Banker to the Poor (5 page)

The more I studied Jobra's poverty, the more I realized how important it was to differentiate between the really poor and the marginal farmers. International development programs in rural areas always focus on farmers and landowners. In Bangladesh, half of the total population is worse off than the marginal farmer. At the time I was studying Jobra, government bureaucrats and social scientists had not clarified who the "poor" in fact were. Back then, "poor person" could mean many things. For some, the term referred to a jobless person, an illiterate person, a landless person, or a homeless person. For others, a poor person was one who could not produce enough food to feed his or her family year-round. Still others thought a poor person was one who owned a thatched house with a rotten roof, who suffered from malnutrition, or who did not send his or her children to school. Such conceptual vagueness greatly damaged our efforts to alleviate poverty. For one thing, most definitions of the poor left out women and children. In my work, I found it useful to use three broad definitions of poor to describe the situation in Bangladesh
*
:

P1—the bottom 20 percent of the population ("hard-core poor"/absolute poor)

P2—bottom 35 percent of the population

P3—bottom 50 percent of the population

Within each category of poor, I often created subclassifications on the basis of region, occupation, religion, ethnic background, sex, age, and so on. Occupational or regional categories may not be as quantifiable as income-asset criteria, but they help us to create a multidimensional poverty matrix.

Like navigation markings in unknown waters, definitions of poverty need to be distinctive and unambiguous. A definition that is not precise is as bad as no definition at all. In my definition of the poor, I would include the women who threshed rice on our Three Share Farm; women who made bamboo stools: and petty traders who had to borrow at 10 percent per month or sometimes per week. I would also include others like them who earned so little weaving their baskets and sleeping mats that they often resorted to begging. These people had absolutely no chance of improving their economic base. Each one was stuck in poverty.

My experience with Jobra's deep tubewell convinced me to turn my focus on the landless poor. Soon I started arguing that wherever a poverty alleviation program allowed the nonpoor to be co-passengers, the poor would soon be elbowed out of the program by those who were better off. In the world of development, if one mixes the poor and the nonpoor in a program, the nonpoor will always drive out the poor, and the less poor will drive out the more poor, unless protective measures are instituted right at the beginning. In such cases, the nonpoor reap the benefits of all that is done in the name of the poor.

In 1976, I began visiting the poorest households in Jobra to see if I could help them directly in any way. There were three parts to the village: a Muslim, a Hindu, and a Buddhist section. When I visited the Buddhist section, I would often take one of my students, Dipal Chandra Barua, a native of the Buddhist section, along with me. Otherwise, a colleague, Professor H. I. Latifee, would usually accompany me. He knew most of the families and had a natural talent for making villagers feel at ease.

One day as Latifee and I were making our rounds in Jobra, we stopped at a run-down house with crumbling mud walls and a low thatched roof pocked with holes. We made our way through a crowd of scavenging chickens and beds of vegetables to the front of the house. A woman squatted on the dirt floor of the verandah, a half-finished bamboo stool gripped between her knees. Her fingers moved quickly, plaiting the stubborn strands of cane. She was totally absorbed in her work.

On hearing Latifee's call of greeting, she dropped her bamboo, sprang to her feet, and scurried into the house.

"Don't be frightened," Latifee called out. "We are not strangers. We teach up at the university. We are neighbors. We want to ask you a few questions, that is all."

Reassured by Latifee's gentle manner, she answered in a low voice, "There is nobody home."

She meant there was no male at home. In Bangladesh, women are not supposed to talk to men who are not close relatives.

Children were running around naked in the yard. Neighbors peered out at us from their windows, wondering what we were doing.

In the Muslim sections of Jobra, we often had to talk to women through bamboo walls or curtains. The custom of
purdah
(literally, "curtain" or "veil") kept married Muslim women in a state of virtual seclusion from the outside world. It was strictly observed in Chittagong District.

As I am a native Chittagonian and speak the local dialect, I would try to gain the confidence of Muslim women by chatting. Complimenting a mother on her baby was a natural way to put her at ease. I now picked up one of the naked children beside me, but he started to cry and rushed over to his mother. She let him climb into her arms.

"How many children do you have?" Latifee asked her.

"Three."

"He is very beautiful, this one," I said.

Slightly reassured, the mother came to the doorway, holding her baby. She was in her early twenties, thin, with dark skin and black eyes. She wore a red sari and had the tired eyes of a woman who labored every day from morning to night.

"What is your name?" I asked.

"Sufiya Begum."

"How old are you?"

"Twenty-one."

I did not use a pen and notepad, for that would have scared her off. Later, I only allowed my students to take notes on return visits.

"Do you own this bamboo?" I asked.

"Yes."

"How do you get it?"

"I buy it."

"How much does the bamboo cost you?"

"Five taka." At the time, this was about twenty-two cents.

"Do you have five taka?"

"No, I borrow it from the
paikars
."

"The middlemen? What is your arrangement with them?"

"I must sell my bamboo stools back to them at the end of the day as repayment for my loan."

"How much do you sell a stool for?"

"Five taka and fifty poysha."

"So you make fifty poysha profit?"

She nodded. That came to a profit of just two cents.

"And could you borrow the cash from the moneylender and buy your own raw material?"

"Yes, but the moneylender would demand a lot. People who deal with them only get poorer."

"How much does the moneylender charge?"

"It depends. Sometimes he charges 10 percent per week. But I have one neighbor who is paying 10 percent per day."

"And that is all you earn from making these beautiful bamboo stools, fifty poysha?"

"Yes."

Sufiya did not want to waste any more time talking. I watched as she set to work again, her small brown hands plaiting the strands of bamboo as they had every day for months and years on end. This was her livelihood. She squatted barefoot on the hard mud. Her fingers were callused, her nails black with grime.

How would her children break the cycle of poverty she had started? How could they go to school when the income Sufiya earned was barely enough to feed her, let alone shelter her family and clothe them properly? It seemed hopeless to imagine that her babies would one day escape this misery.

Sufiya Begum earned two cents a day. It was this knowledge that shocked me. In my university courses, I theorized about sums in the millions of dollars, but here before my eyes the problems of life and death were posed in terms of pennies. Something was wrong. Why did my university courses not reflect the reality of Sufiya's life? I was angry, angry at myself, angry at my economics department and the thousands of intelligent professors who had not tried to address this problem and solve it. It seemed to me the existing economic system made it absolutely certain that Sufiya's income would be kept perpetually at such a low level that she would never save a penny and would never invest in expanding her economic base. Her children were condemned to live a life of penury, of hand-to-mouth survival, just as she had lived it before them, and as her parents did before her. I had never heard of anyone suffering for the lack of
twenty-two cents.
It seemed impossible to me, preposterous. Should I reach into my pocket and hand Sufiya the pittance she needed for capital? That would be so simple, so easy. I resisted the urge to give Sufiya the money she needed. She was not asking for charity. And giving one person twenty-two cents was not addressing the problem on any permanent basis.

Latifee and I drove back up the hill to my house. We took a stroll around my garden in the late-afternoon heat. I was trying to see Sufiya's problem from her point of view. She suffered because the cost of the bamboo was five taka. She did not have the cash necessary to buy her raw materials. As a result, she could survive only in a tight cycle—borrowing from the trader and selling back to him. Her life was a form of bonded labor, or slavery. The trader made certain that he paid Sufiya a price that barely covered the cost of the materials and was just enough to keep her alive. She could not break free of her exploitative relationship with him. To survive, she needed to keep working through the trader.

Usurious rates have become so standardized and socially acceptable in Third World countries that the borrower rarely realizes how oppressive a contract is. Exploitation comes in many guises. In rural Bangladesh, one
maund
(approximately 37 kilograms) of husked rice borrowed at the beginning of the planting season has to be repaid with two
maunds
at harvest time. When land is used as security, it is placed at the disposal of the creditor, who enjoys ownership rights over it until the total amount is repaid. In many cases, a formal document such as a
bawnanama
establishes the right of the creditor. According to the
bawnanama,
the creditor usually refuses to accept any partial payment of the loan. After the expiration of a certain period, it also allows the creditor to "buy" the land at a predetermined "price." Another form of security is the
dadan
system, in which traders advance loans against standing crops for purchase of the crops at predetermined prices that are below the market rate. Sufiya Begum was producing her bamboo stools under a
dadan
arrangement with a
paikar
.

In Bangladesh, the borrowing is sometimes made for specific and temporary purposes (to marry off a daughter, to bribe an official, to fight a court case), but sometimes it is necessary for physical survival—to purchase food or medication or to meet some emergency situation. In such cases, it is extremely difficult for the borrower to extricate himself or herself from the burden of the loan. Usually the borrower will have to borrow again just to repay the prior loan and will ultimately wind up in a cycle of poverty like Sufiya. It seemed to me that Sufiya's status as a bonded slave would only change if she could find that five taka for her bamboo. Credit could bring her that money. She could then sell her products in a free market and charge the full retail price to the consumer. She just needed twenty-two cents.

The next day I called in Maimuna Begum, a university student who collected data for me, and asked her to help me make a list of people in Jobra, like Sufiya, who were dependent on traders. Within one week, we had a list prepared. It named forty-two people, who borrowed a total of 856 taka–less than 27 dollars.

"My God, my God. All this misery in all these families all for of the lack of twenty-seven dollars!" I exclaimed.

Maimuna stood there without saying a word. We were both sickened by the reality of it all.

My mind would not let this problem lie. I wanted to help these forty-two able-bodied, hard-working people. I kept going around and around the problem, like a dog worrying a bone. People like Sufiya were poor not because they were stupid or lazy. They worked all day long, doing complex physical tasks. They were poor because the financial institutions in the country did not help them widen their economic base. No formal financial structure was available to cater to the credit needs of the poor. This credit market, by default of the formal institutions, had been taken over by the local moneylenders. It was an efficient vehicle; it created a heavy rush of one-way traffic on the road to poverty. But if I could just lend the Jobra villagers the twenty-seven dollars, they could sell their products to anyone. They would then get the highest possible return for their labor and would not be limited by the usurious practices of the traders and moneylenders.

It was all so easy. I handed Maimuna the twenty-seven dollars and told her, "Here, lend this money to the forty-two villagers on our list. They can repay the traders what they owe them and sell their products at a good price."

"When should they repay you?" she asked.

"Whenever they can," I said. "Whenever it is advantageous for them to sell their products. They don't have to pay any interest. I am not in the money business."

Maimuna left, puzzled by this turn of events.

Usually when my head touches the pillow, I fall asleep within seconds, but that night sleep would not come. I lay in bed feeling ashamed that I was part of a society that could not provide twenty-seven dollars to forty-two skilled persons to make a living for themselves. It struck me that what I had done was drastically insufficient. If others needed capital, they could hardly chase down the head of an economics department. My response had been ad hoc and emotional. Now I needed to create an institutional answer that these people could rely on. What was required was an institution that would lend to those who had nothing. I decided to approach the local bank manager and request that his bank lend money to the poor. It seemed so simple, so straightforward. I fell asleep.

The next morning I climbed into my white Volkswagen beetle and drove to my local branch of the Janata Bank, a government bank and one of the largest in the country. Janata's university branch is located just beyond the gates of the campus on a stretch of road lined with tiny stores, stalls, and restaurants where local villagers sell students everything from betel nuts to warm meals, notebooks, and pens. It is here that the rickshaw drivers congregate when they are not ferrying students from their dormitories to their classrooms. The bank itself is housed in a single square room. Its two front windows are covered with bars and the walls are painted a dingy dark green. The room is filled with wooden tables and chairs. The manager, sitting in the back to the left, waved me over.

"What can I do for you, sir?"

The office boy brought us tea and cookies. I explained why I had come. "The last time I borrowed from you was to finance the Three Share Program in Jobra village. Now I have a new proposal. I want you to lend money to the poor people in Jobra. The amount involved is very small. I have already done it myself. I have lent twenty-seven dollars to forty-two people. There will be many more poor people who will need money. They need this money to carry on their work, to buy raw materials and supplies."

"What kind of materials?" The bank officer looked puzzled, as if this were some sort of new game whose rules he was not familiar with. He let me speak out of common respect for a university head, but he was clearly confused.

"Well, some make bamboo stools. Others weave mats or drive rickshaws. If they borrow money from a bank at commercial rates, they will be able to sell their products on the open market and make a decent profit that would allow them to live better lives. As it is now, they work as slaves and will never manage to get themselves out from under the heel of the wholesalers who lend them capital at usurious rates."

"Yes, I know about
mahajons
[moneylenders]," the manager replied.

"So I have come here today because I would like to ask you to lend money to these villagers."

The bank manager's jaw fell open, and he started to laugh. "I can't do that!"

"Why not?" I asked.

"Well," he sputtered, not knowing where to begin with his list of objections. "For one thing, the small amounts you say these villagers need to borrow will not even cover the cost of all the loan documents they would have to fill out. The bank is not going to waste its time on such a pittance."

"Why not?" I said. "To the poor this money is crucial for survival."

"These people are illiterate," he replied. "They cannot even fill out our loan forms."

"In Bangladesh, where 75 percent of the people do not read and write, filling out a form is a ridiculous requirement."

"Every single bank in the country has that rule."

"Well, that says something about our banks then, doesn't it?"