Muhammad Yunus, winner of the 2006 Nobel Peace Prize, likes to compare his microcredit programs with the current global economic crisis. Yunus spoke Feb. 5 at UNC’s Kenan-Flagler Business School to an outsized crowd and standing ovation in an event, sponsored with UNC’s Office of International Affairs, through its Global Education Distinguished Speakers Series.
The Grameen Bank of Bangladesh, which Yunus founded in 1983, last year launched a microcredit project in New York City providing small loans to five women in Jackson Heights. Now, the project has grown to encompass 500 women who have taken loans that average about $2,200. The repayment rate has never fallen below 99 % on the project, added Yunus.
“The same city where the big banks are [and] they can’t get their money back,” Yunus said. “There is this tiny little thing … recovering their money with no problems, no lawyers and no paper to tie them down. It is a good time to raise the question, ‘Who is credit-worthy?’”
“Dr. Yunus' ideas have inspired and improved the lives of millions of people around the world,” said James W. Dean Jr., dean of Kenan-Flagler. “The values that he brings to his work - an ethic of service, a willingness to explore innovative solutions to vexing problems, and a deep commitment to community - are shared by our faculty, staff and students.”
Yunus, who shared the Nobel Prize with Grameen Bank, started the Grameen Bank project in 1976 with one small personal loan. Now, the bank has 2,535 branches in 83,343 villages; as of last October, Grameen’s deposits totaled the equivalent of more than $844 million in U.S. dollars. The bank’s loan recovery rate is more than 98%, and 95% of the bank’s equity is owned by its more than 7.6 million borrowers worldwide – 97% of them women.
Yunus said he began his microcredit efforts after witnessing the poor in Bangladesh falling victim to loan sharks for small loans.
“[The loan sharks] grabbed the whole person, the whole family for their own use and converted the family to a kind of slave labor just from loaning that money,” he said. “The solution was to give this money from my pocket and tell them to return the money to the loan sharks and be free. If you can make so many people so happy with such a small amount of money why shouldn’t you do more of it?”
Yunus added that his philosophy is that all human beings are entrepreneurs, that entrepreneurship is not a talent isolated to a select few. To demonstrate this theory, Grameen launched a project four years ago focusing exclusively on beggars. Grameen offered beggars the option of taking on loan items like cookies and toys door-to-door to offer for sale while they were begging. While Grameen envisioned that 2,000 to 3,000 would join the program, it has 100,000 beggars among its ranks.
“More than 11,000 have stopped begging completely because they became successful door-to-door salespeople,” he added. The remainder is part-time beggars. They will tell you which house is good for begging and which house is good for selling. They’ve never been to business school, and they figured out the market segmentation.”
He suggested that business school students consider working for what he calls a “social business,” one where the focus is on doing good and not making a profit. His latest book, “Creating a World without Poverty: Social Business and the Future of Capitalism,” also focuses on this theme.
Grameen has partnered with the French company Group Danone, for example, to offer very low cost yogurt to malnourished children in Bangladesh. The yogurt is infused with the nutrients lacking in the children’s diets. If children eat two cups of the yogurt per week, they can escape malnutrition in eight or nine months, he added.
UNC Kenan-Flagler has sponsored a microfinance course for undergraduates for the past three years. The University also has a very large microfinance organization – the Carolina Microfinance Initiative – that was incubated at Kenan-Flagler and has more than 100 members. Kenan-Flagler continues to sponsor the organization.