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Nobel Prize Winner Outlines
‘Microcredit Movement’ that Helps Poor, Rural Women Start Businesses

Barry Jagoda | Nov. 5, 2007

In a revealing autobiographical talk on Oct. 21, the 2006 Nobel Peace Laureate, Muhammad Yunus, told of how he developed a program to help poor, rural women start businesses. Although at first widely rejected by bankers in Asia, in its current incarnation Yunus’s Grameen Bank now serves more than 7.5 million entrepreneurs in Bangladesh, with similar programs under way around the world.

Muhammad Yunus
Nobel Peace Laureate, Muhammad Yunus.

Yunus, founder of the “microcredit” movement, which advances small sums without collateral to would-be entrepreneurs, spoke to a Sunday afternoon audience of more than 600 in Mandeville Auditorium on the UCSD campus. As part of his remarks, he encouraged educational and business leaders to struggle against “mindsets” that perpetuate existing stereotypes and that cause resistance to social change.

The low-key, inspirational presentation began with Yunus describing his south Asian roots and a journey that eventually led to a doctorate in economics and a job teaching in a small Tennessee university. Visiting his home region of East Pakistan, which had become Bangladesh, he encountered a few people trying to start a small textile business but unable to find resources. On a whim, he loaned the villagers $27. Their tiny enterprise took off, so Yunus decided to find funds for other groups.  He was turned down by the regional banks who said, “Banks don’t loan to poor people because they are not creditworthy.”

Eventually, one bank did agree to supply a small amount of capital but only if Yunus would serve as a personal guarantor. This experience caused Yunus to realize that a co-operative, retaining profits and plowing them back into village enterprises, could do a better job for the poor than traditional financial institutions. Of the nearly 8 million recipients in Bangladesh today, 97 percent are women and Grameen Bank now offers a wide range of services, from cell phones to insurance to a nationwide network of branch loan institutions.

Arguing that “poverty is not caused by poor people, poverty is created by the system,” Yunus challenged the audience with descriptions of two other efforts he has successfully started in recent years. One is a program for “beggars,” where 100,000 of the poorest Bangladeshis now receive small advances without collateral, in many cases turning people into a force of door-to-door peddlers or sales people.

A second innovative area for Yunus is what he terms “social business,” where companies are engaged in projects that benefit society. One such venture, in Bangladesh, is a partnership between Grameen Bank and the Dannon yogurt company. Some start-up funds were provided by Grameen with Dannon agreeing to change the content of its yogurt to provide minimum daily required vitamins, and food content to provide for a healthy diet. The program took off, Dannon started making money on the venture and agreed to turn the profits back into similar start-up socially beneficial endeavors.

A separate Yunus-inspired activity is under the imprimatur of the Grameen Foundation, which currently runs programs in 23 countries similar to the first work in Bangladesh. “The lecture demonstrated that great ideas matter and mean even more when they are tied to entrepreneurial social programs.” said UCSD Dean of International Relations and Pacific Studies Peter Cowhey, a member of the Grameen Foundation Board,

Mary Walshok, dean of Extension and Associate Vice Chancellor of Public Programs at UCSD, the event coordinator, said, "Yunus reminded that major change usually comes from outside systems concerned with sustaining their existing practices and customers.  This message resonates with the innovative culture and entrepreneurial spirit of San Diego."

The lecture was jointly sponsored by UC San Diego, San Diego State University and the University of San Diego. Sanjay Sinniah, an MBA student at USD from Sri Lanka, summarized the substance of the presentation when he said, “All this started with a simple idea that has spread throughout the world. He challenged basic economic principles and now everyone is embracing it.”

Henry DeVries contributed to this story.

Yunus' talk, entitled "Doing Well by Doing Good,"
will be broadcast on UCSD-TV on the following dates:

Nov. 12, 8 p.m.
Nov. 13, 10 p.m.
Nov. 16, 7 p.m.
Nov. 26, 9 p.m.
Nov. 27, 11 p.m.
Nov. 30, 6 p.m.

UCSD-TV may be watched on Time Warner cable channel 18, Cox cable digital channel 135 and on UHF channel 35.

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