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The inspirational story of how Nobel Prize winner Muhammad Yunus invented microcredit, founded the Grameen Bank, and transformed the fortunes of millions of poor people around the world.

Muhammad Yunus was a professor of economics in Bangladesh, who realized that the most impoverished members of his community were systematically neglected by the banking system — no one would loan them any money. Yunus conceived of a new form of banking — microcredit — that would offer very small loans to the poorest people without collateral, and teach them how to manage and use their loans to create successful small businesses. He founded Grameen Bank based on the belief that credit is a basic human right, not the privilege of a fortunate few, and it now provides $24 billion of micro-loans to more than nine million families. Ninety-seven percent of its clients are women, and repayment rates are over 90 percent. Outside of Bangladesh, micro-lending programs inspired by Grameen have blossomed, and serve hundreds of millions of people around the world.

The definitive history of micro-credit direct from the man that conceived of it, Banker to the Poor is the moving story of someone who dreamed of changing the world — and did.

Praise for Banker to the Poor

"By giving poor people the power to help themselves, Dr. Yunus has offered them something far more valuable than a plate of food—security in its most fundamental form."

—President Jimmy Carter

"[Yunus's] ideas have already had a great impact on the Third World, and ... hearing his appeal for a 'poverty-free world' from the source itself can be as stirring as that all-American myth of bootstrap success."

—The Washington Post

"I only wish every nation shared Dr. Yunus's and the Grameen Bank's appreciation of the vital role that women play in the economic, social, and political life of our societies."

—Hillary Rodham Clinton

"The [Grameen Bank] has become a mecca for development economists and is being copied around the world."

—The Economist

"Muhammad Yunus is a practical visionary who has improved the lives of millions of people in his native Bangladesh and elsewhere in the world. Banker to the Poor [is] well-reasoned yet passionate."

—Los Angels Times

"Microcredit has proved its worth among the poorest."

—The International Herald Tribune

"Yunus shows that micro-lending can be much more effective than unwieldy and expensive aid programs."

—Publishers Weekly

"Banker to the Poor offers a challenging look at the way we reinforce poverty—offering welfare instead of encouraging self-sufficiency, only offering loans to candidates with a 'safe' risk factor (what Yunus calls a 'financial apartheid'), believing that the poor lack skills and can only be worthwhile contributors to the economy after extensive training. Yunus lays out a convincing argument for the need to nourish and better understand the 'people's economy'.... A hopeful and inspiring read, even for those who, like me, have little prior knowledge or understanding of financing and credit loans."

—Vision Magazine

"An inspiring memoir of the birth of microcredit, written in a conversational tone that makes it both moving and enjoyable to read."

—Election2004.com

"Fascinating."

—Hungry Mind Review

"A fascinating and compelling account by someone who decided to make a difference, and did."

—Choice

INTRODUCTION

In the year 1974 Bangladesh fell into the grip of famine.

The university where I taught and served as head of the Economics Department was located in the southeastern extremity of the country, and at first we did not pay much attention to the newspaper stories of death and starvation in the remote villages of the north. But then skeleton-like people began showing up in the railway stations and bus stations of the capital, Dhaka. Soon this trickle became a flood. Hungry people were everywhere. Often they sat so still that one could not be sure whether they were alive or dead. They all looked alike: men, women, children. Old people looked like children, and children looked like old people.

The government opened gruel kitchens. But every new gruel kitchen ran out of rice. Newspaper reporters tried to warn the nation of the extent of the famine. Research institutions collected statistics on the sources and causes of the sudden migration to the cities. Religious organizations mobilized groups to pick up the dead bodies from the streets and bury them with the proper rites. But soon the simple act of collecting the dead became a larger task then these groups were equipped to handle.

The starving people did not chant any slogans. They did not demand anything from us well-fed city folk. They simply lay down very quietly on our doorsteps and waited to die.

There are many ways for people to die, but somehow dying of starvation is the most unacceptable of all. It happens in slow motion. Second by second, the distance between life and death becomes smaller and smaller, until the two are in such close proximity that one can hardly tell the difference. Like sleep, death by starvation happens so quietly, so inexorably, one does not even sense it happening. And all for lack of a handful of rice at each meal. In this world of plenty, a tiny baby, who does not yet understand the mystery of the world, is allowed to cry and cry and finally fall asleep without the milk she needs to survive. The next day she may not have the strength to continue living.

I used to feel a thrill at teaching my students the elegant economic theories that could supposedly cure societal problems of all types. But in 1974, I started to dread my own lectures. What good were all my complex theories when people were dying of starvation on the sidewalks and porches across from my lecture hall? My lessons were like the American movies where the good guys always win. But when I emerged from the comfort of the classroom, I was faced with the reality of the city streets. Here good guys were mercilessly beaten and trampled. Daily life was getting worse, and the poor were growing even poorer.

Nothing in the economic theories I taught reflected the life around me. How could I go on telling my students make-believe stories in the name of economics? I wanted to become a fugitive from academic life. I needed to run away from these theories and from my textbooks and discover the real-life economics of a poor person's existence.

I was lucky that the village of Jobra happened to be close to the campus. In 1958, Field Marshall Ayub Khan, then president of Pakistan, had taken power in a military coup. Because of his fear of rebellious students, he decreed that all new universities be situated away from urban centers. His fear of political agitation meant that the new Chittagong University, where I was teaching, was built in a hilly section of the rural Chittagong District, next to Jobra village.

The proximity of Jobra made it a perfect choice for my new course of study. I decided I would become a student all over again, and the people of Jobra would be my professors. I vowed to learn as much as possible about the village. Traditional universities had created an enormous distance between their students and the reality of everyday life in Bangladesh. Instead of traditional book learning, I wanted to teach my university students how to understand the life of one single poor person. When you hold the world in your palm and inspect it only from a bird's eye view, you tend to become arrogant—you do not realize that things get blurred when seen from an enormous distance. I opted instead for "the worm's eye view." I hoped that if I studied poverty at close range, I would understand it more keenly.

My repeated trips to the villages around the Chittagong University campus led me to discoveries that were essential to establishing the Grameen Bank. The poor taught me an entirely new economics. I learned about the problems that they face from their own perspective. I tried a great number of things. Some worked. Others did not. One that worked well was to offer people tiny loans for self-employment. These loans provided a starting point for cottage industries and other income-generating activities that used the skills the borrowers already had.

I never imagined that my micro-lending program would be the basis for a nationwide "bank for the poor" serving 2.5 million people or that it would be adapted in more than one hundred countries spanning five continents. I was only trying to relieve my guilt and satisfy my desire to be useful to a few starving human beings. But it did not stop with a few people. Those who borrowed and survived would not let it. And after a while, neither would I.

CHAPTER ONE

Number 20 Boxirhat Road, Chittagong

Chittagong, the largest port in Bangladesh, is a commercial city of 3 million people. I grew up on Boxirhat Road in the heart of Chittagong's old business district. A busy one-way lane, just wide enough for one truck to pass, Boxirhat Road connected the river port of Chaktai to the central produce market.

Our section of the road lay in Sonapotti, the jeweler's section. We lived at Number 20, a small two-story house with my father's jewelry shop workshop tucked beneath us on the ground floor. When I was a boy, my world was full of the noise and gasoline fumes of the street. Trucks and carts were forever blocking our road, and all day long I would hear drivers arguing, yelling, and blaring their horns. It was a sort of permanent carnival atmosphere. When toward midnight the calls of passing street vendors, jugglers, and beggars finally subsided, the sounds of hammering, filing, and polishing in my father's workshop took over.

On the upper floor, we occupied just a kitchen and four rooms: Mother's Room, Radio Room, Big Room, and a dining room where a mat was spread out three times a day for our family meals. Our playground was the flat roof above. And when we got bored, we often idled away our time watching the customers downstairs or the gold artisans at work in the back room, or we would just look out at the endlessly changing street scenes.

Number 20 Boxirhat Road was my father's second business location in Chittagong. He had abandoned the first when it was damaged by a Japanese bomb. In 1943, the Japanese had invaded neighboring Burma and were threatening all of India. In Chittagong, however, the air battles were never intensive. Instead of bombs, the Japanese planes dropped mostly leaflets, which we loved to watch from the rooftop as they floated like butterflies down over the city. But when a wall of our second house was destroyed by a Japanese bomb, my father promptly shifted us to the safety of his family village, Bathua, where I had been born at the beginning of the war.

Bathua is some seven miles from Chittagong. My grandfather owned land there, and a major part of his income came from farming, but he gravitated toward the jewelry trade. Dula Mia, his eldest son (and my father), also entered the jewelry business and soon became the foremost local manufacturer and seller of jewelry ornaments for Muslim customers. Father was a soft-hearted person. He rarely punished us, but he was strict about our need to study. He had three iron safes, each four feet high, built into the wall at the back of his store behind the counter. When the store was open for business, he left the safes open. With the insides of their heavy doors covered in mirrors and display racks, they appeared to be not safes at all, but part of the decor. Before the fifth prayer of the day, at closing time, father would push the drawers of the safes shut. To this day I would recognize the squeal of those ungreased hinges and the sound of six locks on each safe clicking shut. These sounds gave my older brother Salam and me just enough time to stop whatever we were doing and to leap back to our books. As long as Father saw us seated with our reading, he would be happy and say, "Good children, good boys." Then he would make his way to the mosque for prayer.

My father has been a devout Muslim all his life. He made three pilgrimages to Mecca and he usually dressed all in white, with white slippers, white pajama pants, a white tunic, and a white prayer cap. His square tortoiseshell glasses and his gray beard gave him the look of an intellectual, but he was never a bookworm. With his large family and his successful business, he had little time or inclination to look over our lessons. Instead, he divided his life between his work, his prayers, and his family.

In contrast to Father, my mother, Sofia Khatun, was a strong and decisive woman. She was the disciplinarian of the family, and once she bit her lower lip, we knew that it was useless to try to change her mind. She wanted us all to be as methodical as she was. She was probably the strongest influence on me. Full of compassion and kindness, Mother always put money away for any poor relatives who visited us from distant villages. It was she, by her concern for the poor and the disadvantaged, who helped me discover my interest in economics and social reform.

Mother came from a family of minor merchants and traders who bought and sold goods from Burma. Her father owned land and leased most of it out. He spent most of his time reading, writing chronicles, and eating good food. It was this last trait that most endeared him to his grandchildren. In these early years, I remember my mother often wearing a bright-colored sari with a gold band around the hem. Her dark black hair was always combed into a thick bun and parted in the front to the right. I loved her very much and was certainly the one who most often pulled at her sari and demanded attention. Above all, I remember her stories and songs, such as the tragic tale of the Karbala. Every year, during Moharram—the Muslim commemoration of the Karbala—I remember asking my mother, "Mother, why is the sky red on this side of the house and blue on the other side?"

"The blue for Hassan," she would answer, "and the red for Hussein."

"Who are Hassan and Hussein?"

"They were the grandsons of our prophet—peace be upon him—the gems of his two holy eyes."

And when she finished the story of their murder, she would point to the dusk and explain that the blue on one side of the house was the poison that killed Hassan and the red on the other side was the blood of the slain Hussein. To me as a child, her depiction of this tragedy was no less moving than our great Bengali epic Bishad Shindhu ("The Sea of Sorrow").

Mother dominated my early years. Whenever she would fry her pitha cakes in the kitchen, we would crowd around her, scrambling for a taste. As soon as she slipped her first pitha from the frying pan and blew on it to cool it, I would snatch it from her, for I had the family distinction of being her chief taster.

Mother also worked on some of the jewelry sold in our shop. She often gave a final touch to earrings and necklaces by adding a bit of velvet ribbon or woolen pompoms or by attaching braided colored strands. I would watch as her long thin hands worked away at the beautiful ornaments. It was the money she earned on these projects that she gave away to the neediest relatives, friends, or neighbors who came to her for help.

Mother had fourteen children, five of whom died young. My elder sister, Momtaz, eight years older than me, married when she was still a teenager. We often visited in her new home at the edge of town, where she served us lavish meals. Salam, three years older than I, was my closest companion. We played war, mimicking the sounds of Japanese machine guns. And when the wind was right, we built colorful kites from diamond-shaped pieces of paper and bamboo sticks. Once Father bought a few defused Japanese shells in the market and we helped Mother transform them into plant pots for the roof by standing them on their fins, wide end up.

Salam and I, along with all the boys of our working-class neighborhood, attended the nearby Lamar Bazar Free Primary School. Bengali schools inculcate good values in the children. They aim not only for scholastic achievement but also teach civic pride; the importance of spiritual beliefs; admiration for art, music, and poetry; and respect for authority and discipline. In the Lamar Bazar Free Primary School, each classroom had about forty students. Primary and secondary schools were not coeducational. All of us there, even the teachers, spoke in Chittagonian dialect. Good students could win scholarships and were often asked to compete in nationwide exams. But most of my fellow schoolmates soon dropped out.

Salam and I devoured any books and magazines we could get our hands on. Detective thrillers were my favorite. I even wrote one, a complete whodunit, at the age of twelve. But it was not easy to keep our thirst for reading satiated. To meet our needs, Salam and I learned to improvise, buy, borrow, and steal. For instance, our favorite children's magazine, Shuktara, held a yearly contest. The winners of the contest received a free subscription and had their names printed in the magazine. I picked one of the winners at random and wrote to the editor:

Dear Sir,

I am so-and-so, a contest winner, and we have moved. From now on, please mail my free subscription to Boxirhat Road Number—.

I did not give our exact address, but a neighbor's, so that my father would not see the magazine. Every month, Salam and I kept our eyes peeled for our free copy. It worked like a dream.

We also spent part of every day in the waiting room of our family physician, Dr. Banik—just around the corner—reading the various newspapers he subscribed to. This freelance reading stood me in good stead over the years. Through primary and secondary school, I was often at the top of my class.

In 1947, when I was seven, the "Pakistan movement" reached its peak. Areas of India with Muslim majorities were fighting to become an independent Muslim state. With its Muslim majority, we knew that Chittagong would be included in Pakistan, but we were not sure what other areas of Muslim Bengal would be included or what exact boundaries would be drawn.

Friends and relatives argued endlessly at 20 Boxhirat Road about the future of an independent Pakistan. We all realized it would be a most curious country, with its western and eastern halves separated by more than one thousand miles of Indian territory. My father, a devout Muslim, had many Hindu friends and colleagues who came to our house, but even as a child I sensed the mistrust between the two religious groups. On the radio I heard about the violent riots between Hindus and Muslims. Mercifully, there was little of this in Chittagong.

My parents were deeply committed to partition from the rest of India. When my little brother Ibrahim started to speak, he called white sugar, which he liked, "Jinnah sugar," and brown sugar, which he did not like, "Gandhi sugar." Mohammed Ali Jinnah was the leader of the Pakistan partition movement, and Gandhi, of course, wanted to keep India whole. At night Mother mixed Jinnah, Gandhi, and Lord Louis Mountbatten into our bedtime stories. And my brother Salam, though only ten, envied the bigger boys in the neighborhood who carried the green flag with the white crescent and star and chanted, "Pakistan Zindabad" ("Long live Pakistan") in the street.

At midnight on August 14, 1947, the Indian subcontinent, which had been under British rule for nearly two centuries, was granted its independence. I recall it all as if it were yesterday. The whole city was decorated with flags and green and white festoons. Outside I could hear the blaring of political speeches, interrupted every so often by the chant, "Pakistan Zindabad." By midnight our street was crammed with people. We set off fireworks from the rooftop. All around I could see the silhouettes of our neighbors staring up as the exploding fireworks filled the night sky. The whole town throbbed with excitement.

As midnight approached, Father led us down into Boxhirat Road. Though he was not a political activist, he had joined the Muslim League National Guard as a gesture of solidarity, and that night he proudly wore his guard uniform, complete with the characteristic "Jinnah cap." Even my younger siblings, two-year-old Ibrahim and little baby Tunu, were with us. Exactly at midnight, the electricity was switched off, and the entire city was plunged into darkness. The next moment, when the lights came back on, we were a new country. The roaring slogan resounded again and again, from every part of Chittagong—"Pakistan Zindabad! Pakistan Zindabad!" I was seven and this was the first shot of national pride I had felt in my veins. It was intoxicating.

After Momtaz, Salam, myself, Ibrahim, and Tunu, my mother gave birth to four more boys: Ayub, Azam, Jahangir, and Moinu. But when I was nine, my beloved mother started becoming irritable for no apparent reason. Her behavior was increasingly abnormal. In her calmer periods she would talk disjointed nonsense to herself. For hours on end she would sit in prayer, read the same page of a book, or recite a poem over and over without stopping. In her more disturbed periods, she would insult people in a loud voice and use vulgar language. Sometimes she would hurl abuse at a neighbor, a friend, or a family member, but other times she would rant away at politicians or even long-dead figures. Her mind would turn against imaginary enemies, and then, without much warning, she would become violent. Often at night she would erupt in shouts and physical attacks, and I would help Father restrain her or try to protect my younger siblings from her blows. After such crises, she would often return to being the sweet, soft mother we remembered, giving us as much love as she could, taking care of the younger ones. But we knew that the recovery was temporary. As her condition worsened, she gradually lost track of our schooling and studies.

My father tried everything to cure her. He paid for the most advanced medical tests available in the country. As Mother's own mother and two sisters had suffered from mental illness, we assumed her condition must be congenital, but no doctor was ever able to diagnose it. In despair, my father turned to unorthodox remedies such as opium treatments, incantations, and even hypnosis. Mother never cooperated with any of these treatments, however, and none of them were successful.

At least we children found the treatments interesting. After watching a renowned psychologist apply posthypnotic suggestions to Mother, we performed our own hypnotic experiments on one another. We also learned to treat her condition with a certain humor. "What is the weather forecast?" we would ask one another when we tried to predict Mother's mood for the next few hours. To avoid provoking a fresh bout of abuse, we gave code names to various persons in the household: Number 2, Number 4, and so on. My brother Ibrahim even wrote a hilarious skit, in which he called our home a radio station, with Mother always "on air," broadcasting her sermons in various languages and moods with "active accompaniments."

The one who shone brightly through this whole sad period was my father. He adapted himself to the situation with grace and fortitude, caring for Mother in every possible way and in all circumstances for the thirty-three years that her disease lasted. He tried to behave as if nothing had changed and she was the same Sofia Khatun he had married in 1930, when he was only twenty-two. He was loyal and good to her all the fifty-two years of their marriage until her death in 1982.

Although Father did not mind spending money on our education and travels, he kept an extremely simple household and gave us little pocket money. In high school, the monthly stipend I received by winning the Competitive Scholarship Examination in the Chittagong District provided me with some pocket money, but not enough. I acquired the balance from Father's drawer of loose change. Father never detected this. In addition to our interest in books and magazines, Salam and I had developed a weakness for movies and eating out. Our palates were not sophisticated. My favorite dish was "potato chop," a roast potato filled with fried onion and sprinkled with vinegar. Salam and I ate these with a cup of jasmine tea at the simple tea stall around the corner from our house. Father was not privy to these outings.

The first camera that Salam and I bought was a simple box camera. It accompanied us everywhere. We researched and planned our subjects like experts: portraits, street scenes, houses, still lifes. Our accomplice in photography was the owner of a neighboring photo shop named the Mystery House Studio. He allowed us to use his darkroom to develop and print our black-and-white film. We tried special effects and even retouched our photos in color.

I became interested in painting and drawing and apprenticed with a commercial artist, whom I called Ustad, or "Guru." At home I arranged my easel, canvas, and pastels so that I could hide them from Father at a moment's notice. As a devout Muslim, Father did not believe in reproducing the human figure. Some art-loving uncles and aunts in the family became my coconspirators, helping and encouraging me.

As a by-product of these hobbies, Salam and I developed an interest in graphics and design. We also started a stamp collection and convinced a neighboring shopkeeper to display our stamp box in the front of his shop. With two uncles we frequented theaters to see Hindi and Hollywood films and to sing the romantic folk songs that were popular at that time.

Chittagong Collegiate School was much more cosmopolitan than my primary school had been. My classmates were mostly sons of government officials on transfer from various districts and the school offered one of the best educations in the country. But its particular attraction for me was the Boy Scout program. The scout den became my hangout. Along with boys from other schools, I engaged in drills, games, artistic pursuits, discussions, hikes in the countryside, variety shows, and rallies. During "earnings week" we would raise money by hawking goods, polishing boots, and working as tea stall boys. Aside from the fun, scouting taught me to be compassionate, to develop an inner spirituality, and to cherish my fellow human beings.

I particularly recall a train trip across India to the First Pakistan National Boy Scout Jamboree in 1953. Along the way, we stopped and visited various historical sites. Most of the time, we sang and played, but standing in front of the Taj Mahal in Agra, I caught our assistant headmaster, Quazi Sirajul Huq, weeping silently. His tears were not for the monument or for the famous lovers who are buried there or for the poetry etched on the white marble walls. Quazi Sahib said he cried for our destiny and for the burden of history that we were carrying. Though I was only thirteen, I was struck by his passionate explanation. With his encouragement, scouting began to infiltrate all my other activities. I had always been a natural leader, but Quazi Sahib's moral influence taught me to think high and to channel my passions.

In 1973, in the chaotic months following the Bangladesh War of Liberation, I visited Quazi Sahib with my father and brother Ibrahim. We drank tea and discussed the political turmoil around us. A month later, Quazi Sahib, then a frail old man, was brutally murdered in his sleep by his servant, who robbed him of a small sum of money. The police never caught the murderer. I was devastated. In retrospect, I came to understand his tears at the Taj Mahal as prophetic of both his own suffering and the suffering in store for the Bengali people.

Genre:

"By giving poor people the power to help themselves, Dr. Yunus has offered them something far more valuable than a plate of food - security in its most fundamental form."—President Jimmy Carter
"[Yunus's] ideas have already had a great impact on the Third World, and ... hearing his appeal for a 'poverty-free world' from the source itself can be as stirring as that all-American myth of bootstrap success."—Washington Post
"I only wish every nation shared Dr. Yunus's and the Grameen Bank's appreciation of the vital role that women play in the economic, social, and political life of our societies."—Hillary Clinton
"Muhammad Yunus is a practical visionary who has improved the lives of millions of people in his native Bangladesh and elsewhere in the world. Banker to the Poor [is] well-reasoned yet passionate."—Los Angeles Times
"A fascinating and compelling account by someone who decided to make a difference, and did."—CHOICE

On Sale: Mar 31, 2007
Page Count: 312 pages
Publisher: PublicAffairs
ISBN-13: 9781586485467

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Muhammad Yunus

About the Author

Muhammad Yunus, a native of Bangladesh, was educated at Dhaka University and was awarded a Fulbright scholarship to study economics at Vanderbilt University. In 1972 he became head of the economics department at Chittagong University. He is the founder and managing director of Grameen Bank, a pioneer of microcredit, an economic movement that has helped lift millions of families around the world out of poverty. Yunus and Grameen Bank are winners of the 2006 Nobel Peace Prize.

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