The Grameen model of development is changing the face of rural Bangladesh. It is also fast gaining popularity world-wide, with developed nations such as Norway deciding to replicate it.
ANY query about Professor Muhammad Yunus, founder of the globally renowned Grameen Bank, elicits a uniform response from different people, whether a business executive travelling on a flight from Calcutta to Dhaka or a reasonably educated woman in rural Bangladesh: "If any Bangladeshi deserves a Nobel Prize, it is he."
Even United States President Bill Clinton had at one time expressed the same sentiment to U.S. journalists, but Yunus himself plays down the incident. Speaking to this correspondent at the Grameen Bank office in Dhaka, Yunus said that when Clinton was running for the presidency, he made a pledge that if elected, he would bring 1,000 Grameen programmes to the inner cities of the U.S. "The journalists kept pestering him: 'What is this programme? How dare you think that something that works in Bangladesh can work in the U.S?' It was in this context that Clinton said, 'This guy deserves the Nobel Prize.' "
FOR the Grameen movement, it has been a long and purposeful journey since the time of the great famine in 1974 when Yunus, after realising the futility of "teaching grand economic theories" that had no relevance to the lives of the poor people of Bangladesh, initiated the first steps towards the setting up of Grameen Bank by giving a personal loan of $27 to 42 men in the villages near Chittagong. Yunus, who was a Professor of Economics at Chittagong University, was unable to convince bank managers to lend money to the rural poor without collateral security. Although he volunteered to be a guarantor for the borrowers, it took six months of paperwork to secure a $300 loan. Even after this loan was repaid, the banks could not be persuaded to extend further loans. It was then that Yunus decided to set up a bank for the poor. After a long and exhausting wait during which he had to run around to get permission from the central bank and various government offices to set up a bank exclusively for the poor, Grameen Bank came into existence as an independent bank in 1983.
When Grameen Bank initially invited the poor to borrow from it, they thought that it was a joke. It took a lot of effort to assure them that the loan came without any strings attached to it. Grameen Bank later started giving importance to women because it found that the money that was lent to women played a significant role in pulling the entire family out of poverty.
By the end of February 1998, Grameen Bank had given loans to 2.3 million people (94 per cent of them women), totalling $2.3 billion (about 91.5 billion taka) spread over 38,173 villages. The magnitude of its operations can be gauged from the fact that it has reached more than half of Bangladesh's 68,000 villages. As Yunus proudly points out, Grameen members' total savings amount to over $150 million. "Today, if they wish," said Yunus, "they can buy the largest enterprise in Bangladesh." He believes that if the concept of micro credit is replicated all over the world, it is possible to banish poverty "to the museums".
The repayment rate is an impressive 95 per cent. This figure assumes more significance when one learns that the overall repayment rate for commercial banks in Bangladesh is just a little more than 30 per cent. Commenting on the high incidence of default faced by other banks, Yunus said: "If the rich and the powerful do not pay, nobody can catch them. They can get away. They know these institutions are for their benefit and they take advantage of that. But when the poor know that if they do not pay back, they will not get any further loans."
Although these words may sound like mere rhetoric to sceptics, a visit to some of the 'Grameen' villages is an eye-opener.
ONE of the 1,106 Grameen Bank branches is located at Dakkainkhan Uttara village, about 30 km from Dhaka. Nurul Islam, manager of the branch, which controls 68 centres, agrees to accompany me to the weekly meeting at a nearby village. (The meeting is organised by Grameen Bank to collect money from women who have borrowed from it.) The back-breaking ride in a Toyota Hi Ace van (Bangladesh is flooded with Toyotas) on the narrow, winding rural roads does not deter Islam from transacting his daily business with the help of a cellphone. Islam has got this phone courtesy Grameen Phone, a "for-profit member" of the Grameen family of enterprises, which includes Grameen Uddog, Grameen Shakti, Grameen Shamogri, Grameen Fund, Grameen Telecom and Grameen Cybernet.
Fifty-one per cent of Grameen Phone's shares are held by Telenor of Norway, 35 per cent by Grameen Telecom, 9.5 per cent by Marubeni of Japan, and the remaining 4.5 per cent by a U.S. company owned by a non-resident Bangladeshi.
Grameen Phone, a commercial venture, has already provided 20,000 connections in and around Dhaka. It would have moved closer to its target of connecting about half a million subscribers through this wireless communications system over the next four years if it had not run into trouble with the government-owned BDT&T (Bangladesh Telephone and Telecom) Board. Predictably enough, the BDT&T Board, whose lines are not very reliable, is not amused by the fact that its monopoly has been broken by a "poor people's enterprise" like Grameen Phone.
It accuses Grameen cellphone subscribers of choking its network since most of the callers dial BDT&T numbers. At present Bangladesh has only four lakh fixed telephone connections, and its telephone penetration rate is only one for 300.
At the moment, the BDT&T Board has presented some problems in Grameen Phone acquiring new subscribers. Interestingly, 65 of Grameen Phone's 20,000 existing subscribers are Grameen borrowers from the villages around Dhaka. For example, Islam's branch has provided cellphones to 18 women. These women, who virtually operate mobile public call offices (PCOs), even provide the added service of going to the homes of people who expect calls. The residents of these villages no longer have to travel to Dhaka to make international calls. The women, whose clients are villagers with relatives in West Asian countries, Malaysia and other South-East Asian countries, do roaring business. Interestingly, Grameen Phone, which charges four taka per minute for commercial use, gives the women cellphone operators a 50 per cent concession.
Hasina, a cellphone operator at Uzampur village, about 40 km from Dhaka, said: "For this service they give me 20, 40 or 50 taka. And if the person is a good friend, or gives me a lot of business by making many calls, I provide this service (of going to their homes when they expect a call) free of cost." Hasina is one of the 'Grameen' women who have done a dreamer like Yunus proud. She entered the Grameen family nine years ago with as much trepidation as most of the 94 per cent of Grameen Bank's women borrowers did. Initially, most of these women pleaded with Grameen Bank to give loans to their husbands since they were not confident that they (the women) could make profits and repay the loan. Hasina's foray into the world of micro credit began with a moderate loan of 2,000 taka, which went into paddy husking. By meticulously following the repayment stipulations, and returning the entire amount with 10 per cent interest in 50 weeks, Hasina took a 3,000-taka loan in the second year to set up a grocery shop. She borrowed 5,000 taka in the third year to expand the shop. The next year she bought a milch cow with a loan of 7,000 taka and, once this was repaid, she bought another cow. She then started a fish culture business with a loan of 13,000 taka. Three months ago she became the proud owner of a cellphone, for which she got a loan of 22,000 taka from Grameen Bank. Hasina's association with Grameen Bank has ensured that all her three children are in school; her house has electricity, a cot, a two-in-one music system and a television set. She proudly tells you that she earns about 6,000 taka a month. What she is not so willing to share is the information that her husband, who works in a nearby mill, brings home less than what she does.
ACCORDING to Jannat-e-Quanine, Deputy General Manager (International Projects) of Grameen Bank, the Grameen experience has been replicated in 64 countries around the world, including India. "Ultimately, we want to reach 100 million people in the world."
What is surprising is that Norway, a developed country, has replicated the Grameen experience through the Self Help project of the Norwegian People's Aid. Why has an affluent country such as Norway opted for a micro credit project? Self Help Project Director Unni Beate Sekkesaeter, who visited Grameen Bank's headquarters in Dhaka, explained: "In Norway, there are thousands of educated and highly skilled people from various countries who have come looking for jobs that are just not there. The Norwegian people expect them to do lowly jobs, for which they are too skilled. This has resulted in their marginalisation." She has adopted the Grameen model for about 40 such immigrants and refugees with good results.
Other affluent countries such as Sweden and Switzerland have expressed an interest in Grameen Bank idea. The United Nations High Commission for Refugees has invited Sekkesaeter to Geneva to talk about her project.
WORKING with women in an Islamic country like Bangladesh has its limitations. Even though a few non-governmental organisations have brought the Grameen kind of micro credit programme to India, Yunus feels that the concept will succeed only if the government supports the idea and creates an environment conducive to its working. According to Yunus, former Finance Minister Manmohan Singh expressed a keen interest in the Grameen concept when he visited the Grameen headquarters and asked him (Yunus): "We are pouring billions and billions of rupees down the drain and we do not see any results. But you lend money and your money comes back. So what is the trick, or the magic?" Even though Manmohan Singh's interest did not translate into concrete action, Yunus believes that a country like India where "people are much more resourceful" could do wonders with such a micro credit programme. According to him, the limitations of working with women in a Muslim country like Bangladesh could also be overcome if the concept is accepted in India.
Speaking about Grameen Bank's "magic" 95 per cent recovery rate, Yunus denied the use of "inhuman" methods to recover loans. "If this were true," he said, "our staff would be the most hated people in the villages, which is not the case." The entire operation revolves around giving credit to groups of five women. The responsibility of paying the instalments rests with the entire group and if one member is in trouble or is ill, the others support her.
As the Deputy Managing Director of Grameen Bank Khalid Shams pointed out, an element of trust and a sense of belonging are very much part of the system. For instance, when the weekly collection of a couple of thousand taka was once looted, the villagers caught the thieves. They told them: "Why are you taking this money? It belongs to us, the poor."
RESPONDING to Yunus's complaint that economists scoff at the 'Grameen model' of poverty alleviation, president of the Bangladesh Economic Association, Wahiduddin Mahmud, told Frontline: "Dr. Yunus has made a great innovation... We did not know earlier that it would work so well. It is an excellent model, its potential is not to be underestimated, and it can play a great role in alleviating poverty." He went on: "I am a sympathiser of Grameen Bank. I sit on the committees that look after the micro credit programmes of Bangladesh. But we will not become an industrialised country or achieve a sustained growth rate of 6 to 7 per cent with Grameen alone. You cannot overstretch the role of Grameen Bank."
For his part, Shams said: "Grameen does not pretend to assume overall societal responsibility to solve all the problems. It has identified a specific problem, and we say that poverty alleviation is a doable, feasible thing. And it can be done in our time. As sons of this soil, we owe it to ourselves. Let us put in our best." According to him, education, awareness, and political participation have to accompany poverty alleviation measures. "Even the poor should have the right to participate in the political process and in making macro-level policy. Only then will they be able to make sure that the policies serve their interests. Otherwise, people will be making polices only in Dhaka, saying, 'Oh, this is good for the poor', when in reality it is not."
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