Saket Vora

This morning I hopped on the train to Santa Clara University to hear a keynote by Dr. Muhammad Yunus. Dr. Yunus is the founder of the Grameen Bank (or village bank) and a pioneer in the microfinancing movement that has lifted millions of people out of poverty. He was awarded the 2006 Nobel Peace Prize for his efforts (and picked up 28 honorary doctorates). Dr. Yunus was the morning keynote for a program on Transformative Changes through Science and Technology: The Role for Social Benefit Entrepreneurs. Last night, the winners of the Tech Awards were announced at a gala.

Dr. Yunus is an inspiration — an optimistic man who believed in the good of people. In 1976, he was a professor of economics at Dhaka University (he is Bangladeshi) when he became frustrated at the plight of the poor in Bangladesh. So he gave out loans of $27 to 42 poor villagers. This wasn’t a handout — he asked them to repay him whenever they could. But they used the money to help a fledging business and all of them paid him back. Dr. Yunus spoke of the early difficulties: he’d go to a bank and ask them to give out loans, and they said it would never work, you couldn’t trust the poor people to pay it back. Dr. Yunus said he’d be responsible. And it worked. So the bank said, “well, it’s just one village. Won’t work for two.” So Dr. Yunus made it work for two. Still, “that’s just two. Five villages is different.” So Dr. Yunus made it work for five. Then ten. Then 20. Today, the Grameen Bank has 7.5 million borrowers with 2,515 branches covering 97% of Bangladeshi villages. The microcredit and microlending system it pioneered and perfected is now in action in all corners of the world. 97% of the borrowers are women. And the repayment rate is 99.5%.

A few notes I jotted down:

• Before Grameen Bank, women made up less than 1% of the borrowers in Bangladesh. But Dr. Yunus and his colleagues saw that money that went to women had better impact than if they gave it to men, so they started to focus on woman. Other microfinance organizations start off with only working with women.
• The borrowers of the Grameen Bank, the poor people, ARE the owners of the bank too. This was a tough sell to the Bangladeshi government beacuse they couldn’t understand how poor people could own the very bank they use. But it works.
• The Grameen Bank keeps 50% more cash than the amount of money it has lent out. This is because Bangladesh is a disaster-prone region, so they need to be ready to make loans right after diaster strikes.
• Dr. Yunus instructed not only the Grameen Bank, but each individual branch to stay self-reliant. They all had to maintain appropriate lending and savings rate.
• Some people criticized the bank, stating that it was only meant for the ‘entrepreneurial poor’. Dr. Yunus was confused by this, because he said ‘all people are entrepreneurial’. So they tried giving loans out to the lowest section of society – beggers. They told the beggars, “look, you go begging for food or money. I’ll give you a loan, buy something to sell to people too.” So they tried it. They gave some $15 loans to a few hundred beggars (I think). Zero interest, undefined payback period. The one rule was that if they wanted another loan, they would have to pay back the first one. Bah! People said these people wouldn’t possibly pay you back. There are now 100,000 beggars in the system, many of them on the 2nd, 3rd, or 4th loan.
• 100% of the children of Grameen Bank borrowers go to school, because education is important. These are illiterate families, and sure enough some students were so talented that they shot to the top of the class once they were simply given a chance to succeed. Some 23,000 students of poor, illiterate families are now in college.
• When some of these students graduated, they went to Dr. Yunus asking for help finding a job. Dr. Yunus said “You come from a Grameen Bank family. You are special. You do not seek jobs. You create jobs.” The graduates said, “but we don’t have jobs to begin with!”  The Grameen Foundation has gone on to start Grameen Phone, Grameen Energy, Grameen Healthcare, etc.
• Grameen Bank USA opened its first branch in Queens, New York City. People scoffed – c’mon, this is New York City, not some Bangladeshi village! Though the average Grameen loan is $12 in Bangladesh, the average loan in Queen was $2,200 given to 300+ woman. The result? Nearly 100% repayment. It’s universal.
• Each person has two selves, a selfish self and a selfless self. Business as it is conventionally thought of is purely profit-making, and thus appeals to the selfish self. Social business is one in which the goal is not money, but of social impact and helping other people. Dr. Yunus had a nice way of putting it: in business, profit is the end and money is the means. In social business, social benefit is the end, and money is the means.

It was a thrill to get to see and hear from such an influential man. A gracious, calm, and geninue speaker. The collective respect and admiration for him from the crowd was palpable in the auditorium. For the past 30 years people would say it couldn’t be done, that it couldn’t scale, it wouldn’t be sustainable, it couldn’t possible succeed. And he worked past all of the naysayers. And the results are plain to see. Dr. Yunus said that we each have a small time on this earth, and he would like people to work to be a positive influence on others, for it is what you will really be remembered by.