by Aldain Reid
I had the distinct priviledge of attending a recent luncheon hosted by Scotiabank.
The special guest presenter was Professor Muhammad Yunus, Nobel Laureate and founder of the world renown, Grameen Bank in Bangladesh. (The word Grameen means rural)
Established in 1983, the Grameen Bank was founded on the basic principle that credit is a human right, regardless of one's economic circumstances.
Poverty alleviation was his fundamental objective, and through the bank he has provided loans to over 7 million customers on suitable terms, in addition to providing solid financial advice.
Recognized worldwide as one of the most successful international development projects, the Grameen model provides people the resources and the opportunity to do what they choose, and development follows.
He shared his story with the captivated audience at the Jamaica Pegasus about how this phenomenon started.
It was while teaching at a University in the US in the 1970s during a time of great change in his homeland Pakistan' (Pakistan was split to form Bangladesh) that Yunus found himself a citizen of Bangladesh.
Poverty was rife and he felt a burning desire to play an active role in improving the lives of his fellowmen. So he moved back home with a big vision of transformation.
He found that most rural folk, particularly the women, needed only a very small amount of capital to get them started in a business, but had tremendous difficulty accessing finance.
The banks ignored him when he tried to get them to lend money to the poor. `We can't do that. They have no collateral,' was the response.
Finally, after a few years of battling the beauracrats, Yunus was able to set up his own bank. The customers, mainly women, can borrow for up to a year at 20 per cent interest. The default rate is lower than that experienced by most commercial banks, now only about two per cent.
Professor Muhammad Yunus signing his book "Creating a world without poverty; Social business and the future of capitalism"
Its no surprise therefore, that conventional bankers are beginning to take notice. Scotiabank's invitation is proof of this.
Many countries have applied the philosophy of the Grameen Bank with great success.
Yunus insists that his bank is restricted his to rural areas so it would not be taken over by urban interests. `We fill the gap that is left by the conventional financial institutions,' he says.
From listening to his speech, I was convinced that Prof. Yunus's satisfaction, however, does not come from the financial success of his bank but from what it has done for the women of Bangladesh. Millions, formerly without status and with little opportunity, are becoming entrepreneurs, shareholders in a bank, homeowners, contributing to the growth of their country.
The lesson from the Grameen Bank experience appears to be that the traditional banking industry is lending to the wrong people.
