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Banker to the Poor

Posted on April 9, 2006

I just finished reading Banker to the Poor this weekend which was written by Muhammad Yunus, founder of the Grameen Bank. The book chronicles Yunus’ discovery of microfinance and readers get to see the idea move from its humble beginning (a spontaneous $27 loan from Yunus’ own pocket) to the poverty fighting powerhouse Grameen is today ($5.34 billion in loans distributed with a 98.45% payback rate). However, it wasn’t easy getting there.

Yunus faced many issues while building up Grameen. The first of those issues what that of purdah. Purdah is a tradition in Bangladesh (where Grameen started) that basically says women should stay inside the home and not leave or converse with other men unless their husband is present. This tradtion caused Yunus and his team much trouble in the early days since women, the primary microfinance borrowers, were to scared to talk to them and especially to borrow money without their husbands permission. Even if Yunus could talk to these women while their husbands were around their hubands wanted to know why they couldn’t have the loan.

I should take a side bar here and note that women are the primary focus of Grameen because Yunus and his team found that money made by women affected poverty the most since they would put the money back into their home and buy food, etc. so, econmically, women with money will provide more on an impact on poverty.

Through shear perseversence and cultural awareness Yunus and his team were able to win over the people and the bank was formed. The problems didn’t stop there though. The government was not as fond of Grameen as they should have been, natural disasters sometimes wiped out the borrowers assets and even the World Bank caused Grameen some troubles. However, the concept and the people behind it were too strong to be cast aside and I, for one, am greatful for that.

Many of you who are long time readers know that I am strong advocate of microfinance lending (I even produced a podcast on it which you should check out if you are interested). I believe that microfinance makes the most economic imact per dollar spent in terms of helping the poor. The impact is so great because credit empowers people to take control of there lives and use their natural creativity to pull themselves out of poverty. Many programs out there now, while still doing a lot of good (and I applaud them for that so please don’t take this as a knock), think that training is the answer and that without it people won’t move above the poverty line. Microfinance shows just the opposite. It shows that everyone is an entrepreneur and can/will survive on their own merit if just given some start-up capital.

I urge anyone who is somewhat interested in microfinance to read Banker to the Poor. While reading you will feel the passion Yunus has for the idea and you will see, through examples, that it works. I am willing to bet that, after reading the book, you will feel as strongly about the concept as I do.

Additional Info: I will be attending the Chicago Microfinance Conference on April 21st at the University of Chicago (you can register and attend too - just click on the link for more info). I am really excited about it and will undoubtedly have some interesting things to report on after so stay tuned!

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1 Comment so far
  1. Marshall Kirkpatrick April 10, 2006 7:33 pm

    Grameen is one of the case studies we have profiled in the fundraising section of the Net Squared website ( http://netsquared.org/catlist/tid/72/flexinode-1 ) You and your readers might be interested in some of the others as well.

    I came to your blog by chance from the Feedburner support forum and am happy to learn more about your other interests!