Haase - From a Movement to an Industry: The Story of...

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From a Movement to an Industry: The Story of Microfinance We started as a very modest local initiative… I realized very soon that the problem was not at all a local one. In order to solve the problem, the entire banking system would have to be turned upside down and fully reorganized. - Muhammad Yunus, Founder of the Grameen Bank The microfinance revolution began inauspiciously in August 1976, in a small Bengali village called Jobra. Dr. Muhammad Yunus, an economics professor at nearby Chittagong University, had supported Bangladesh’s struggle for independence five years earlier, only to see the new nation fall victim to apocalyptic famines soon thereafter. His love for his country compelled him to act, and the Vanderbilt- trained economist did so in a realm familiar to him: the market. Circumventing the local loan sharks, Yunus served as an intermediary between a local commercial bank and a handful of impoverished women who needed very small loans to buy supplies for their hand-made crafts, such as bamboo stools. For Yunus, these women weren’t helpless peasants in need of foreign aid, but aspiring entrepreneurs. When his first few loans were repaid successfully, Yunus realized he alone could never meet the demand of all the other rural entrepreneurs; so he founded the Grameen (“Village”) Bank, which officially began lending in 1978. Since then Grameen has lent out nearly $10 billion to over 8 million people - 96% of them women. But this is no longer a phenomenon exclusive to Bangladesh. Today there are nearly 4,000 organizations around the world providing over 150 microloans annually; 83% of those loans go to women. These numbers are impressive, but it was not the statistics that most endeared to me to microfinance. Rather it was the way the movement seemed to transcend political and ideological boundaries. When I began studying microcredit programs about 20 years ago, I found it incredible to be walking through the rolling hills and sleepy towns alongside former Marxist guerillas in El Salvador now working as “village bankers” for a US government-funded microcredit project. This was no typical development project concocted by bureaucrats in Washington, DC; it seemed to me Muhammad Yunus had managed to do something countless politicians before him had largely failed to do: find some common ground between socialism and free market economics. “The change that is needed will have to come from the bottom.” I was not the only one enamored with the idea of microfinance; development practitioners and humanitarian activists who were seeking an alternative to the traditional Washington approaches to poverty alleviation came to Bangladesh to see for themselves how Grameen worked. Yunus and his colleagues established the Grameen Dialogue, an annual forum that brought together development practitioners from around the world to learn how microcredit works. A session I attended included participants from Vietnam, Columbia, and Botswana, excitedly exchanging ideas in myriad accents of English about how to
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Haase - From a Movement to an Industry: The Story of...

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