Who Is Muhammad Yunus?
Muhammad Yunus is a professor of economics who was awarded the 2006 Nobel Prize in Economic Sciences for his efforts in developing social and economic improvements through microcredit and microloan operations. Most notably, Yunus founded the Grameen Bank, which is known for loaning billions of dollars to impoverished people all over the world.
- Muhammad Yunus is an economist, microfinancing pioneer, and founder of the grassroots Grameen Bank, known for loaning billions to impoverished people all over the world.
- While teaching economics in his native Bangladesh, Yunus became aware of the extreme poverty in the country and the refusal of banks to offer credit to poor people.
- He responded by lending them the money himself, confident that the very poorest could raise their own small business activity and their station with very small loans.
Understanding Muhammad Yunus
Yunus, who has since gone on to win numerous prestigious awards and accolades for his work, believes that credit is a basic human right. After years of studying and teaching economics academically, he took an active interest in poverty. His goal was to help people escape economic hardship by supplying them with affordable loans and a simple guide to managing their finances.
Over the years, Yunus has also written several books, including: Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs, Banker To The Poor: Micro-Lending and the Battle Against World Poverty, A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment and Zero Net Carbon Emissions, and Creating a World Without Poverty: Social Business and the Future of Capitalism.
History of Muhammad Yunus
Born in Bangladesh on June 28, 1940, Yunus completed his BA and MA at Bangladesh's Dhaka University. After graduating, he taught economics at Chittagong University, before receiving a Fulbright scholarship to study in the United States.
In the early 1970s, Yunus completed his PhD in economics at Vanderbilt University. Following his studies, Yunus returned to Bangladesh to become the head of Chittagong University's economics department.
Banker to the Poor
Around the time of Yunus' return to Bangladesh, a famine had swept through the country. He became aware that the poor needed access to capital to start small businesses and that banks generally weren't willing to help them, either refusing requests outright or charging extortionate interest rates.
In 1976, Yunus took matters into his own hands, loaning very small sums of money, reportedly $27, to 42 local women who needed to buy materials to produce their products. Traditional banks wouldn’t offer loans or lines of credit to people without collateral, yet Yunus believed that the very poorest of a culture could raise their own small business activity and their station with microcredit and microloans.
It was this "discovery" of microcredit that would lead him toward the beginnings of forming the Grameen bank and his future Nobel Prize. Yunus began borrowing money from other banks to make loans to the poor, initially as part of a pilot program that ran from 1976 to 1983.
In 1983, Yunus formally opened the Grameen (Village) bank, which served as a way to offer microcredit to entry-level and subsistence entrepreneurs. By June 2020, Grameen Bank had given $30.48 billion dollars worth of loans to some of the world's poorest people. Perhaps more importantly, Yunus' scheme and his promotion of microcredit led to the formation of hundreds of similar projects in nations around the globe.
As of 2020, Grameen Bank has roughly nine million borrowers, 97% of which are women, with a near-perfect repayment rate.
In 2006, Yunus became the first Bangladeshi to receive a Nobel Prize in any of the award disciplines. His country awarded a commemorative stamp to congratulate him. Yunus then pledged the $1.4 million in prize money to a company that wished to produce low-cost food for the poor, while using the rest to set up an eye hospital in his native community.
As Yunus' achievements spread, more accolades followed. In 2008, he was listed as the second most important public intellectual by Prospect magazine. Then in 2009 and 2010, he was awarded the Presidential Medal of Freedom and Congressional Gold Medal, respectively.
Yunus since went on to become the chancellor of Glasgow Caledonian University of Scotland. He was also invited to sit on the board of directors (B of D) at the United Nations Foundation, a charitable operation funded by a $1 billion donation from Ted Turner.
Criticism of Muhammad Yunus
Yunus' banking for the poor venture has come under attack from some quarters. Microfinance loans are said to carry unusually high interest rates, owing to a lack of collateral and the overheads associated with administering small loans.
Yunus himself has even admitted that some organizations may have abused the microcredit system for profit. Another issue that has been flagged is the huge jump in scale of microcredit. As it expanded all over the world, it became less likely that borrowers would be monitored and protected from falling deep into debt like before.