Grameen, Micro-Credit, and a Sobering Encounter

A couple of weeks ago I finished reading Banker to the Poor by Muhammad Yunus. It had been sitting on my shelf for about three years, bookmark wedged in a few pages shy of 100. The damn thing wasn't getting read. I figured I'd sell it to Russells for store credit or something, but I decided, out of a mix of guilt and curiosity, to actually finish reading it first.

Doubtless most people reading this will be familiar with Yunus and his Nobel Peace Prize winning Grameen Bank, if not for its work and theories, then at least for the controversy it received in the media last year over allegations of tax-evasion and charging extremely high interest rates*. But for those of you who aren't familiar, Dr. Yunus started the Grameen Bank in the late 70's in Bangladesh. The idea was born after he lent a total of $27 US, at no interest, to a number of impoverished families in a village, to help them purchase the materials needed to make and sell their wares, and lift themselves out of poverty without turning to greedy moneylenders for help. At the heart of the Grameen Bank (Grameen meaning "rural" or "village" in Bangla) is the belief that poor people are incredibly creative and resourceful, not lazy and worthless, and the Bank's job is to offer them the chance in the form of "micro-loans" to help unleash the creative potential of these people as contributors to the economy and valuable members of society. The Bank lends the money to borrowers, the majority of them women, so they can use that seed money to start their own businesses, like selling hand-made baskets or fabrics, and the borrowers pay back the interest-free loan on the terms of their setting. It may take a while, but as Yunus illustrates, almost every single borrower pays back what they owe.



I am not entirely against capitalism, but my belief is that it must be curbed by government policy. So it's quite a challenge when Yunus says we should reduce the role of the government and let the private sector take the lead. But he is no typical neo-liberal. He argues that bureaucracy has completely undermined the idea of a state-funded social safety net, and because money isn't getting to the poor, it's not doing its job. But he recognizes that at the other end lies the cut-throat business entrepreneur consumed by greed, whose image of the world is equally horrible. The poor get screwed on both accounts. So what Yunus advocates is small government, and that instead of international aid and charities combatting poverty, the standard should be taken up by a kind of "social entrepreneur", a new breed of entrepreneur whose goal of making profit is second to her goal of helping the world through socially and environmentally conscious action, Grameen being one example.

This strange brew of socially-minded, compassionate capitalism may be hard to imagine, but as I read of Yunus and the Bank's struggles from inception to the present day I was struck by the overwhelming number of success stories, ones where the value of human life was enshrined. Of course, micro-loans aren't a cure-all to poverty. The borrowers didn't suddenly become part of the middle class, and there were endless setbacks, including disease, famine, natural disasters, and even cultural resistance (rumours went around in the conservative, rural areas of Bangladesh that the Bank actually turned women away from Islam). But many have started up their businesses nonetheless, broken the debilitating cycle of poverty, and since then have become an economic force to be reckoned with, in Bangladesh, and in various other countries around the world where Grameen or similar micro-credit programs have started up. Overall, micro-loans have had a positive influence in the world. Of course the founder will portray his program in the best light, but the proof speaks for itself. Plainly written so that a layperson like myself can read, enjoy, and maybe even be inspired by it, I don't regret finishing it, and may instead decide to lend it to someone else instead of sell it off.


A couple of days ago I was headed downtown, waiting at the corner of Yates and Quadra for the light to change, when I was approached by a man. He seemed friendly enough, but he shoved a paper into my hands and went on to explain that he was living on the street and selling this paper by donation. I told him I didn't have any money to offer him, and when he asked if I could go to a bank to get out some cash, I told him again that I didn't have any money to offer him. Clearly disappointed, he told me to keep the paper, and walked away. The whole experience lasted maybe two minutes, but it left a bad taste in my mouth. It certainly poked a hole in my bubble of a self-satisfied life. I did have a few nickels in my wallet. I think I said no as a knee-jerk reaction; it's not just to people living on the street, but canvassers of worthy causes like Amnesty, Red Cross, and SPCA as well. I don't react well to peddlers of any kind. But even though I didn't like how pushy he was, I could understand what he was trying to do. In fact, it seemed not unlike what many borrowers in Bangladesh villages are trying to do. Instead of just asking for spare change, he was trying to engage me in a business transaction, working to generate seed money to help himself along while keeping his dignity intact, perhaps even empower him. It's not exactly a parallel situation, but similar in essence. And in light of the hope I felt after reading about the Grameen Bank, you'd think I would've been more enthusiastic about what this guy was trying to do. But for one reason or another, out of fear, caution, impatience, or whatever, I refused.

I offer this anecdote as self-reflection, and as a tonic to whatever sense of ego-inflation we may feel when we align ourselves with a noble cause. This sort of scenario happens thousands of times a day, but for some reason it certainly gave me enough pause to need to stop and reflect on it. Regardless of a person's attitude toward homeless people asking for money, hopefully others can learn from my behaviour and find a better way of dealing with these brief, but impactful meetings with people living on the fringe making an honest effort to better their lives. I hope that perhaps if I am approached by another person selling this paper or any like it (it's called the Lionheart Tribune, by the way. Anybody else been approached by someone with this publication?), if I can't offer anything by way of money, I can at least offer a word, or an ear to listen. We needn't go to the other side of the world to find poverty. It isn't quarantined off in developing countries, but here in Canada as well, and the best part of Yunus' idea is that it is applicable to any country, regardless of its GDP. I'm not about to go off and become a social entrepreneur now, but it seems to me even the little efforts count for something. Here's hoping, anyway.

*These allegations were proved to be nothing more than that. The source was a Norwegian documentary called Caught in Micro-Debt. Micro-credit is not without its critics of course, and I'm sure there are cases where they are right, but I don't have reason to believe that it is fundamentally unsound as an approach to fighting poverty. It's certainly worth a try, isn't it?