Banker to The Poor presents micro-credit in a way that is both readable and understandable. Muhammad Yunus, the founder of the Grameen Bank in Bangladesh and the author of the book was also the co-recipient of the Nobel Peace Prize in 2006 (shared with Grameen Bank). The book starts more than 40 years ago, including the early life of Muhammad Yunus. Yunus also discuses some of the historical/political issues leading up to and after gaining independence from Pakistan.
The book covers some of the early foundations that led up to creation of what is now the Grameen Bank. Likewise is covers the need for change within social systems in order to alleviate poverty. In many cases poverty is not the result of inaction, it’s the result of the lack of opportunity. In Bangladesh (and most of the world) credit is extended to people if they have some form of collateral to back up the loan. This automatically disqualifies a great number of people from getting traditional credit to begin with.
The result of a lack of credit is presented within the book. People’s only option for credit is limited to money changers in a local economy. Money changers sometimes charge huge amounts of interest on a daily loan causing the borrower to work all day for mere pennies. With one loan an individual in poverty can break the cycle and start using their own daily savings and start generating a return that leads them out of poverty.
From the earliest days of loaning $27 U.S. to a small community to loaning over $6.5 billion combined to date; the Grameen Bank has grown into a very successful micro-lending institution. The success of Grameen didn’t stop with a lending institution. There have been many different businesses created through Grameen, including a joint venture with Danone yogurt to provide nutritious, affordable food to the poor.
Bangladesh, a country roughly the size of the U.S. State Louisiana, is the 7th most populous country in the world with over 160 million people. Regardless of the high density of people living there it is also recognized as being one of the Next Eleven emerging economies. Since 1991 the poverty rate has fallen over 20%, some would suggest that this reduction in poverty is due in great part to micro-credit, I would agree.
