Book: Banker to the Poor

Author: Muhammad Yunus

Publisher: Public Affairs publishers, 2007

Volume: 289 pages

Cost: Shs 63,000

Reviewer: Martyn Drakard

Available from Aristoc Is capitalism as we know it - the free market whose main aim is profit- the best and fairest business system possible? Not according to Muhammad Yunus, founder of the Nobel-prize winning Grameen Bank. Surely no harm would come to the free market if not all businesses were profit-maximising; surely capitalism is amenable to some improvements.

The common notion that the poor are poor simply because they are illiterate, lazy, unmotivated and disorganized is not sustainable. They are poor, he claims, because they cannot retain the returns of their labour. They cannot control capital because they do not inherit either capital or credit and no-one gives them access to it because they are not considered credit-worthy.

Hence the vicious circle of inherited poverty. The poor's lack of access to the Internet and good quality education makes matters worse; but most of all they cannot reach the real market, because of barriers and protections, perhaps designed to help them, but which in fact have had the opposite effect. These structures protect the rich and clever instead.

Yunus says that by trying to ensure equality of opportunity, the state has wound up using taxpayers' money, setting up massive bureaucracies to look after the poor. From his own experience of Grameen Bank, poor people can get themselves out of poverty if they're given the same opportunities as others. No normal person chooses to have to ask himself everyday where bread will come from, and how he will shelter and educate his children.

Yunus' answer to the challenges of the poor of Bangladesh and the land available -which is largely under-exploited - was to establish a bank, the Grameen, devoted to providing the poorest of Bangladesh with minuscule loans.

It all started one day in 1976 when Yunus, a university lecturer out of touch with the real economy around him, loaned $27 from his own pocket to forty-two people living in a tiny village, and got it back.

These first micro-entrepreneurs only needed enough credit to purchase the raw materials for their various trades; his loan helped them break the poverty cycle, and they have never looked back. His solution: lend poor people money on terms they find suitable, teach them a few sound financial principles, and they will help themselves. And his system works.

By the time he wrote the book, Grameen had provided loans totaling six billion dollars to seven million families in rural Bangladesh. Over 250 institutions in 100 countries now operate micro-credit programmes based on this methodology, turning Grameen into a kind of world movement to eradicate poverty through micro-lending.

The bank faced huge problems to begin with; and all is told through the personal experiences of the pioneers. But it was worth the effort. Yunus' honesty in changing his view from the bird's eye - where the distance from the problem makes one arrogant - to the worm's eye, where everything is as large as life, paid off in more ways than one. An inspiring book and good reference source.