Written by Laurence Brahm - Published by Review Asia on 10/01/2007

Review Asia's Laurence J. Brahm talks to Professor Muhammad Yunus, the Nobel Peace prize-winning pioneer of micro-credit to the poor, about his new spin on humanism.

Known to the world as "hanker to the poor", the humble and self-effacing Bangladesh economist received the 2006 Nobel Peace prize jointly with Grameen Bank, which he founded to pioneer a grass-roots credit model based on human trust and not physical collateral. Grameen in Bengali means "village".

Muhammad Yunus has put a new spin on humanism, declaring that "credit is a human right". His words have echoed across the globe. To date, however, the World Bank barely recognizes the value of micro-credit as a solution to self help in changing lives. But for Bangladesh’s rural poor, whom Henry Kissinger once wrote off as a bottomless basket case ", Yunus presents fresh paradigms. Close to 60% of Grameen’s borrowers have climbed out of the poverty trap, a phenomena that the bank tracks and measures assiduously.

Even here, Yunus provides new criteria. Instead of the mainstream institutional approach assessing annual per capita income in evaluating whether people have shifted above the poverty line, his organization asks more relevant questions to its lenders: Do you have a roof you’re your head? How about warm clothes for winter, safe drinking water and proper sanitation? Are your children in school?

It is this approach of pragmatism over theory that has caught the attention of non-government organizations and governments worldwide, now inspiring more than 100 poorer countries to adopt this model with local variations to confront challenges of liberating thousands of people from the maws of poverty.

Where US-linked theoretic models of free capital flows, sudden privatization and turnkey capital markets intended to "shock therapy" a nation have failed, Yunus has shown many an alternative approach empowering people with more than cash, giving them a newly awakened sense of pride.

The following are excerpts from an exclusive interview with Yunus in Dhaka, at the headquarters of Grameen Bank.

RA: Grameen Bank seems to be everywhere in Bangladesh, changing lives for the better.

Y: Today, Grameen Bank gives loans to nearly 7 million poor people, 97% of whom are women, in 73,000 villages in Bangladesh. Grameen Bank gives collateral-free income-generating loans, housing loans, student loans and micro-enterprise loans to poor families.

RA: How can Grameen manage such expansive lending operations without any collateral?

Y: Everyone is interested in how much money we lend, how we get paid, how the money is returned, how accounts are kept - everything about money. But Grameen Bank is not about money. Ninety percent of Grameen Bank is about people. The bank’s only collateral is trust.

RA: You often say “the poor always pay back their loans”. Why?

Y: If any one can trust her [a rural poor borrower] with what is for her so much money, she will work hard.

RA: So Grameen creates mechanisms of self-employment rather than aid?

Y: The most important step to end poverty is to create employment and income opportunity for the poor. But orthodox economics recognized only wage-employment. It has no room for self-employment. But self-employment is the quickest and easiest way to create employment for the poor.

RA: The success of your micro-credit model is often held up as an antithesis of Washington-consensus globalization. Is it?

Y: The issue of globalization comes to me everyday. T ho se who take an anti-globalization position are confusing the issue. Globalization has been here for centuries - the ancient trading routes of central Asia, the sea routes discovered by Europe to India - these were all expressions of globalization, and so was colonization for that matter. Only [this time], these things are happening at a greater speed, and with more business products.

RA: So globalization is not new?

Y: Globalization is the urge of human beings to go out. We cannot isolate ourselves, or we will just become tribes.

RA: So the threats and benefits of globalization are not black and white?

Y: Our garment industry flourishes because of globalization and we will grow. China is growing because of globalization. Taiwan and Korea are growing because of globalization. But it takes a lot of hard work to prevent the strength of big capital from controlling your economy. As the first principle, you need a win-win for both sides.

RA: How does one achieve this?

Y: The issue is not globalization - yes or no. The question is right globalization or wrong globalization.

RA: But how do you define what is right or wrong with globalization?

Y: If we don't do anything about globalization and let it just happen - laissez faire globalization - it would mean the most powerful will take it all and the meek will loose everything.

RA: Can you describe what you mean?

Y: Globalization is like a "multi-lane highway across our world and the US has the big trucks. So a small country like Bangladesh cannot find a lane because the bigger businesses from the US and Japan will take all the business from the little players like Bangladesh. So imagine a hundred-lane highway. There should be traffic rules. There are lanes for trucks, for vehicles, for buses - so at least I know my rickshaw neither has a lane and will nor be run over by the trucks!

RA: So we should not have unchecked globalization, is that what you are saying?

Y: Today globalization does not have traffic police. And all the problems arise from this. We need rules. We need a body to govern the rules. We need to have penalties. Otherwise, free-for-all globalization will become new business colonization.

RA: There is a lot of talk around Dhaka these days, after creating the micro-finance model, that you are now pioneering a new concept of “social business”. Can you share your new vision?

Y: We need to popularize social business. Now the only thing people can do is create trusts and found at ions to give money as charity because systems only allow charity, nor really responsible business. Charity is good, but to run a charity, you must always find money. Charity funds only have a one-time use. Once the money is given, it is gone. Once you give it, you need more. But social business has endless life. It keeps recycling its own income.

RA: Can you give an example of what you mean by a social business?

Y: We created with Danon Yogurr of France a joint Grameen Dan on Company to produce fortified yogurt for malnourished children. In it we put all the micronutrients missing in their bodies and sell it cheap because we want poor children to have rich, delicious yogurt. The more they take [the yogurt], the more they will regain their health. And the more we can have them take [the yogurt], the more we can help. We want healthy children. Profit stays with the company, co be reinvested for expansion to get more nutrients to more children. If we use just charity, then we can only give one yogurt per child. Then we have to find a way to pay for it.

RA: What is your long-term vision developing the social business concept?

Y: With social business, we must do several things, Today, there arc institutional arrangements for profit businesses – for in stance, the stock marker. So you go to buy stocks in the stock market for only one objective - profit. So there should be a separate stock market with social businesses dedicated to health care, helping the poor, bringing forests to countries where they do not exist, bringing drug addicts off the sneer and giving them self-employment. Then people can go to the stock market and look for companies that will help HIV victims and reach out to the poorest villages. We then need information. To know about profit-making businesses, we have the Financial Times and The Asian Wall Street Journal. We should have a Social Times and The Social Wall Street Journal to tell us about new social ideas and opportunities as well.

RA: You are vocal concerning global warming. The effects are already hitting Bangladesh.

Y: Bangladesh is less than one meter above sea level. The sea is rising because of global warming. It will destroy the ecology of out country. This is a small country with a big population. Our people will have to move inland. The poorest live in marshland. Saline now rushes in from the shoreline. People become refugees, For us, this is life and death. We must take this seriously.

RA: What is your prognosis?

Y: Global warming is now at a serious stage and green house gas emissions are becoming bigger. Europe itself is coming with bigger emissions. The US accounts for over 25% of the 'world's greenhouse gas emissions. Europe is concerned, but the US does nothing and refuses to sign the Kyoto Protocol. This has now become a less effective instrument. And China now has become the biggest polluter itself. So it is now not just the US contribution but China as well. All its power [supply] is based on dirty fuel. China will become worse and worse: Next to follow is India. So now, three nations have joined the club.

RA: How does one contain the greenhouse gases from these giants?

Y: The Kyoto Protocol is a non-binding agreement. What we need is a binding agreement.

RA: What about enforcement?

Y: It must be done through the United Nations and done now. T here is not enough time left before 2012 [when the Kyoto Protocol expires].

RA: This is the problem. What is the solution?

Y: By the year 2050, we must reduce our greenhouse gases by 50%. But the US did not want to sign the Kyoto Protocol. So we must get the US to join. Many people in the US are for the Kyoto Protocol, but the government is against it.

RA: Do you see other underlying problems? The real problem is lifestyle. We can agree about having "non-smoking" areas in public places because one's smoking may destroy another's health. What about wastefulness of lifestyle? How can some nations retain lifestyles that destroy other peoples? For instance, buying gas-guzzling vehicles. This lifestyle is not consistent with our planet. How can you enjoy life on this planet if your lifestyle destroys it? It is like partying on a boat while lighting a bonfire on that same boat. What should we consider?

Y: We should not talk about the US and Bangladesh. Instead, we should talk about the next generation. We only live on this planet during our lifetime. But think about the next generation. They will suffer from what we do.

RA: So with all the world’s elegant economic theories, why can’t our economists get it right?

Y: With all of our economic theories, we forget the environment, forget people, forget culture, and destroy anything to make money. This is the inherent fault in an economic theory that creates an artificial human being who knows how to make money because maximizing profit is the sole basis of business. But human beings arc bigger than just money. A caring human being is somebody who jumps to help others. The compassionate, caring human being is left out, so in economic theory, the only thing left are the money-making people. Economic assumptions forget the compassionate people.

RA: Despite all the suffering you’ve seen, you staunchly remain both an optimist and a visionary. Why?

Y: Inside each human being is care and concern. Somebody may be a stern money lender, but when they see a sick person, remember we all have a soft heart. But economics denies emotion and only talks of making money. This is why there are so many problems.

Laurence Brahm is a global activist, international mediator, political columnist and author. He is the leading advocate of a fresh development paradigm - The Himalayan Consensus - an innovative approach to development.

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