Banker to the Poor (11 page)

Many Islamic scholars have also told us that the Shariah ban on the charging of interest cannot apply to Grameen, since the Grameen borrower is also an owner of the bank. The purpose of the religious injunction against interest is to protect the poor from usury, but where the poor own their own bank, the interest is in effect paid to the company they own, and therefore to themselves.

Still, it became a big challenge to train our bank workers to overcome opposition from political and religious leaders without endangering their safety and that of the women they were serving. We tried a variety of techniques, and after a few years we learned that our staff members should quietly go about their business in one tiny corner of the village. If just a handful of desperate women make a leap of faith and join Grameen, everything changes. They get their money, start to earn additional income, and nothing terrible happens to them. Others begin to show interest. We find that borrowing groups form quickly after the initial period of resistance. When the ice finally breaks, women who originally said no to us begin to say, "Why not? I need money, too. In fact, I need the money more desperately than those who already joined. And I can make better use of it!" Gradually people come to accept us, and opposition dies off. But in every new village, it is a battle to begin.

After all these struggles, repeated in thousands of villages, it is frustrating to hear people dismiss our accomplishments, arguing that Grameen's success is due to cultural factors that cannot be replicated elsewhere. To succeed in Bangladesh, in many ways we have had to struggle
against
our culture. In fact, we have had to create a counterculture that values women's economic contribution, rewards hard work, and punishes corrupt practices. Grameen actively discourages the practice of dowry payments and the overly rigid interpretations of
purdah
. Indeed, if one were to look for the country where it would be most difficult to have a program like Grameen Bank succeed, I think that Bangladesh would come to the top of the list. And when we see programs modeled on Grameen thriving in the Philippines, Malaysia, Vietnam, South Africa, and Bolivia, to name a few, it simply reminds us of the tremendous obstacles we have had to overcome in our own country with its a moribund economy, reactionary elites, and frequent natural disasters.

Toward the end of 1981, when our two-year experiment in Tangail was coming to an end, the Central Bank asked the managing directors of its member commercial banks to give an assessment of Grameen's work. I was puzzled by their reaction, for they chalked Grameen's success up to one factor—the devotion of myself and my staff. They were still convinced that the Grameen concept could not be expanded.

"Grameen is not really a bank," said one manager. "Grameen's staff does not sit in offices or keep bankers' hours. They work until midnight day after day and go door to door like Boy Scouts. This is not a model we could replicate. It depends too much on Professor Yunus's personality. We can't have a Yunus in every branch."

I was angry. Why should we be penalized for our hard work? Rather than admitting that Grameen had come up with a new banking structure, a new economic concept that could revolutionize the nature of banking, these executives kept trying to pin our success on the individual qualities of myself and my staff. This was the same reaction I had heard two years earlier when we were performing our experiment on a tiny scale in Jobra village.

But this quibble masked a greater concern. These commercial bankers preferred to lend large amounts of money to fewer clients. We, on the contrary, prided ourselves on our vast number of clients. Our annual report listed hundreds of microloans offered to a plethora of new businesses, everything from husking rice to making ice cream sticks, trading in brass, repairing radios, processing mustard oil, and cultivating jackfruit.

I looked around the table at these grave men. "Okay," I said, accepting their challenge. "Why don't you spread our experiment over a large, spread-out area. Choose the poorest, most remote places you can find. Make certain that they are so far apart that I could not possibly be in all those areas at once."

I pulled out a sheet of paper and with a pencil I drew up then and there a five-year expansion plan for the Grameen experiment. I also promised the Central Bank that it would not cost them a penny. I would mobilize the funds needed to execute the plan elsewhere.

Since my days at Chittagong University, one international organization had always come up with support when I asked for it. This was the Ford Foundation. Lincoln Chen, Stephen Biggs, and Bill Fuller, among others, have assisted us with our work. At this particular time, the foundation was especially interested in our experiment and eager to help us overcome the skepticism of the commercial bankers. Adrienne Germain, the foundation's resident representative in Bangladesh at the time, brought in two American bankers as consultants to assess our work. Mary Houghton and Ron Grzywinski, both from the South Shore Bank of Chicago, visited us in Dhaka and in the villages. They were very impressed by what they saw.

"I need a flexible fund," I told Adrienne in 1981. "I need a fund that I can use to cope with the problems we face in our daily work. I also want to offer a guarantee to the commercial bankers who are supporting us so that they can't back out of the expansion by arguing that it is too risky."

With recommendations from Ron and Mary, the Ford Foundation agreed to provide us with $800,000 as a guarantee fund. I assured them we would never need to dip into it. "The fact that it is there," I said, "will do the magic."

And that is exactly how it worked. We put the funds in a London bank and never withdrew a pound.

We also negotiated a loan of $3.4 million from the International Fund for Agricultural Development (IFAD), based in Rome. This amount, matched by a loan from the Bangladesh Central Bank, would be used to expand Grameen's program in five districts over the following three years.

So in 1982, we launched our expansion program to cover five widely separated districts: Dhaka in the center of the country, Chittagong in the southeast, Rangpur in the northeast, Patuakhali in the south, and Tangail in the north. By the end of 1981, our cumulative loan disbursement was $13.4 million. During 1982 alone, our disbursements increased by an additional $10.5 million.

Though Bangladesh has a population of 120 million, it is run entirely by a handful of people, most of whom are college or university friends. Time and again this unfortunate feature of Bangladesh society and politics has helped Grameen overcome otherwise impossible bureaucratic hurdles. A. M. A. Muhith, for example, had been the economic counselor to the Pakistan Embassy in Washington, D.C., while I was teaching in the United States. During the War of Liberation, we collaborated in lobbying the U.S. government and trying to create public support in the United States for our cause. We were friends.

In 1982, we met again at the Bangladesh Academy for Rural Development in Comilla, where I was supposed to present a paper about the future of the Grameen Bank Project. As we assembled in the conference hall, it was announced that a coup d'etat had toppled the civilian government and that the army chief of staff, General Hussain Muhammad Ershad, had assumed power. Martial law was declared. As we were not permitted to leave the building and all meetings had been banned, Muhith and I sat in the cafeteria of the academy with all the other delegates and chatted.

Muhith had become an admirer of Grameen when he was still a civil servant. He had even hoped to start a Grameen program in his own village. Stuck in the conference room, I spent most of the day explaining to him my dream of making Grameen an independent bank and how government civil servants and the bureaucracy of the Central Bank were against me. By the end of the day, the military relaxed its restrictions on public movement, and we returned to Dhaka.

In the following few days, Muhith was unexpectedly named finance minister by the new government. And so it turned out that my day "wasted" in the academy had a determining influence on Grameen. Several months later, I met Muhith and asked for help. He offered to put Grameen's case on the agenda at the next monthly meeting of the Central Bank. It was a difficult meeting. Muhith faced a storm of opposition from the managing directors of all the government-owned banks, who came up with a dozen reasons why it would be unwise to turn Grameen into a separate bank.

After the meeting, Muhith took me aside and asked, "Yunus, do you have patience?"

"Yes, that is all I have," I said.

"Good, well, let me handle this my way."

A couple of months later, Muhith again convened a meeting of the seven managing directors through whose branches we had been administering the Grameen project. Again he raised the issue of the future of Grameen. And again all said that the work that Grameen was doing was impressive but converting us into an independent bank would be disastrous.

One managing director said, "Yunus will have to bear a lot of administrative costs that right now he can pass on to us. He doesn't realize the time and expense his type of poverty banking requires."

Another said, "Yunus, why don't you create a division of our bank and work through us? Wouldn't that suit you better?"

"No, it would not," I said. "I would have to adapt to the rules and procedures of your bank. In Tangail, we have seen that is extremely difficult. Nearly impossible."

"You will lose money," warned another managing director.

In my Boy Scout uniform at age 13, in 1953

My first US apartment, Nashville, 1966

With my wife Afrozi at our wedding reception, April 1980

Meeting with borrowers at the Ruhea Thakurgaon branch in Dinajpur

Loan disbursement at the branch office at Shashiddhi, Sri Nagar

Fish cultivation and group meetings of Grameen Fisheries Foundation in Nimgachi

Fabric-making at Grameen's Araihazar and Sadipur branches

Clockwise from upper left:
rope making; cotton dying; cotton spinning; weaving; embroidery work