He’s an economist, a banker and the man who developed the concept of microcredit. Mohammad Yunus set up the Grameen bank in Bangladesh more than 30 years ago, and in 2006 they were jointly awarded the the Nobel Peace Prize. In simple terms the concept he dreamt up was to loan small amounts of money to entrepreneurs, too poor to qualify for traditional bank loans. His view was that rural poor people had skills that with a little financial backing could help lift them out of poverty. He also strongly believed that people from a poorer background were more likely to repay their loans.
He’ll be with us for the whole of Friday’s programme taking your questions not only about microcredit but about the global financial crisis. If you’ve recently lost your home or job or fear they are under threat or are feeling the pinch in your pocket – he is here to answer your questions.
But in these difficult economic times, when many people are thinking that western banking systems have failed – are there lessons to be learnt from microcredit?
For many people in poverty in the developed world, the only way to get hold of money is to borrow from loan sharks with exorbitant interest rates – have you borrowed money in this way? Do you think microcredit could work for you?
The loans are primarily taken up by women and by 2006 it had loaned $5.7bn and had 6.6 million borrowers in Bangladesh.
Not everyone believes it works. This blogger says the problem lies with the expectation by some that it is the answer to rural poverty. Vijay Mahajan, Chairman of Basix, an Indian rural finance institution says microcredit “seems to do more harm than good to the poorest”
Post your questions below for Mohammad Yunus.
RSS feed
BBC World Have Your Say 
Do you think it is a good idea for taxpayers to bail out failing banks, or do you think this only makes matters worse? This is a rather divisive issue in the USA, and I would be interested to hear your perspective on it.
firstly I would like to say that your moralistic ideals of helping others when possible are, I am searching for the right word to describe an eastern attitude, I can’t find one in our western language!
We have so much to learn from so called developing countries, what do you see as the way forward to installing moral behaviour into the western world?
The Micro credit finance has been trying to assist in Uganda but the interest rates have been so high and besides pay back period allowed has been so short. In most cases the borrowers have been harassed for failure to pay in time. This has been basically because its the women who borrow with out the knowledge of their husband and in turn the micro finance staffers act as perhaps court bailiffs and auctioneers and carry of household properties including bedding’s, cups and plates,living the same borrowers coin less and property less. This has caused some poor mirror image on the borrowers!
I doubt if a country like Bangladesh has anything to teach us except how to be poor. This is just the usual anti-Westernism of Western leftists, this time in the guise of fawning over the Third World and its non-achievements (fictions about higher spiritual values, a greater sense of community, being untainted by materialism, having so very much to teach the decadent, capitalist West, etc).
What nonsense. In the Nineteenth Century the Japanese encountered the West. They compared their way of life and ours. There was no cant about their conclusions: Japan’s inferiority to the West in myriad ways, and the need for Japan to learn from the West, reform itself, and rise to a Western standard of education, science, economic management, and social organisation. As a result nobody in Japan today needs to rely on micro-credit or put up with condescending Westerners praising the kind of backwardness for others that they would never for a moment tolerate for their own Western selves.
Re Western banking systems having failed (Rejoice! Oh socialists!!!). A set of failed banks are not equivalent to a failed system. A free market demands the failure of an incompetent bank, not that it be shored up by foolish, panicked governments wasting taxpayers’ money. The collapse of banks is part of the system, not evidence of its failure.
There much particularly in the area of creative bank accounting and above all in the parts ofn the world considered to be miserably poor, the little financial help extended to the masses to help lift them out of poverty. There is much the rich world’s banks can learn. Ros thanks for the good topic.
Maurice in Nairobi
This is really a funy quetion, nothing good western world would leaen from the third would countries rather than corruption, in the third world leaders are the decision markers, in Economy, scurity,employment so to inrich their families and friends, the second thing is that many are not well educated though they could read or write still they are not intellegent or creative people, most of them depend to western Aid,believe me if you vist an African house you would find USAID cone bag or cant. sure there is nothing you cuold get from 3rd world countries.
Southern Sudan, JUba
he did a great thinking but this is being misused down in africa like when i was down in uganda these microfinances could charge abnormal intrests that the local people could not afford so it turned out that they where looting the locals of their little assets.Ben from Juba South sudan
One of the amazing things about micro-credit is the way it empowers women. As a previous blogger pointed out though, some women fail to notify their husbands that they have taken out one of these loans. Does this happen because they feel that they would be punished, or are they trying to break from “traditional” roles of home focused works and continue to allow men to remain the heads of the economic family?
Additionally, what has micro-credit in Bangladesh done to combat the presence of foreign based companies in the area? Have they changed any of their practices since people now have some access to money outside of Western employment?
Nice to have a Bangladeshi in a WHYS show!
My questions:
1)People have talked that you have been doing business in the name of lending.How true is it?What do you have to say to those people?
2)Do you have plans to help talented youngsters in Bangladesh who actually can help develop the economy of Bangladesh?I know there are many youngsters who are brilliant academically but aren’t encouraged to work for the nation.Rather they work for Banks abroad.So,do you have plans to encourage them to work here for the development of Bangladesh?
3)How much effect do you think has the recently concluded Mutiny have on the picture of Bangladesh to the world?
4)Do you think going into politics is a solution for Bangladeshi youngsters who want ‘Change’ in their nation?
James from Kenya
Which vetting system do you use to find out which ideas are worth loaning money to and what risks have you ever accrued? I.e like defaulters of payment.
Interesting comments about microcredit empowering women.
Years ago I read an account of how Western aid workers gave small grants to the men in a very impoverished village in an east African country (Ethiopia, I think). The loans were to enable them to buy seed and basic tools with which to farm the land. The aid workers returned some months later to gauge progress. They were shocked to discover that nothing at all had changed. On inquiring, it turned out that the men who received the money had spent it all on beer and prostitutes. Fuller investigation revealed to the aid workers where they’d gone wrong: they’d taken Western assumptions and applied them in a non-Western setting. In that part of the world farming, like all hard labour, was done by the women. The role of the men didn’t extend beyond eating the food their wives had cultivated.
Women are often the actual workers in many developing countries. Western aid givers are often not alert to such important cultural variations. A reason why locally based aid schemes like microcredit are so much better.
Morocco now leads Arab states in terms of micro-credit. Micro-credit institutions in Morocco have seen an upswing in the number of applicants for loans. According to recent data, the increase is attributed to women, who borrow to finance small businesses in agriculture and handicrafts.
Micro-credits are one of the best means for poor people to get a good start and to be self-employed instead of lingering in their poverty and being at the mercy of big enterprises that can sack them outright when a recession is looming.
However, there remain some questions:
1- How the activities from micro-credits can survive when there is an economic recession? Is the current global economic downturn to their advantage or disadvantage?
2- What are the legal measures taken against those who can’t pay their debts back?
3- How is the current economic recession affecting micro-credits as banks are reluctant to lend money as they themselves need bailouts?
4- Do you think micro-credits are just a means to help poor women to subsist without giving them the means to have economic powers?
My question would be, “if a market historically could only fetch the price of 1 unit for a bag of rice, then a small loan was made to a few members of the market in a way that they could pay 2 units for a bag of rice, what is the new market price for the bag of rice? What happens to all of those people who once stretched to afford a bag of rice at 1 unit?”
The point being that bankers are the invasive species of any market. How much damage do small loans do over time. With the worlds consumer economy, “the US” failing to consume, what impact do you expect on the small start up companies that depend on the US economy. Would the population have been better to have just gotten by as it had for the thousands of years prior to the introduction of foreign capital?
Sir, I know you meant well and your heart was in the right place. But, “the road to Hell is paved with good intentions.”
@Taban:
“nothing good western world would leaen from the third would”
“sure there is nothing you cuold get from 3rd world countries.”
I simply cannot believe what I had read from Taban’s post.
MAYBE it’s just me, but I always believed that no matter WHAT part of the world you come from, there is something SOMEONE may learn from you.
So I post this question to Mr. Yunus: If a country is so poor and in need of a helping hand, and feels they cannot see the “light at the end of the tunnel”, how would you go about reversing such a course? And besides entrepeneurs, where else does the money go to, and do you have a say as to WHAT the money goes TO (such as education, schools, etc..)?
Hi Ros. The should learn that eveyone was born poor whoever the luckness of few individuals(RICHEST) should not be uses to oppress the poor comunities like cutting jobs.
My question to Mohammad Yunus is a philosophical, “devils advocate” one. Do you think that the very poor are basically more honest, more desperate, overall less jaded, less greedy than the people who apply for large loans? Or could it be that large amounts of money attract the avaricious and amoral? Could it truly be “money is the root of all evil”?
There is a lot to learn from eastern philosophy in business , management and accounting .
The west overwhelmed the east by con[vincing] ,debauchery and its firepower. Whilst they use the name of God to loot and conquer new territories. The east stand for care for society , humility and frugality. The west use idealistic moral stand to fool their naive victims to hand over their very soul. This did not only happen in the past but up to today and succeeded in bringing the world to its knees. Themselves too
From the far reaches of Africa, the Masai tribes , the sub continent of India, the Chettiars and the Chinese Confucian self help groups are great examples on how through altruistic business philosophies that help its society to prosper. This is what the west should learn from the less endowed people who beleive in u win , I win. I’ll be more prosperous if u prosper too.
Their ways wane when they were conquered and made to learn the western way including Marxism.
Dr Yunus policy microcredit system is not a way to abolish poverty at all.if this is the actual way or if the system is successful why this is not successful in our country(Bangladesh).percentage of poor in our country is not reduced at all that means when there was not microcredit system the percentage of the poor and after 30 years of the establishment of Grameen Bank cant afford to reduce the percentage of the poo in our country.if this is the appropriate way why this happen?
sabbir from Dhaka,Bangladesh
Could microcredit be a solution to the US bankning system’s current credit freeze? Is it even possible for “Rich World Countries” to begin some form of micro credit?
Be sure to mention Kiva on this topic. I have loaned small amounts of money directly to individuals all over the poorer regions. All have been payed back and reloaned. This is a wonderful idea thanks to the internet. Austin,tx
Mohamed Yunus is a model for all developing countries. I congratulate him for the great efforts in social and economic development of Bangladesh and for inspiring many others. I would like to know how he proceeded from 67 dollars to a well equipped bank?how did he deal with the people to pay back the credit? thanks
I think that what you have done and acheived is fantastic . You have shown great moral courage to use the existing financial system in a way that has truly helped many in the Third World .
You stand head and shoulders above the ”bankers ” who are now being brought to heel.
I would be interested to know your thoughts regards the limitations of your method ( if any ) regards a solution for the present financial crisis , and what are your feelings and thoughts regards the ”financial speculators and ‘wide boys’.
Dear Dr. Yunus,
How microcredit program has been working in Mexico? and Latin America? I am from Mexico and I know that previous social programs to relief poverty have been spoiled for electoral or corruptions issues. How do you face these problems?
Also, I would be interested to see how microcredits has helped to empower women’s roles at the local level and in their participation in their own personal economy?
Thank you!
Yazmin Garcia
Are there micro- banks, following Grameen’s protocol, for the poor in the US? It seems that this concept provides a good and realistic return on investment – not only for the lender (me) but as a way to return benefit to the environmental and social fabric that we all live in.
Mohammad Yunus is a hero a thousand times over. I salute him.
I believe his innovative thinking and bottom-up approach has helped the world’s poor more than the massive institutional aid programs, which often are wasted on inappropriate projects and outright theft.
I would like to hear his opinion about private initiatives versus government aid. And what does he think of other microcredit initiatives like kiva.org, which follows many of his principles and uses the internet to connect lenders to borrowers?
Jonathan
San Francisco
Microlending very well could be part of the solution for the US where very poor people are being denied loans or charged such an exorbinate interest rate that only makes them poorer. This is no longer an underdevelopmed nation issue. I say forget the big banks with their big rates and crazy fees and start microlending to middle class US entrepenuers who only want help in getting started… not a free hand out. When you offer that type of help the payback rate is higher than with people who got big bank loans at outrageous interest rates.
Wonderful idea. You could save the American middle class! Our American bankers are too worried about their multi-million dollar incomes and annual bonuses to help the economy by lending the money that will actually turn this financial disaster around. You are speaking of the type of lending that Obama is actually attempting to stimulate and the bankers are loathe to give. We have just experienced the collapse of the housing industry. It has been said the next disaster is the credit card industry. This could quite possibly blunt that very collapse.
The moderator often asks Professor Yunnus about the scalability of his model at a larger level and for the non-poor. This question exists in an incorrect paradigm. The model is NOT intended for the non-poor, and should NOT replace the traditional approach to banking. The bottom line is that: That is okay! The Grameen Bank Model does not have to be scalable to the larger population for it to be an excellent idea and one that is transportable to other poor areas of the world.
I would love to see the principles of the Grameen bank applied to a system of community banks in Canada. In Canada poorer people often find barriers to using the mainstream banking systems for reasons that include the inability to afford the service fees, casual employment, lack of identification documents, and so on, and they are forced to use payday loan companies to cash government support cheques, or paycheques which charge upwards of 200% for payday loans and very high cheque cashing fees. People use these loans to bridge the time between paycheques, but then end up owing much of their paycheques to repay the loan, and then are caught in a cycle of borrowing against unearned income. It would also be great to have a system of banking where people could borrow the money they need to find stable housing or the resources they need to establish small businesses. Unfortunately, we have no such system.
I worked in the Peace Corps in a micro-lending project in Guinea. We had start-up funds from Art Kobacker of Payless Shoes in the U.S. We established small rotating credit funds in a number of cities. The project worked, sort of, but there was a good deal of corruption and a lot of bad loans. Ultimately, I think, the project shifted to a more grant-based community development program where former recipients would be hit up for contributions to the fund. That appears to have worked better. I think our loan size was too big – the people we were serving were public employees, teachers, and so forth, with bigger dreams, and maybe too exaggerated a sense of their ability to make money. We helped a lot of people but the program was never self-supporting
The moral ideas carried by microcredit cannot be easliy transferred into the main stream western banking system where the only concern is about making a quick profit regardless of whether what is being invested in actually exists in the first place. Banks don’t seem to care about the ultimate wider impact of their actions on socitey as a whole. Most importantly, the ideals carried by the founders of microcredit/Grameen Bank works well on a small scale because similar minds have come to work together. On a larger scale it is more likely to have people that are not of similar minds and similar morals.
Professor Mohammad Yunus sounds like a decent compassionate human being.
Mr Yannis , how much are you influenced in your ideas by Iyvedic and Oriental medicine ? ie that money as ‘energy’ needs to keep moving , to’ facilitate life’ not ‘drain’ it .
It seems to me you are recognising this very principle of life , where the point is to keep energy moving and to not induce stagnation
When we only serve our selves , and seek a lions share then stagnation and dis-ease will only enter the social body elsewhere.
After listening to Maria Otero’s pathetic justification for what I consider to be gross, unabashed exploitation of the poor, I now believe Ms Otero and her ACCION organization are nothing more than glorified, exploitative predatory lenders. Indeed it might be considered implausible to believe there are still organizations in existence which consider the welfare and interests of their clients, above their very own.
Thank you for a very inspiring programme, a nice change of pace of World Have Your Say.
This hour has gone by far too fast!
What is Dr. Yunus’ opinion of Dr. Hernandez de Soto, another paradigmatic innovator in third world poverty and property rights?
Micro banking is the way banking should be done. The problem with big banks is corruption of ethics, and that is in the bookkeeping and maximizing of profit through predatory interest garnishing. Micro banking is needed and Bangledesh has Provided the answer.. It is time that the corrupt practice of Bookkeeping is addressed, and a more actual real accounting of reality and time be re-employed, and the last thirty years of “creative Bookkeeping” be removed from the banking system.
That is a great insight from Mr Yunus, that the top people are corrupt and the poor people are honest.
Oops, I snooze, I lose, show is over. At least I got to hear it.
I think Dr. Yunus would be the first to agree that the premise of this show is flawed–the principles and practices of Grameen Bank are appropriate for cultures with tightly woven social structures, where honor and shame and pride are meaningful motivators.
The model would not be successful in a rich country like the US or UK, where culture is different. The anonymity and mobility afforded by urban life serve to attenuate the values on which his model depends.
It”s much more than just a question of “scale.” Also, there’s the question of necessity: what we in the west call “poverty” is a quite different matter from genuine third world starvation/subsistence poverty.
Congratulations to World Have Your Say for getting such an illustrious guest.
@ Mohammad Yunus! Given that the ideal percentage return back is 10% , what are the checkups above the 10% interest return? Again what scrutiny methods should be provided to check these credit scheme providers / institutions dealing with poor people and not the already well off?
@Vivian do not judge the interest the lender is charging ,I’ve paid higher using credit cards but judge instead how the profits are used and how much the money cost them and how much the CEO and top managers are getting. Also judge how loans are given on the ability to pay back. Loan sharks and american banks push out their loans indiscriminately .
@ Yunus Should credit finance scheme be Banks, Institutions,Government or individuals? what are the protocol guidelines as founder especially for third world aAfrica?
Despite theoretical differences , Mr Yunus is clearly a man of great integrity and compassion. He has used his position to truly serve rather than self serve.
One thing he demonstrates is that prviledge in any society is offered freely if one truly serves the people .
Whether capitalist or socialist ; integrity,humility, and compassion must abide in the heart, or else with all the ‘best intentions’ and ‘theoretical justifications’ it will eventually be compromised .
@ vivian
”Indeed it might be considered implausible to believe there are still organizations in existence which consider the welfare and interests of their clients, above their very own.”
Probably right there Vivan , but if its owned by those it serves then as long as the bureaucracy within it isnt ‘on the take ‘ its got its place .
However the danger is that in the context of the wider financial make up of world economy , no structure remains isolated from it .
So with all good intentions …its difficult not be compromised .
Such is the reasoning why ” socialism cannot exist in one country ”
Thanks for broadcasting the interview with Dr Yunis. The social business model is a practical step towards a more sustainable “real wealth” economy. I would like to hear more programs like this.
Our present economic system has brought great money wealth and military power to many nations. We are now beginning to understand that it has also caused climate change, ecosystem service degradation and human suffering.
We have long known that the modern money economy is subject to unmanageable booms and busts. It is certainly unstable and very probably unsustainable. Despite its great benefits it is flawed. But it is so hard for us to talk about this without falling into political controversy and disputation, even war.
Dr Yunis recognises that the real wealth of nations depends on more than making money. His successful social business model shows that sound and profitable businesses can be structured to deliver both personal (chattel) wealth and common natural and social wealth, at the same time.
Our national governments could do this if they developed new accounting systems for natural and social wealth based on sound environmental and social science, using new natural and social money tokens as the measure of value. The new natural and social currency would then provide ‘economic’ incentives for natural and social wealth building enterprise. Is this also a sound basis for a sustainable political economy, an harmonious growth economy?
I would like to know more about how businesses structured on the social business model measure and account for environmental and social outcomes.
Ros! I was disturbed the whole night. The phone got me at the wrong place! However, just to check the credibility of these micro-credit finance schemes! “If ” rural development banks or any other indigenous banks charge their customers who hold savings accounts and fail to meet the required bank balance limit 10% interest rate , what is the logic behind micro-credit finance institutions charging 10% monthly from borrowers who borrow from these institutions just the same amount equal to the savings account bank balance limit?
whats the difference between the poor and the rich ? poor people just has more expectation upom them in achicing where as the rich are jsut risking for more. thats what happpens in a world where people strive for a status, where becoming top dog is all that matters and in return we have this crisis. people will always want to be on top as it is narutal, but what bothers me is the blame game. sure no one wants to fail but realy ask our selfs did these big bankers and bosses want to fail ? or succeed to please you, the public
i know the rich world’s banks know the history of MISSION BOARDS/ORGS which are either religious or just philanthropic,is to have a mission of helping the needy in particular and not just the first to seek like is the norm of banks which consider only their customers or those that have securities and are seeking to get loans from these normal banks that follow the laws of capitalist economics…which are even outdated.
in short,these banks need to act like community based organisations with a mission of creating condusive coexistance.
TAMBUA,HAMISI,KENYA.
another thing these banks can live with is to accept their new found status…………WAREHOUSES FOR GOVERNMENT BAILOUTS or AMERICAN PEAPLE’S COLLECTION POINTS OF THE GOVT BAILOUTS.
you see,this is because what banks are doing is offer themselves as landlords and the government as tenants.
TAMBUA,HAMISI,KENYA.
to Tom D Ford: sounds or looks? I wonder why Ros decided to put a video with him
Nothing different between Bangladesh’s microcredit scheme and Western banking system except for hidden subsidies on the part of Bangladeshi’s credit providers. They take lower pay for probably the same amount of time,effort and knowledge applied in credit assesement to credit maintainence of a Taka 1000 loan vis-a-vis their USA counterparts doing a USD 10,000 loan.
As a matter of fact, the USA bankers were very “socialistic” when they lowered their credit standards to lend to their sub-prime mortgage borrowers. These USA geniuses went one step further as they sold their mortgages in whatever derivative form to those with cash surpluses.
When everybody in the world knows that subsidised housing cannot be funded solely by private sector means. Or else all governments in the world would have solve the housing problems of their less well-off citizens many years ago.
The process of home building from the land acquisition, house building and finally sales completion are done in real time market prices. What made these USA bankers junk their capitalistic learning and do the “stupid” in subsidising the poorer home owners? It’s because the personal benefits (bonuses etc) earned by them far outweighed their obligations to their shareholders.
Till to date in the midst of this financial hell, these bankers are still “gaming” for better personal benefits.
I think that the poorer banks can teach the rich world’s bank that small loans are better than big loans…
~Dennis Junior~