Defying the System

The Lee Kuan Yew School of Public Policy along with Institute of South Asian Studies organized a forum on “Bangladesh and Singapore: Developing a Development Mindset” on 2 November 2007. The inaugural address was delivered by Prof. Muhammad Yunus, the Nobel Laureate. According to him, the problems our societies facing today cannot be solved by the existing system because it is the same system which has created these problems. The solution to these problems lies in “defiance”. If we challenge the existing system and explore alternative methods, the objective will surely be achieved.

According to him, he started Grameen Bank with a total capital of $ 27. He faced many problems from the formal system and existing institutions. Grameen Bank declared two things – (1) financial system is wrong because it rejects the poor and helps the rich, and (2) banking system is wrong because rejects the women. However, he also faced similar problems. Even though he wanted to help the women and bring them into business, they were very apprehensive. According to him, this denial or “no” is not her voice; it is the voice of history and when the women will say “let me try” that would be the success for Grameen Bank. It took 6 years for Grameen Bank to achieve this success. Though Grameen bank’s policy was 50:50 male-female proportion, in borrowing pattern it observed that money going to the family through women has tremendous impact than money going through men. The obvious question then was why 50:50? Grameen Bank extended itself to reach out to more women and today out of 7.5 million borrowers of Grameen Bank 97 per cent are women.

As policy, Bank tries to implement its 16 decisions in the grassroots through women. Some of them are sending children to school, stop giving and receiving dowry, etc. Today almost 100 percent of Grameen children are in school and 18,000 Grameen student are having access to Bank’s educational loan and pursuing higher education degrees in medicine, engineering and other fields.

He also mentioned that the world is going through tremendous transformation and the world is not going to be as it is today. The next generation would speak different languages and behave differently. Sometimes we may like it, sometimes we may not. This change in relationship will change the society and this change is happening in exponential way. What took Grameen Bank 20 years to achieve may now take 5 or 10 years to achieve the same.

Grameen Bank’s effort has been extraordinary. Today of the 150 million people in Bangladesh, almost everyone has a cell phone. The information technology will change our lives and this is only the beginning. He also mentioned about their success in solar energy among the rural population in Bangladesh.

Answering the questions he pointed out that human being is not a machine for making profit. They are not selfish individuals involved in economic business for profit. They are also involved in what he calls “social business” where personal profit takes a back seat and profit for the people or public profit becomes important; where individual think about common public good and try to include others in the process of development. This development will establish a humane world. This social business cannot thrive on “charity” because in charity you always have to look for funds but in social business you generate money from the initial capital not for personal profit but to be reinvested for common public good. In this case the concept of micro-credit becomes important.

He distinguished between micro-credit and money-lending. According to him, many of the organizations are imposing high rate of interest and still calling themselves as micro-credit programme. He divided micro credit into three categories – (1) green zone where the interest rate below 10 per cent; (2) yellow zone where the interest rate between 10 and 15 per cent; and (3) red zone where the interest rate goes beyond 15 percent. And anyone involved in the social business and charging more than 15 per cent interest are not in micro credit but in money lending process. The primary objective of Grameen Bank was to oppose the high rate of interest and help the rural poor have access to capital with lower interest rate. This will not only remove the poverty in rural areas but also develop entrepreneurship among them and help creating a more humane world. Micro-credit thus has become a tool to defy the conventional wisdom which indeed is the conventional stupidity.