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Seasons Greetings!

Written by Lin Acacio-Flores

Illustrated by Rommel Joson

Muhammad Yunus

Throughout the "third world" inadequate access to reasonable credit in most villages remains a major hurdle to the fulfillment of basic human aspirations. Complex application procedures and lack of connections and collateral are insurmountable impediments. Ironically moneylending, especially to the poor, makes many fortunes and scarce resources are immobilized for consumption rather than invested in development.

Usury rates throughout much of Asia and some other lands illuminate the problem. Bangladesh villagers routinely pay 120 percent annual interest on loans used for investment and consumption purposes. Metro Manila market vendors commonly operate on a "five-six system," paying 20 percent interest per week on their borrowed capital. Especially in agriculture such exorbitant rates cripple investment. Access to credit at more reasonable rates often favors those who already hold wealth or exercise power, thus stifling more egalitarian participation in the economy.


When he assumed his post as professor of economics at Chittagong University in 1972 MUHAMMAD YUNUS established a Rural Economics Program to do research in the villages. Beginning with an idle tubewell, abandoned for lack of management, he developed in 1974 the Tebhaga Khamar (three-share farm) program which the government has adopted as the Packaged Input Program. To make it effective YUNUS and his associates found it essential to propose a new institution--Gram Sarkar, or village government--which would allow ordinary people to participate in making the decisions affecting them. Gram Sarkar was adopted by the government as a national model in 1980, but dropped by the succeeding regime.


However, even these efforts proved inadequate to arrest a process of pauperization that left ever more villagers without hope. And the traditional poverty-focused programs proved incapable of "breaking out" of the straightjacket of ingrained habits and half-truths compounded by myths. Supposedly, the poor cannot save, will not work together, have no marketable skills, are uninterested in change and the women are not allowed to keep what they earn. Thus the life of the poor is a vicious self-perpetuating quandary, and population growth multiplies their burdens.


YUNUS' solution is the Grameen (village) Bank Project (GBP) for the landless. It aims to: 1) extend banking facilities to the poorest segment of society, 2) bypass moneylenders, 3) create self-employment for unutilized man/woman power, and 4) bring the disadvantaged into an organization they can understand and operate. It began in 1976 at Jobra near Chittagong University where the Bangladesh Krishi Bank in 1978 agreed to establish a branch with operational policies designed by YUNUS and his Rural Economics Program.


All loans are made to members of a group of five men or women, two of whom are given loans, with the other three eligible only when the first two start making their weekly repayments. Groups meet weekly and monitor each member's performance. Repayment of loans on schedule has been better than 98 percent. Group members also must save weekly for capital in their Group Fund.


For over 100,000 villagers, formerly submerged in poverty, but who today have utilized GBP loans, the results of releasing productivity have been spectacular. They have built small mustard seed oil mills, bought cows and goats for fattening, begun weaving saris and making fish nets, started pottery works and betel nut growing, purchased fertilizer for rice growing, and expanded the inventory of their small shops. The evidence is compelling that even the poorest villagers have sound ideas about how to use effectively loans ranging from the equivalent of US$2 to US$2,100.


Only 44 years old, YUNUS, his ex-students from Chittagong University, and their collaborators in the Bangladesh banking fraternity--with a modest investment of less than US$8 million--have launched a major, positive rural change in one of the world's poorest nations. Their collaboration has brought closer the day when it again can become "Golden Bangla. "


In electing MUHAMMAD YUNUS to receive the 1984 Ramon Magsaysay Award for Community Leadership, the Board of Trustees recognizes his enabling the neediest rural men and women to make themselves productive with sound group-managed credit.