Background of Muhammad Yunus
Contents | NYTimes Kiva Feature>>where it started...
Traveling to the nearby Jobra village, Yunus decided to study the lives of the Bangladeshi poor and learn about the many barriers to acquiring basic feed, house, and clothe necessities. The first person Yunus encountered in Jobra was Sufiya Begun, a 21-year old mother of three, whose livelihood depended on the sale of bamboo stools. Though Sufiya spent most of her day working on beautiful bamboo chairs, she was hardly able to earn enough money to feed herself. After some inspection, Yunus learned that Sufiya's problem was her reliance on middlemen, or paikars, to get the bamboo she used to make her stools. Each day, Sufiya borrowed bamboo from these paikars for five taka, roughly twenty-two cents. However, in order to actually afford the bamboo, Sufiya was continually forced to sell her stools back to the paikars for a fixed price of five taka and fifty poysha, earning her a profit of two cents each day. As Yunus remarks in his book Banker to the Poor: "The existing economic system made it absolutely certain that Sufiya's income would be kept perpetually at such a low level that she would never save a penny and would never invest in expanding her economic base. I had never heard of anyone suffering for the lack of twenty-two cents."
Yunus realized that Sufiya's problem could only be resolved if she could find the five taka to buy her bamboo, and avoid dealing with the paikars. That way, she could sell her products in a free market to charge a full retail price to consumers. In true resolve, Yunus and his students went around the village of Jobra and found all the individuals who were dependent on middlemen traders and loan sharks. They found 42 people in all--stool makers, basket weavers, rickshaw drivers, and more--who faced the same situation as Sufiya. Altogether, the 42 borrowers needed 856 taka, less than 27 dollars. Stunned by the small amount it would take to free this group economic dependence, Yunus made his first loan out of his own pocket to the people of Jobra village.
...where it went...
To finance additional loans in Jobra, Yunus went to a nearby bank and signed as guarantor of poor borrowers, not demanding any collateral from his clients. His work laid the foundation for the Grameen Bank, established in 1983, a bank devoted to serving the poorest people of Bangladesh. In creating the Grameen Bank, Yunus questioned the unworkable and hardheaded customs of loan lending that had traditionally prevented poor people from receiving loans. Instead, Yunus sought to rethink the concept of credit to best help his entrepreneurs succeed. As such, Grameen's methodology of banking to the poor, eventually termed 'microloaning' or 'microcredit', included several features to help the success of its borrowers. Such features included 'solidarity groups' that provided loan applicant support, daily/weekly loan repayments, and a guarantee of no legal suits or allegations against loan recipients on the part of Bank.
...and where it is now.
Since its inception in 1983, the Grameen Bank has grown to serve over 78,000 villages with its 2,400 branches. The Bank has provided over 6.3 billion dollars total to 7.2 million borrowers, and boasts a loan recovery rate of 98.6 percent. Grameen has also been a pioneer in microcredit and a leading example to microfinance institutions all over the world. Today, more than 250 institutions in nearly 100 countries operate microcredit programs based on the Grameen methodology. In 2006, Muhummad Yunus and Grameen were jointly awarded the Nobel Peace Prize for their "efforts to create economic and social development from below."
The main concept behind microfinance is that each individual has the potential for great success and that the contributions of each individual can bring us one step closer to ending poverty. As Yunus says: "Unleashing of energy and creativity in each human being is the answer to poverty." With this in mind, we ask you to join us. We hope the Gumball Challenge will provide you with an opportunity to learn more about microfinance and to help entrepreneurs around the world ensure their own success. In addition, we hope this Challenge gives you an opportunity to test your own potential and spark your own creativity and entrepreneurial spirit.
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