Floor discussion

An exchange between the speakers and discussants follower It was initiated by Ismail Serageldin's commentary.

Ismail Seragldin: I am surprised to hear today a description of the World Bank that is very different from the Bank that I know and work in My colleague here at the podium was telling me that we need to know more about how the World Bank works, and my brief discussion with Muhammad Yunus yesterday about his statement also revealed that people may need to know more about how the World Bank really works.

In some ways, we are very much like Grameen Bank in the sense that the less you have, the higher priority you get, not the more you have, the more you get The latter is not the policy of the Bank. In fact, every time a country achieves a certain level of development it ceases to be a borrower from the World Bank. We automatically say, "You now have no business with the World Bank ".

When I first started working in the Bank we were working on Greece, Ireland, and Spain. These countries all have graduated, and the Republic of Korea, Thailand, and others will probably be following suit very soon We exert ourselves for the poorest countries by our unremitting efforts to obtain the concessional funding they need, by mobilizing support for IDA By providing IDA support, far from forcing countries to pay through the nose for debt, IDA provides tremendously generous grants The grant element in IDA is calculated by the Development Assistance Committee at more than 80 percent. The terms for the repayment of IDA credits are forty years' with ten years of grace, zero interest, and only three-quarters of 1 percent administrative charge So exploitative repayment conditions are not the Bank's mode of operation.

There is a big difference, however, between working with governments and working directly with the beneficiaries. The Bank is an intergovernmental organization Our mandate, our statutes, are to lend to governments for the purpose of promoting development The examples that Muhammad Yunus gave do not work well in dealing with governments because the people who have gone directly to governments and said to them, "Here, we will lend you money and you know how to use it," were the commercial banks in the 1970s. They created the debt problem because they kept lending more and more money to governments without any regard to how this money was being used, whether to build lavish new capital cities or to purchase luxury items This was known as sovereign debt We all know what happened to those loans because giving directly to governments is not the same thing as giving directly to beneficiaries.

Two more points need to be made about working with and through governments It is our experience—and I am honored to say this in the presence of a most notable African leader President Masire that whenever a national government, a national leader, has articulated a vision, the Bank and others have tended to support it Where differences have existed, they have been technical differences The success stories invariably come from people who say, '´This is what we have done. This is our program," and the Bank supports it.

It is unfortunate that in many other situations, government officials tend to blame the conditions on outsiders Governments do not discuss all the contents of their programs sufficiently with their people. They do not have the kind of dialogue with civil society that is necessary to create a broadly based consensus on "What is our situation, and how are we going to solve it?" In such cases, when confronted with difficulties many government officials find it expedient to blame it on the Bank or on the International Monetary Fund or on some international entity, but pointing to others is not the same as dealing with their own problems When governments do take responsibility, not only does success come to them, but the donor community and everybody else will support them.

With tremendous modesty, President Masire talked today about what has been achieved in Botswana. What other country has had to launch special programs to feed as much as 30 to 40 percent of its total population? Would it have had the dialogue to build the consensus with its people that Botswana achieved? And on top of this, President Masire said that he wants to engage the nongovernmental organizations and the civil community more actively in this debate. This is the land of action that I salute and to which we should dedicate ourselves.

People talk about the World Bank as if it were the bogeyman. This is not true. If we listen to the discussions we have been having here, we could build a better understanding of one another's strengths and comparative advantages and see how we could help one another achieve that objective to which we must all commit ourselves and dedicate ourselves: the abolition of hunger in our lifetime.

Muhammad Yunus: Concerning the difference between borrowers as individuals and borrowers as governments, I still think the relationship has a lot more similarities than dissimilarities. If I were lending to a government, I would rather wait for it to formulate what it wants the money for, because just as we do not tell our borrower what she should be borrowing money for, I would not tell the government what it should be borrowing money for.

The way the World Bank does this, and I am not saying this in a spirit of hostility, is to send a mission to find out what you, the country, needs, and tells you what you need. And then it sends a project preparation mission, because you do not know how to prepare your projects, and says, "We will do it for you." Then the preappraisal mission comes, the appraisal mission comes, the inception mission comes. This is how the projects are prepared.

If I were the World Bank I would say, "You do your programming. If you need assistance in terms of money to pay for experts of your choice, tell us, and we'll give it to you, but you prepare it If you want us to come and comment on your programming, we'll do so. This is your project You prepare it." If the government does not prepare the project, it does not own it.

I can give you an example When we were preparing a Grameen Bank proposal for what we wanted to do in the next three years, IFAD sent one of their staff. He introduced himself by saying: "IFAD sent me to prepare your proposal " I said, "Who is IFAD to prepare our proposal? We shall prepare our own proposal." IFAD had not even bothered to tell us that they were sending somebody to prepare our proposal I said, "We don't recognize you." So the poor IFAD representative was hanging around, sending faxes back to his Rome office. Finally, a formal letter came to us, and I said, "I don't recognize this letter, because this letter has to come from the government." So he could not do anything, and he went back, but before he went back, he tried to explain to me, "You tell us what you want, and I'll write the thing in the language of IFAD" I said, "I will write my proposal in my language. If IFAD does not understand it, IFAD has to hire an interpreter to understand what I wrote, because this is my proposal, and it is up to IFAD whether or not to give money".

This kind of thing happened not only once, but all the time when we created the Grameen Bank. At that time, we were receiving funds from IFAD, but project execution was by the Asian Development Bank Each mission that came from the Asian Development Bank caused us nightmares. They hated us for everything we did Whenever we heard that the IFAD technician was coming we spent sleepless nights, as if we were doing something criminal. When we became a bank, the mission that arrived in Dhaka was furious. They said, "You have no right to convert into a bank " I said, "We struggled very hard to make a bank. Now you tell us that we have no right. Who has the right?" He said, Without the permission of IFAD, you cannot do this." I said, "Who is IFAD that I have to get their permission? If you don't want to give us the money, keep your money. We will I find other money".

For another example, the World Bank pressured the government of Bangladesh about making up its mind about a credit program. The president formed a high-level committee and asked me to be part of it. In the committee meeting I said, "In this program, 60 percent of the money will be used for technical assistance, which means that experts will come to Bangladesh to tell us how to run a credit program. They are also saying how they are so impressed by the Grameen Bank So they do not need to send people from Washington or anywhere else. We are here, and we do not need any money to tell you how we run a credit program ".

So the minister of planning asked me to write up the project and gave me a deadline of twenty-four hours At a meeting the next day the committee reviewed the proposal and approved it, but the World Bank continued to pressure us. It insisted that the new foundation I had suggested, which would receive funds from the government and make them available to any NGO that was interested in lending money to the poor at 2 percent interest, had to receive US$75 million from the World Bank We said we did not need the money and the World Bank insisted that we come and negotiate a US$75 million loan Finally, by going to the president of the World Bank and then sending a negotiator to the Washington meetings, we managed to convince the Bank that we really did not want their money for this project. This was not a pleasant experience, and what I am trying to say is that we can do business differently.

Sekai Holland: I wanted to respond to the comment that we do not have enough information about the Bank. The reason InterAction asked me to come and speak is because we produced a five-year program in March this year and we came here in a desperate effort to get some funding in the United States To this day we have not received one cent from one donor.

What we are doing right now is trying to understand the different policies of the different donors. While we are doing that, the 66 workers of the Association of Women's Clubs servicing 40,000 women have been working voluntarily, for no pay, for 12 months. I do not know how many tunes we have been told that the World Bank has US$10 million for women, the USAID has US$10 million for women. I am sick and tired of hearing about how women are a priority and they ought to be supported, yet when we produce something the donors give us every excuse as to why they cannot put money into the Association of Women's Clubs, and they have done so even though we have asked them for a financial comptroller to come for two years to train us in how to look after money.

So the point about the 'world Bank that I found out yesterday is that it is our bank, and I found out that the people I ought to be fighting with are the Zimbabwe government But I find that hard to believe, because the same problem that we have met in trying to get a revolving fund to finance our 1,780 clubs must be the same problem our government is racing with the World Bank in getting money into Zimbabwe, because the problem in Zimbabwe is that there is no cash to do anything.

A number of participants commented from the floor; then the speaker responded

Participants' Comments

First Boor participant: I know that Muhammad Yunus has a wonderful story to tell about how Grameen workers find the poorest when they start a new group, and I would like to ask him to share that story with everyone here.

Second floor participant Statistics reveal that in many countries persistent structural hunger is more an urban than a rural phenomenon. I was recently in Kenya for a meeting with representatives of the United Nations Children’s Fund, and this is what they have found in Kenya. Yesterday I spoke with a colleague from Brazil. Brazil is 80 percent urban, but according to his figures about 75 percent of the hunger in Brazil is in urban areas. So what we are calling for is assistance to the urban poor to produce their own food in the way Ruth Bamela urged us.

Now before anyone thinks this is rather farfetched, a recent survey carried out in Moscow found that two out of three families in greater Moscow are producing food. A survey in Kenya found that three out of five families in Nairobi are producing food. In most countries, urban agriculture is women's agriculture rather than men's. I was recently in Uganda, where the women headed families leave the villages and move to the city In the city they have to produce their own food So urban agriculture in many countries is women's agriculture.

Virtually no research or development assistance has been devoted to urban food producers, yet we all know that within a few years half the world's population will be urban So I call to your attention the need to empower the poor in cities and towns to achieve food security by producing their own food, which means that they have to have access to credit, to land (which government gets involved in), and to water This will also help cities become more environmentally sustainable and less polluting.

Third floor participant I have been an admirer of Grameen Bank for many years. The bank does not only lend money, it contributes very effectively to health, nutrition, education, and welfare in general How does it do this and what is the relationship between the bank and the government concerning these social services?

Fourth floor participant: We are an international private voluntary organization, and in the last fifty years we have built up a program that is now a US$200 million program worldwide, but we built it up community by community, through participation. My question is, how does one reverse the process with the Bank, whereby you start with multimillion dollar loans and then get to the community level?

Fifth floor participant: The US Congress, especially President Clinton, is in the process of slashing foreign assistance, including foreign assistance that goes to the poorest countries and to poverty-focused programs. I understand that Muhammad Yunus met with President Clinton and had an opportunity to talk with him about that problem. I would be interested to hear his impression of President Clinton's interest.

Speaker's Response

Muhammad Yunus: On the question of how we find the poorest person in the village, we follow two basic principles One is that people should not come to the bank, but that the bank should go to the people. Our staff travel around and meet people to talk to them about their needs. The second principle is the reverse of the banking principle that the more you have, the more you can get, so if you don't have anything, you can't get anything We say that the less you have, the higher your priority. So we try to identify those who have nothing at all.

During out staff training we explain things in this way. When you explain that you represent a bank that lends money to poor people, everybody around you is likely to turn into a poor person Anybody who says, "I am a poor person, give me the money," will surely not he a poor person, and you can ignore that person You should walk around and try to find out where the poorest person in the village lives. If a man comes up to you and claims to be that person, accompany him to where he lives, and that way you can see how well or badly he lives for yourself.

Once you get in the house and you find out that he has a relatively decent house and a few possessions, then you tell him, "Look, you say you are a poor person, and maybe you are, but don't you think there are people who are not as lucky as you in this village, who are maybe worse off?" Then he will admit that he knows several people who are worse off then he is. Then you say, "Would you please accompany us to show us who is the poorest in your estimation?" So he becomes a guide to take us to the poorest person. And if you see that this is a house in name only, and that all the owner and her children have is maybe a couple of pots and pans, a few bottles hanging from one comer, and some rags, then you will know you have found the poorest person.

Then you explain what Grameen does and how she can borrow from Grameen. And after a while, when you ask for her response, she will say, "Oh, no, I can't take money, and I don't need money. What can I do with money?" And you know right away that she is the person you are looking for So from now on, you have to build up her confidence because she has not gotten an offer of help before, so naturally she is suspicious. So you have to build up her confidence so that one day, maybe several weeks later, she will say, "Yes, let me try to find some friends to form a group."

So this is how we try to find the poorest person, and the first few groups that Grameen forms in a village have to be made up of the poorest people, because otherwise we will keep moving up to a higher level, and we will never come down to the poorest. Our approach is the same whether we are in an urban or a rural area, a hill region or a plain region, and the causes of poverty and hunger are the same, institutions that deprive the poor of a fair chance at access to credit.

As for producing food, all poor people do not have to produce food as long as they have the income to buy it from a job. I do not see how a poor person can be engaged in food production in an urban situation.

In the case of social services supplied by the government in Bangladesh, not too many of these services are readily available to the poor Our health service is free, because it is aimed at the poor However, anything that is free only serves the interests of the rich, because they have the power to capture it, and most of these benefits will be in urban areas, where the powerful and the rich tend to live. If the benefit ever get to the rural areas, the same thing will happen. So all these services like health and education do not really go all the way down to the poor. In Grameen's case, we try a different approach to see it these benefits can be provided through the Grameen groups.

We have something called sixteen decisions. These are decisions that the people themselves have arrived at through intensive dialogue within their Grameen Bank groups about their problems and what they can do about them From these discussions over the years, we now have a list of sixteen decisions, for example, we shall not take any dowry at the time our sons marry and we shall not give any dowry when our daughters marry Giving a dowry is a killer for poor people and can lead to even deeper poverty and to debt with the moneylenders.

Another example is that we shall grow vegetables all year round, eat plenty of them, and sell the surplus. Malnutrition is rampant in Bangladesh, and one of the ways people can improve on the nutrition situation and alleviate certain vitamin deficiencies is by eating plenty of vegetables. So we explained this to them, they discussed it, and they decided to grow vegetables year round, and Grameen took the responsibility of selling vegetable seeds at cost to the borrowers. Today Grameen sells more vegetable seeds than the government agency responsible for selling vegetable seeds.

Another example of a decision is that we shall send our children to school and help them to earn enough to pay for their education One of the ideas that emerged during our discussions was that if you plant enough vegetables so that you can sell some in the market, you can use the money to buy all the stationery that your child will need in school. And growing vegetables is fun for children, who would also enjoy raising chickens to earn money to pay for other necessities, while at the same time learning how to do things for themselves.

About the meeting with President Clinton, one of the things we discussed was the USAID and the foreign aid situation, and I expressed my views about foreign aid. In the foreign aid situation, the donor country writes the check, but gives the wrong address. In the case of Bangladesh, it says US$100 million to Bangladesh under the assumption that Bangladesh is a poor country, so everybody there must be poor What happens is that the richer people in Bangladesh grab that check and use it for themselves You have to address the check to, say, the poorest 50 percent of Bangladesh's population, so that the officials who are responsible for it now have to find these people.

I also mentioned to President Clinton that when I had visited the USAID on previous occasions, I felt as though I had entered enemy territory, but this time I felt at home Everybody was speaking the same language that I spoke. I thanked him for making this happen, especially the change in policy on macroeconomic lending. I said, "I wish you could use your influence to change the World Bank in the same way."

Finally, I delivered a letter from many of the NGOs who are represented here today that asked him not to make the planned reduction of about 50 percent in aid money and poverty reduction funds. He read the letter and said. "I'll make sure that there is no cut." I hope he remembers.