Muhammad Yunus: Lifting People Worldwide out of Poverty
Published : May 27, 2009 in Knowledge@Wharton
What began with a loan of $27 to 42 women in a small village 33 years ago has grown into a global microcredit movement that has changed the lives of millions of poor people around the world. Muhammad Yunus, founder and managing director of Bangladesh's Grameen Bank, was the guest speaker at Wharton's MBA commencement on May 17 and the recipient of an honorary doctor of laws degree during the University of Pennsylvania's commencement on May 18. Yunus spoke with Knowledge@Wharton about his successes, challenges and upcoming initiatives.
An edited version of the transcript follows.
Knowledge@Wharton: Our guest today is Muhammad Yunus, winner of the 2006 Nobel Peace Prize and founder of the microcredit movement -based on the idea of making very small loans to the world's poorest people, thereby giving them the opportunity to raise themselves and their families out of poverty. Thank you for joining us.
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Yunus: Thank you.
Knowledge@Wharton: People often associate good works and worthwhile causes with non-profit institutions. But you have emphasized that your model is a for-profit one, not a non-profit one. Can you briefly describe that model and tell us why the distinction is so important to you? Yunus: We are not trying to create a non-profit. That was not our intention. Our intention was to persuade the bankers to lend money to poor people, so my struggle was always with the bankers. Initially, I offered myself as a guarantor, and then took the money from the bank and gave it to people. So it was an extension of the bank's activities. When we saw that it was working well and the banks were not as enthusiastic as we were, we thought maybe we should have a separate bank created for this purpose. Finally we did that in 1983 -- called Grameen Bank or the "village bank." So we became a bank because it is a bank's activity. We lend money to the poor. People sometimes refer to us as an NGO. We have to explain that we are not an NGO. It's not that we are belittling NGOs.... I'm simply stating that people get confused, thinking that because we work with the poor, we must be an NGO. I say, no, we are a bank and it is owned by the poor people. The owners of the bank are the borrowers of the bank. That's the distinction that we want to make, to clarify what we are.
Knowledge@Wharton: Grameen Bank has grown dramatically since the time that you founded it. I've read that you now have operations in more than 100 countries, and you have seven million borrowers in Bangladesh alone. But your success with Grameen has led to a lot of other people entering the microcredit area. Some of them are commercial banks. Some are funded by venture capitalists. How has that changed the microcredit model, and can you explain some of the issues that have come up as a result of that?
Yunus: Just a little clarification: We work -- or at least the main idea has been working -- in almost all the countries of the world. So now it's not right to say 100 countries. Knowledge@Wharton: So you're even more successful!
Yunus: At least the idea is that it's spread. Whether they are big or small -- successful or not - All materials copyright of the Wharton School of the University of Pennsylvania. Page 1 of 10
Muhammad Yunus: Lifting People Worldwide out of Poverty: Knowledge@Wharton (http://knowledge.wharton.upenn.edu/article.cfm?articleid=2243)
there are presences in all those countries. Right now, we are nearly eight million borrowers within Grameen Bank itself. In that way,...