A Vision
In 1974, Professor Muhammad Yunus, a Bangladeshi economist who was the head of the Economics Department at Chittagong University, took his students on a field trip to an impoverished village. There they interviewed a woman who made stools out of bamboo, funding her business by borrowing money for each individual stool that she made. She was usually left with a penny margin of profit for each stool, after she paid back the middleman -- sometimes at rates as high as 10% a week. Yunus reasoned that if she could borrow money at a more advantageous rate, she would be able to amass an economic cushion and raise herself above subsistence level.

This realization was the impetus for Yunus to take matters into his own hands. From his own pocket he lent the equivalent of about $12 to 42 basket-weavers. He found that not only did this tiny amount of money help the basket-weavers survive, but it also created the spark of personal initiative and enterprise necessary to help them pull themselves
out of poverty.

Creating Change
Though banks and government advised against it, Yunus kept dispersing 'micro-loans', and in 1983 formed the Grameen Bank. Meaning 'village bank', it was founded on the principles of trust and solidarity. Initially, Grameen's main objectives were to extend the banking facilities to impoverished men and women, eliminate the exploitation of the money lenders, and create opportunities for self-employment in an area where manpower resources were vastly under-utilized. In addition, Grameen tried to bring disadvantaged people within the framework of an organizational format that they could understand and operate, thereby gaining socio-political and economic strength through mutual support. Finally, Grameen intended to reverse the age-old vicious circle of "low income, low savings, low investment" into an expanding system of "low income, credit, investment, more income, more credit, more investment, more income".

Grameen tried to bring disadvantaged people within the framework of an organizational format that they could understand and operate, thereby gaining socio-political and economic strength through mutual support.

Today, in Bangladesh, Grameen has 1,175 branches, with 12,500 staff serving 2.4 million borrowers in 41,000 villages, which is more than 60% of the total villages in Bangladesh. In the ‘90's, credit provided by Grameen began to exceed the total amount of all other financial institutions and NGOs put together in Bangladesh. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 95% are women and over 98% of the loans are paid back, a higher recovery rate than any other banking system. The methods used by Grameen are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.

Expansion
In the late 1980s, Grameen started to build on the network that their borrowers represented, in order to accelerate the progress towards a poverty-free world and also improve Bangladesh's overall economic performance. In the beginning, they got involved in leasing unutilized and underutilized fishing ponds and irrigation pumps such as deep tube-wells. At about the same time, they also became involved in providing training and other support to people from various third world countries that wanted to learn about and utilize the Grameen methodology.

After some initial successes in the fisheries and irrigation projects, Grameen became interested in expanding their work by getting involved in other sectors of business. At this point, carrying out all the new initiatives under Grameen Bank became difficult because of this expansion, so in 1989 they began to establish new organizations. The fisheries project became the Grameen Fisheries Foundation. The irrigation project became the Grameen Krishi Foundation. The international replication and health program were put under the Grameen Trust.

Credit serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside of the banking world on the grounds that they are poor and have no collateral and, therefore, are not "bankable".

Grameen starting becoming involved in venture capital, the textile industry, an Internet service provider and much more. Each new initiative was incorporated in an extending organization or spun off into a new one. There are now more than two dozen organizations within the Grameen family of enterprises, known as the Grameen Family of Organizations. With the advent of the various organizations, Grameen has expanded its ability to improve the lives of the rural poor in Bangladesh and abroad.

The Poor have a Voice
The Grameen Bank has reversed conventional banking practices by removing the need for collateral and creating a banking system based on mutual trust, accountability, participation and creativity. At Grameen, credit is seen as a cost-effective weapon to fight poverty. Credit serves as a catalyst in the overall development of socio-economic conditions of the poor who have been kept outside of the banking world on the grounds that they are poor and have no collateral and, therefore, are not "bankable". Yunus believes that if financial resources can be made available to the poor people on terms and conditions that are appropriate and reasonable, "these millions of small people with their millions of small pursuits can add up to create the biggest development wonder."

This work is a fundamental rethinking on the economic relationship between the rich and the poor, their rights and their obligations. The World Bank recently acknowledged that "this business approach to the alleviation of poverty has allowed millions of individuals to work their way out of poverty with dignity".

The World Bank recently acknowledged that "this business approach to the alleviation of poverty has allowed millions of individuals to work their way out of poverty with dignity".

Grameen's immediate task is to ensure that the poorest households in Bangladesh, and around the world, succeed in finally overcoming their poverty and in attaining further development in a sustainable way. Grameen has clearly demonstrated that poverty can be alleviated within a short time and that new opportunities can be created for self-employment, higher incomes, improved housing, better health & nutrition, children's schooling, and a better quality of life overall. A substantial number of Grameen's clientele, according to some evaluations, have already succeeded in overcoming absolute poverty, and it is Grameen's firm conviction that a majority of its borrowers will cross the poverty line in the next five years.

Yunus' dream is the total eradication of poverty from the world. "Grameen", he claims, "is a message of hope, a program for putting homelessness and destitution in a museum so that one day our children will visit it and ask how we could have allowed such a terrible thing to go on for so long".




Contributed by Lyla Bashan, Global Envision Assistant Editor.