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close this bookOvercoming Global Hunger (WB)
close this folderSession four - lessons of experience
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View the documentLessons of experience
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View the documentSpecial address - ending hunger: a global concern

Lessons of experience

Muhammad Yunus

It has been 2 memorable experience to participate m this conference. I have been feeling outraged by the behavior of the financial institutions around the world for the past many years. Coming here, hearing the Bank's vice president Dr. Ismail Serageld in saying on behalf of the Bank that the Bank is feeling outraged by the poverty situation chat exists in the world, for the first time I felt slightly relieved about my own outrage.

Now that this outrage is felt at the flagship of all financial institutions in the world, I am hoping that something will happen to change the existing situation. Financial institutions have treated the poor with complacency and with indifference. They have continued to operate with a caste system that they created for mankind, categorizing the poor as untouchables. Of course, instead of using a rude word like "untouchables," in their polite Language they describe the poor as "not being creditworthy." Now, if an outrage is felt in the World Bank, and that is translated into action in outrageously unconventional ways, maybe the caste system will be forced out of existence.

Coming to this conference, I feel like I am in a dream hearing the Bank talking about "conscience," not internal rates of return, not all those numbers, but "conscience." I hope conscience has been firmly installed in the Bank, and that conscience is at the driver's seat at the Bank I hope Congressman Tony Hall will not have to repeat his hunger fast again next year to convene another conference to talk about poverty.

I was invited to talk about Grameen Bank While doing that, I end up talking about both.

Grameen Bank and the World Bank. Remarks I have been making about the World Bank and the way it does its business may make my friends a the World Bank feel very unhappy. This would not surprise me at all, because that's the same way we have been feeling about the World Bank, too. But we can work together, we can take joint action to work out of the unhappiness on both sides and get the job done. The big job before us is the creation of a planet totally free from poverty. This can be done if we work together single-mindedly.

Hunger is the worst form of deprivation of a human being. Although inability to access food is the immediate cause of hunger, the real cause in most incidents of hunger is lack of ability to pay for food. If we are looking for a way to end hunger, we should be looking at ways to ensure a reasonable level of income for all Hunger is a symptom of poverty. If we can root out poverty, we root out the systemic cause of hunger.

Poverty Is Denial of All Human Rights

In other words, hunger should not be viewed as a feeding problem. It is a much bigger problem than that I see it as a problem of untying people from chains and barriers created by the societies around them. These chains and barriers have disabled people, crippled them, refused them access to work and income. This situation is described as poverty. Poverty is not the creation of the poor. It is the creation of the "system," which is made up of concepts, theoretical frameworks, policies, and institutions. If we can change the system appropriately, we won't have poverty left on this planet.

Poverty is the denial of all human rights, but we don't feel concerned about it because that's the way the system makes us look at it. The present system promotes the look of indifference toward poverty, not that of concern. More than a billion people around the world are deprived of their human dignity, and the world is deprived of their creativity, ingenuity and productivity. This should be enough cause for concern for anybody.

Each human being is endowed with unlimited potential, but the existing system allows us to unleash only a small part of it The poor never get a chance to explore their potential at all Their potential remains unknown to them forever. The poor keep on suffering miseries and indignities all their lives because they never get a chance to use their capabilities to change their lives This happens because those who design the system and run the system do not care to give them these chances. All they offer them are pity and handouts.

The World Bank's Mission

The World Bank was not created to end hunger in the world. It was created to help development To the World Bank development has meant growth. Single mindedly it pursues growth to the best of its ability until it is distracted by other issues like hunger, women, health, the environment, and so on. It tries to adapt itself to these considerations without giving up its basic goal It adopts the rhetoric of all these issues pretty easily and quickly, but it cannot easily translate that rhetoric into action Conservatism at its core makes doing this extremely difficult.

Two things may have contributed to this conservatism First, the World Bank does not have any compulsion generated by the theoretical framework within which it operates. This framework does not assign any urgency or primacy to poverty reduction As a consequence, its pronouncements about poverty reduction get translated only through humanitarian add-one, like safety nets and so on Second, people who work at the World Bank were not hired to eliminate poverty from the world They were chosen for qualities that may not have immediate relevance for poverty reduction.

The World Bank Needs to Be Changed

For the World Bank to take poverty reduction seriously, these two issues have to be resolved in favor of poverty reduction. This may require us to go back to the drawing board, to design the Bank from scratch. We shall also have to design a theoretical framework in which poverty reduction will have a central place. We shall have to define goals in terms of measurable reductions of poverty each year, for each country, and set a date for freeing the world from poverty once and for all. We shall have to design methodologies and work habits that are pro-poor, and hire people who have the ability and commitment to do the job with all the seriousness it deserves.

Until this restructuring of the World Bank is done, to achieve its poverty reduction goal the World Bank could immediately create a window (like the International Development Association) with an exclusive mandate, managed by people hired exclusively to achieve the goals set in the mandate Poverty reduction should not be mixed up with the usual World Bank projects. The new window should formulate its own business practices rather than follow the existing procedures, which are not conducive to poverty reduction efforts. The hallmark of this window would be that it would not claim to have all the answers It would have the humility to ream, experiment, and continually seek better answers.

It is very important that we change the World Bank to create a poverty-free world The World Bank is the flagship of all the development banks in the world All regional development banks, specialized development banks, and national development banks follow the lead of the World Bank. Ever non bank development institutions follow the World Bank without ever raising a question. Its influence is global and total. Unless we change the course of this flagship we cannot change the course of the ships charting their own courses behind it.

All these changes can come about only if we find poverty totally unacceptable, if we believe that poverty can be eliminated at an affordable cost, and if the basic technology to eliminate poverty is known to us (and we can improve on it as we proceed) We need unshakable political will to end poverty and hunger.

Grameen Bank: A Bank for the Poor

Current conceptualizations of poverty provide no help in the alleviation poverty. These conceptualizations are based on the assertion that the poor are responsible for their poverty They are poor because they are lazy. They are poor because they lack skills, or initiative, ambition, or entrepreneurial qualities They are poor because they suffer from cultural backwardness or they have bad habits (dunking, drugs, and so on). Working on this conceptualization we produce programs and projects to make the poor give up their "bad habits" and acquire "skills" and "attitudes" that we think they should have Obviously, we don't make much headway through these efforts because of the wrong start.

In Bangladesh we run a bank for the poor We think of the poor differently We think they are as capable and as enterprising as anybody else in the world Circumstances have just pushed them to the bottom of the heap They work harder than anybody else They have more skills than they get a chance to use. With a supportive environment they can pull themselves out of the heap in no time We offered tiny loans to the poorest people in one village in 1976 People showed how good they were in using the money to earn income and pay the loans back. But that's not how conventional bankers look at the poor To them the poor belong to the class of untouchables Encouraged by the results we expanded our work to two villages, ten villages, one district, and then five districts At no point did we have any problem getting our money back. But all along conventional bankers told us that what we were seeing was not the real thing. The "real thing" is that the poor have no will to work, they have no ability, they will never return your money.

For a while you feel confused What is real? What you hear about the poor or what you experience with the poor? We relied on our experience We kept on expanding Today Grameen Bank, the poor people's bank in Bangladesh, operates in 34,000 villages, exactly half of all the villages in Bangladesh. Grameen Bank currently lends money to 1 7 million borrowers, 94 percent of whom are women The borrowers own the bank. We lend more than US$30 million each month in loans averaging less than US$100 each. The repayment record of our loans is more than.

98 percent Besides income-generating loans we also give housing loans. A typical housing loan is US$300. We have given more than 220,000 housing loans so far with a perfect repayment record Studies done on Grameen tell us that the borrowers have improved their incomes, widened their asset base, and moved steadily toward crossing the poverty line and toward a life of dignity and honor. Studies also tell us that the nutrition level in Grameen families is better than in non-Grameen families, that child mortality is lower ire Grameen families than in non Grameen families, and that adoption of family planning practices is higher in Grameen families than in non-Grameen families All studies confirm the visible empowerment of women.

All these facts only add up to say that if we had changed our banking system the poor would have had a chance to change their lives. If we can change our development banks, this would make poverty reduction happen much faster.

We Do Our Business Differently

In many ways we do our business differently than other banks, including the World Bank. For one thing we don't blame our borrowers if things don't go right Instead we blame ourselves. We train our staff to find fault with themselves, not with borrowers We tell our staff "Things will go wrong only if you don't do it right".

We take quite a bit of time preparing our borrowers to learn how to make decisions within their five-member groups We raise questions concerning their reactions should one of them fail to pay his or her weekly installment We repeat the following advice many trees to them so that they will remember it when the occasion arises: "Please never get angry with the person who cannot pay the installment. Please don't put pressure on her to make her pay Be a good friend, don't turn into an enemy As a good friend your first response should be, Oh my God, she is in trouble, we must go and help her out” We advise them "First find out the story behind the non repayment. From our experience we cart tell you that most often there is a very sad story behind each case of non repayment When you get the full story you'll find out how stupid it would have been to twist her arm to get the money She can't pay the installment because her husband ran away with the money. As a good friend your responsibility will be to go and find her husband and bring him back, hopefully, with the money.

"It may also happen that your friend could not pay the installment because the cow that she bought with the loan money died. As good friends you should promptly stand by her side, give her consolation and courage at this disaster. She is totally shaken by the shock of the event You should cheer her up and prepare her to pull herself together. Ask Grameen to give her another loan, and reschedule and convert the previous loan into a long term loan.”

Grameen reminds its staff that no borrower should, at any time, get a feeling that she has added to her misery by joining the Grameen group. We are in the business of reducing people's misery we tell them, not increasing it If we are not capable of doing that, we should dose down our shop and find something else to do for a living.

The Poor Suffer Because of Countries' Debt Burdens

Stories that we hear about the enormous debt burden accumulated by a Large number of countries around the world and the miseries caused by the structural adjustment programs imposed on them by the World Bank make us feel that our two banks work quite differently. When we hear about how countries are made to pay these debts through the nose, surrendering the bulk of their import earnings, leasing out valuable resources at throw-away prices to make extra income, sacrificing social and environmental considerations to earn enough to repay their huge debts, we find it difficult to accept this as banking Causing misery to people and to nations cannot be banking.

At Grameen we follow the principle that the borrower knows the best. Of course, the World Bank follows a very different principle. We encourage our borrowers to make their own decisions. When a nervous borrower asks a Grameen staff member: "Please tell me what would be a good business idea for me," the staff member knows how to respond to the request He or she is trained to respond in the following way: "I am sorry, I am not smart enough to give you a good business idea. Grameen has lots of money, but no business ideas. If Grameen had good business ideas also, do you think Grameen would have given the money to you? It would have used the money itself, and made more money.”

But it is quite different with the World Bank. They give you money. They give you all the ideas, expertise, and everything else Your job is to follow the yellow lines, the green lines, the red lines, read the instructions at each stop, and follow them The World Bank is eager to assume all the responsibilities They don't want to leave any responsibility for the borrower, except the responsibility for the failure of the project.

The World Bank approaches its borrowers through a string of powerful missions. The missigns are so plentiful that at no point are you too far away from the next World Bank mission Despite all the arrogance of expertise, supervision, and money, the projects don't always work out It is not fair to blame the borrower for failure of projects and make the poor suffer for it.

We Need the World Bank on the Side of the Poor

Banking can be done in a humane way, in a pro poor way. We must make serious efforts to find this way and put it into practice The World Bank is the most powerful financial institution in the world. To eliminate poverty from the surface of the earth we must learn to bring the full force of this institution behind this effort This needs to be done with the utmost urgency and seriousness.