Present day, Mumbai – India
It is not an uncommon sight while traversing on the streets of third world countries to have beggars approach your vehicle asking for alms during a traffic snarl. My first reaction during such encounters is to see if they are able-bodied; if they are, i choose not to give anything, but if they are physically challenged or too old to be able to work, then without a moment’s hesitation, i reach out to my wallet and offer a rupee. More often than not, at times like this, i find myself in a fix while deciding if i did any good to the beggar. The signal turns green and i move way ahead from the beggar and away from that thought. Have we ever given a thought to understand why the poorest of the poor in most of the cases never manage to come out of the vicious circle of poverty? Are they really stupid or too lazy to not want to work their way out of poverty? Even if they did work, was it enough to liberate them? We may be too busy to even consider to ponder over these questions. However, in some corner of the globe not too far away, someone did!!
Year 1974 – 76, Jobra village – Bangladesh
With around 82% of its population submerged below the poverty line in those days, Bangladesh was monickered as one of the Abodes to the world’s poorest of the poor! At Jobra, agricultural laborer, blacksmiths, carpenters, sculptors and peasants constituted majority of the workforce. The sun rose second to the people of Jobra who were already toiling hard to meet the survival needs. Extremely hard-working, they barely took a break except for lunch and again they got back to perfecting their finished product. But this was also the time when Death had knocked at their doorstep. Masquerading itself as Famine, it took Bangladesh by its claws piercing it through the heart.
With Governments inability to curb the prices of essential commodities compounded with the flooding of the main rivers of Bangladesh, Food had become a cousin of Gold. Barely affordable, the labor workforce had to almost claw their way out for survival. Let alone fulfilling their dream of educating the kids in the family, having a second meal had become the next luxury. To die from hunger is one of the most painful deaths. And to see children go through this plight for no fault of theirs was a live depiction of hell. To live another day was like going through another round of pain. Bangladesh was cursed!
At a time like this two professors from the University of Chittagong started visiting rural households in Jobra to get to the root cause of these deaths. Moreover, the per capita availability of rice despite the floods was even more than the previous year.
This being established, why on earth were people dying from starvation was the question of the century. What commenced as a formal reconnaissance turned to churn out some dark truths that were too ugly to be fathomed by the human conscience. Every household, every person, every street they visited had one element that was screaming out aloud…….it was the element of despair. Only this air of despair was created by an unnamed and organized network of paikars a.k.a. middlemen that left no stone unturned to deprive the people of Jobra of a better life. The unawareness of the populace had become their power. Offering small loan amounts at exorbitant rates of interest they ensured that the people earned enough to only survive and not make a mistake to aspire. For instance if you had a look at the life of a carpenter, the paikars offered around 5 takas (22 US cents) to purchase a bamboo stick that was used to prepare a bamboo stool. The 5 takas were offered with an agreement to sell the bamboo stool for 5 takas and 50 paisa. That was like making a profit of 2 cents per stool. Even a 36gm candy came for 10 cents in those days.1 The paikars would then sell these stools for ten folds the amount making usurious amounts of profit.
The professors were horrified at this discovery and made a survey to check how many people owed to these devious paikars. The revelation was shocking. 42 people had borrowed 856 taka. That amounted to less than $27 in total. All this hardship and exploitation for a lack of $27!! These people were poor not because they were lazy, but because the very financial structures that could help them out of poverty was deviously designed to rather exploit them. Desperate measures were the need of the hour. The financial institutions existing in those days never acknowledged the need to help the poor. Let alone help, they brazenly mocked at the very idea of lending small amounts to these people. Under the pretext of voluminous paper work compounded with cost of labour to entertain a loan request of 5 takas and the need for a collateral, they dismissed the idea as non feasible. But was their situation really incorrigible?
The answer to this very question lead to the beginning of an incredulous story that went on to not only shatter many misconceptions and myths about finance but also serve as a foundation for the invention that ensued.
13th October’ 2006, Oslo – Norway
Every year before the 1st of February, scores of nominations are sent for Noble Peace Prize to the Norwegian Noble Committee. The short listing process happens till March followed by an Advisers review till August. At the beginning of October, the Nobel Committee chooses the Nobel Peace Prize Laureates through a majority vote. The decision is final and without appeal. The names of the Nobel Peace Prize Laureates are then announced. The year 2006 was no different in all aspects except one. This time the noble peace prize was announced to two winners: Muhammad Yunus and Grameen Bank. Their contributions?? Devising a means to eradicate poverty. Their war chest had one weapon: MICRO – CREDIT!! Grameen Bank was the very first financial institution to offer very small loan amounts to impoverished borrowers who lack a credit history and the financial ability to produce a collateral. Every Micro Credit institution you see now owes its existence to Muhammad Yunus, the founder of Grameen Bank.
Established in 1976, and having converted into a full-fledged bank in 1983, Grameen has come a long way from serving 58,000 borrowers in 1983 to 8.93 Million borrowers as on Dec’17.2 What’s even more baffling about the operations of Grameen is that it offers loan mostly to women. That’s the reason why 97% of the 8.93 Million borrowers are WOMEN!! How does that sound for Women Empowerment! In the initial days when a women’s territory never outstretched the boundaries of the kitchen, convincing them to take a loan was a Herculean task. Vanquishing every delusional society stigma, not only has Grameen convinced the world that Women make good borrowers, but it has also helped women realize their true worth.
Right from carrying on a survey in Jobra to offering that 856 taka to those 42 families, Mr, Yunus has lived a story of a legend. Did he always have the knowledge of bank operations to pull this phenomenal feat? NO!! When asked, he narrates, “I just look at the conventional banks, how they do it and once I learn how they do it, each piece and I do just the opposite and it works. They go to the rich people, so I decided to go to the poor people. They go to men, so I decided to go to women. They want to go to the city center to do business, I decided to go the village, remote village. They want collateral. I said forget about collateral. Who wants collateral, if you want collateral you never get to the poor people. They have big lawyers in their bank, we said we don’t need lawyers. So we are the only LAWYER FREE BANK in the whole world. It works!! We don’t need them. Conventional banks are owned by the rich people; so reversed that too. We made this bank owned by the poor people. And not only conventional banks are owned by rich people, mostly they are owned by Rich Men. So we reversed that. We not only make it owned by the poor people we made it owned by Poor Women. So this is a bank which is owned by the borrowers themselves!!”
Poverty always claimed an upper hand. Until Muhammad Yunus stepped in the ring and gave a jab so hard that now at least the world can claim to have won at least one round in this ongoing battle!!