The 2006 Nobel Peace Prize laureate Muhammad Yunus spoke on Wednesday about the potential of microcredit programs and business ventures to empower individuals and to overcome world poverty.

The 2010 Goodrich C. White lecture, titled “The University and Creating a World Without Poverty,” took place at Glenn Memorial Auditorium. Emory students, faculty and members of the media and the greater Atlanta community attended the event.

An internationally-acclaimed economist, Yunus founded the Grameen Bank to lend small amounts of money to poor entrepreneurs who are often unable to access credit through other formal financial institutions.

Gary Hauk, vice president and deputy of the University, introduced Yunus and presented him with the Emory President’s medal to honor him as a “creative economist” and “warrior against poverty.”

Yunus said his involvement with banking began after the Bangladesh Liberation War. He said he returned to Bangladesh only to discover that loan sharks in the village were controlling people’s lives. He made a list of 47 people who had borrowed money from loan sharks; the amount they had collectively borrowed totaled to approximately $27.

“[The] problem was very difficult, but solution was simple,” Yunus said.

Yunus said he provided the 47 people on the list with his own money and told them to return the borrowed money from loan sharks, who often charge exorbitantly high interest rates that borrowers have difficulty repaying. He said the positive effect led to banks agreeing to make loans to the poor if he acted as a guarantor.

Yunus said he then took this scheme to the next level by introducing it to neighboring villages.

“If you can make so many people happy with so little money, then why not do more of it,” Yunus said.

Yunus said that he looked at the way conventional banks operate and decided to do the opposite. Conventional banks make loans based on the principle that the more someone has, the more they get, Yunus said.

But he said he decided to reverse the principle so that the less someone had, the more they could get.

The Grameen Bank, established 27 years ago, differs from conventional banks because it reaches out to women instead of just to men, Yunus added.

Currently, he said, 97 percent of Grameen’s borrowers are women who borrow amounts averaging less than $200.

Yunus said the bank lends money to people without collateral and does not question their past credit records.

“Conventional banks are owned by rich people,” Yunus said. “We reversed it. We made poor people own the bank.”

Yunus said that while the people are individually poor, they collectively own a huge bank in Bangladesh.

“Conventional banks are not interested in the children of their clients, but Grameen banks are,” Yunus said. He added that it has almost become an obsession that the children of their clients must be in school. He said that many women to which the bank lends money are illiterate, but Yunus’s vision was for second-generation Grameen families to be well-educated.

To facilitate this, Grameen Bank introduced scholarships and subsequent educational grants for higher education. Currently there are more than 50,000 students on education loans. Yunus said he has also been having discussions with Emory about setting up nursing colleges.

“With these, a girl will not only transform herself, but she transforms her family,” Yunus said. “She transforms the whole village.” Yunus said that this project could transform the whole community of young girls in these villages.
He narrated the story of a young woman, a practicing doctor in a neighboring village, who had come to see him with her mother in Bangladesh.

“In these situations, a thought flashes in my mind,” Yunus said. “Her mother could have been a doctor, too, but she remained illiterate all her life. Not because she had something lacking in her but because the society never give her that opportunity.”

Yunus said that the system externally imposed on a person creates poverty. He added that accepting the proposition for change requires a change in the system. Every human being has unlimited potential, Yunus said.

“Unfortunately, the fact is that society doesn’t give the opportunity to even know that there’s a woman carrying a wonderful gift, let alone give her the opportunity to unwrap the gift,” he said. “This is the magic of microcredit.”

Yunus said his banking system is dedicated to build an illiterate woman’s second generation. Since its inception, he said, the Grameen Bank has lent more than $8 billion and lends more than a billion dollars annually, all the while remaining self-reliant without needing external funding.

The bank has spread to many countries because the need for financial help is everywhere, including in the United States, Yunus said. Taking up the challenge to initiate the Grameen banking concept in the United States, Grameen America launched its first branch in Queens, New York two years ago. Currently, there are around 2000 borrowers in Queens and Brooklyn, he said.

“The average loan in New York City is $1,500,” Yunus said. “It is amazing to see what $1,500 means to people.”

Yunus said he believes the financial crisis provided an excellent opportunity to redesign the system. Since the introduction of the program, 18,000 beggars have stopped begging completely, while the remaining 90,000 or so beggars have started begging part-time, Yunus said. He emphasized that a banking system that will be open to everybody needs to be established.

“Poor people are the most credit-worthy people that you will see on this planet,” he said.

Yunus said it is urgent to redesign the concept of business in order to see beyond profit maximization, adding that human beings can be both selfish and selfless.

“But the selfless part is not entertained in economics, so what I am suggesting is that why don’t you make businesses based on this selflessness,” Yunus said.

With that, Yunus introduced the concept of social business, a non-loss, non-dividend company that is centered around solving a social problem without making any profit out of it.

Three years ago, Yunus initiated a social business venture with French foods-product company Groupe Danone (known as Dannon in the USA) to produce yogurt to address malnutrition, which affects nearly 50 percent of the children in Bangladesh.

“We make it very cheap so that even the poorest of children can afford it,” Yunus said.

Yunus said that anything not working can be redesigned into a social business.

He cited welfare and unemployment as examples, stating that social business could eradicate the need for these programs.

“Each social business is a seed — anyone from a young student to a seasoned businessman can do that,” he said. Yunus also encouraged students to set up social businesses within universities.

“We have to expand ourselves so that we are at the center of solving the problem,” Yunus said. “If we get involved in the process, we can create a new world where nobody will be a poor person.”

He said his vision was to see a world where poverty could be put in museums as a thing of the past.

“Children will be shocked and will promise themselves that they will never let [poverty] come back again,” Yunus said.

Yunus said that he looks forward to his growing friendship with Emory to bring health care to the poor in an affordable way.

College senior Akbar Khader said he believes Yunus’ “innovative and inspiring” concepts are beneficial to all kinds of societies.

“It gives so much hope to underprivileged societies that through simple trust and economic calculations, we can achieve so much progress,” Khader said.

— Contact Lakshmi Chandrashekar.