I am not sure if the interview with Muhammad Yunus in the url link below about the launch of Grameen America (a branch of Grameen Bank, which, along with Yunus, won the 2006 Nobel Peace Price) is inspiring or depressing (Issues: Loans, p188). Inspiring because it is bringing much needed assistance to those who have the motivation to benefit from it. But, depressing because an institution that meets a vital social need in the developing world as an alternative to the loan sharks and other market predators who were the only source of credit for millions, is now deemed to be necessary in the U.S.:
“Mr. Yunus has now brought Grameen to this borough of New York City. Since taking off in January, Grameen America has lent out a total of $145,000, with interest rates at around 15% on the declining loan balance.”
The advantages for the borrowers are clear:
“Grameen cases are extremely risky," [Yunus] says. "Because not only are we poorest, [borrowers] don't have collateral, they don't have guarantees, they don't have lawyers, nothing. How risky can you get? Still, our money comes back." Grameen has claimed that over 98% of their debts are repaid.”
And the Bank’s business model is both simple and ingenious:
“Grameen, crazy as it may sound, "assumes that every borrower is honest." But it does have ways to help ensure repayment. Each borrower joins a group of people from similar social and economic conditions, and the group approves the loan request of each member. In this way, the group assumes "moral responsibility" for the loan. Mr. Yunus's use of the female pronoun is not accidental. He says Grameen Bank's borrowers are 97% women, the result of a very deliberate policy. … "we started noticing that money going to the family through women brought so much more benefit to the family than the same amount of money going to the family through men …. Let's focus on women because it changes the family faster."”
In the article, Yunus criticizes Bill Gates’ idea of “creative capitalism” and expands on his own idea of “social businesses” and makes a good point:
“Mr. Yunus freely acknowledges that the free market has done a great deal for the poor. "I didn't say that what is there is wrong. I said the structure was not complete. One piece was missing. We couldn't express within the business world all the things we want to do for others."”
Take care
Dave
Bill Werther & David Chandler
Strategic Corporate Social Responsibility
© Sage Publications, 2006
http://www.sagepub.com/Werther
The Weekend Interview with Muhammad Yunus: Subprime Lender
By Emily Parker
2134 words
1 March 2008
The Wall Street Journal
A9
http://online.wsj.com/article/SB120432950873204335.html
