Muhammad Yunus: Pioneer of The Microcredit Concept

Dr. Muhammad Yunus is known throughout the world as a pioneer of the microcredit concept that uses small loans made at affordable interest rates to transform the lives of impoverished people, mostly women. The founder of the Grameen Bank in Bangladesh, Yunus and Grameen were jointly awarded the Nobel Peace Prize in 2006.

 

Dr. Yunus perception on credit:

"Credit is very important. If you look at the world today, I would say probably two-thirds of the world population does not have access to financial services. But that's the first thing that we should take care of. Money begets money. If you don't have that, you wait around to be hired by somebody at the mercy of others. If you have that money in your hand, you desperately try to make the best use of it and move ahead. And that's generating income for yourself.

 

All human beings are very creative—full of potential, full of energy...So, money kind of allows them to express it ... And if you're successful, you can take more money. You can expand your capacity, reach next level of capacity, and so on."

 

Dr. Yunus perception on charity: (Not every situation should be addressed by charity. And charity always has to be a temporary phenomenon, not a permanent solution.)

"Four years back, we started a program exclusively for beggars. Because many people are arguing that the poorest people don't have the capacity to go into business, earn money. I always argued the other way. I said, "All human beings are born entrepreneurs. Some get a chance to unleash that capacity. Some never got the chance, never knew that he or she has that capacity."

 

So in order to address the debate, I thought we should demonstrate it. So we came up with this idea. Why don't we focus on the beggars? So we go to the beggars and explain, "As you go from house to house, would you take some merchandise with you, some cookies, some candy, some toys, some sweets?" And then you give people option [of] whether they will give you something as charity or they will buy something from you. It's up to them to decide.

 

Today we have 100,000 beggars in that program. Typical loan for beggars is in the neighborhood of 12 to 15 dollars. Over four years, the loan that we have given out to them, more than half that money has already been paid back. It's a non-interest bearing loan. You don't have to pay the interest so that you don't worry about money growing in your hand. It won't grow, so take your time. Only thing is, if you pay us back fully you get more money.

 

The point here is, I could have given them 12 or 15 dollars as a gift, as a charity. Would they have paid back? Would they have created this? More than 10,000 of them out of 100,000 have stopped begging completely. They are now door-to-door salespersons. The remaining 90 percent, I can probably say that they are part-time beggars, in the process of kind of closing down their begging division and concentrating on their sales division of their work.

 

Many have taken the second loan and the third loan already. So this is the difference between what I would've given by charity. I could've given each one $15. They would have eaten better or bought some of the things they needed and used it and probably come back and say, "Can you give us some more because this is all gone?"

 

I'm not saying charity's a bad thing, bad. No, charity's very important. But charity has a time and place where he can be. Not every situation should be addressed by charity. And charity always has to be a temporary phenomenon, not a permanent solution."

 

 



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