages, $26

Muhammad Yunus was looking forward to a career as an economics professor when he became curious about why so many people in his native Bangladesh were mired in poverty.

He had encountered a woman who turned to a local moneylender whenever she needed cash for materials to make stools. The moneylender required that she sell him everything she produced at a price he would determine, a system Mr. Yunus equated with “slave labor.” Mr. Yunus then began lending money out of his own pocket to poor women and eventually founded Grameen Bank to provide small, low-interest loans to people with no credit history and no collateral.

Grameen (the word means village) has since opened 2,500 branches across Bangladesh, lending money to millions of poor people who otherwise would have no access to credit. Skeptics said impoverished borrowers would never repay their loans, but in fact the repayment rate has been close to 99 percent. As a result, microcredit has become a growing worldwide phenomenon.

Mr. Yunus rejects the assumption that poor people are stuck in poverty because they lack skills or because jobs are not available. The poor have plenty of moneymaking ideas, he argues, but have no access to capital to buy raw materials.

His bank even lends money, usually about $15, to beggars, who then purchase household items to sell. Some 10,000 of these borrowers have stopped begging and become full-time salespeople.

Two years ago Mr. Yunus and Grameen Bank were awarded the Nobel Peace Prize in recognition of their accomplishments.

Mr. Yunus first told his remarkable story in Banker to the Poor. In his new book, Creating a World Without Poverty, Mr. Yunus broadens the vision by proposing the creation of social businesses that return no profit to investors and produce only products, such as solar panels or nutritious food, that benefit the community. Any profits are plowed back into the business.

The author sharply critiques traditional capitalism, saying it focuses on making money for investors, with little or no regard for social and environmental consequences. He calls social business “the missing piece of the capitalist system” and suggests that many wealthy people would gladly invest in companies created to solve social problems. Investors get back their money over time, but receive no dividends or profits.

One international company already has embraced the idea. The French yogurt maker Groupe Danone joined with Mr. Yunus to create a new company, Grameen Danone, to make fortified yogurt for malnourished children in rural Bangladesh. Grameen Danone plans to open small factories, buying milk from local farmers and hiring village women to sell the yogurt door-to- door. Meanwhile, Grameen Bank has launched other social companies, including one that will build eye-care hospitals to serve the poor.

Social businesses will thrive, Mr. Yunus believes, by tapping into the desire of investors “to do good for people and the planet -- that is, selfless concern for others.”

The author concedes there is a contradiction between raising living standards in the Third World and the projected dire consequences of uncontrolled economic growth and consumption, mainly in the West. If Third World nations were somehow to achieve the standard of living that Americans enjoy, the effect on limited natural resources and the environment would be catastrophic. The author suggests that nations “think about restricting their own consumption voluntarily.” If that fails, he “reluctantly” will propose adoption of international treaties to limit consumption -- a plan sure to be controversial.

Mr. Yunus has written an important book, although some of his visions sound fanciful. He suggests, for example, that social businesses could offer health insurance to the 47 million uninsured Americans by “eliminating the enormous economic drain represented by corporate profit-taking.”

Even more far-fetched is his vision to end “poverty on the planet once and for all” by 2050 and to create in each nation a poverty museum to let people look back on what will one day be only a distant memory.

Lifting people out of poverty, Mr. Yunus also writes, will reduce violence because “poverty and powerlessness are breeding grounds for terrorism,” although history does not support that claim. Terrorism more often is linked to ethnic, religious or national conflicts.

No one can accuse Mr. Yunus of being all talk and no action. Grameen Bank has made a dramatic difference in the lives of millions. Nearly two-thirds of its borrowers who have been clients for at least five years have escaped poverty.

Skepticism about some of the author’s dreams should not be taken as criticism. The world needs bold, idealistic visionaries such as Mr. Yunus, who challenge long-held economic and social assumptions.

Bill Williams is a freelance book reviewer in West Hartford, Conn. He is a member of the National Book Critics Circle.

National Catholic Reporter May 2, 2008

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