Thursday, October 19, 2006

Yunus: ‘Poor women are good credit risk’

The Ramon Magsaysay Award Foundation (RMAF) is on Cloud 9 because 1984 Awardee for Community Leadership, Muhammad Yunus of Bangladesh, is this year’s Nobel Peace Prize winner. The RMAF was 22 years ahead of the Nobel in recognizing Yunus’ work among the poor.

The Dalai Lama received his RM Award (Asia’s Nobel, so-called) in 1959, 30 years before his Nobel in 1989. Mother Teresa got her RM Award in 1962, 17 years earlier than her Nobel.

This means that Asia, the RMAF of the Philippines in particular, is not behind, it is in fact way ahead, in recognizing its own home-grown heroes and, yes, long before these persons have become familiar names in the world.

Yunus was only 44 when he received the RM Award in 1984, one of the youngest in RMAF’s roster of laureates. Now there is an RM award for Emergent Leadership for those below or on the threshold of 40. Yunus was quite surprised that he was chosen at that time because Grameen banking (microfinance) for the poor was not yet a byword. This is what Yunus said in 1984:

“I still cannot make out how the trustees of this prestigious foundation could notice a small effort such as ours, which has reached only some 100,000 in a population of more than 90 million. (As of July 2006, the population is 147.3 million - Inquirer Research Dept.) I can only admire the foundation for taking a big risk in choosing me…”

Because of the Nobel Peace Prize, Yunus will surely be quoted very often these days, listened to, queried. His words and work will be dissected.

Let’s listen some more to what this economist, said in 1984. Do we recognize a glimmer of the grand possibilities?

“As a student of social science, I could not feel comfortable with what I learned. When it came to applying this knowledge in solving real problems, it appeared toothless. I continued to get a feeling that the knowledge that we present in the discipline of social science is replete with pretensions and make-believe stories…

“Social scientists enjoy being up above in the sky and having a panoramic bird’s-eye view over a wide horizon…The view from the sky without the supportive close-up view from the ground merely encourages you to take recourse to daydreaming.

“Not all people have access to a bird’s-eye view. Poor people don’t. They are too busy eking out a survival for themselves with their worm’s-eye view…Poverty can be better understood if we look at it from the ground level at a very close range. Then, instead of generating billions of words about it, we can find ways to cope with it.

“Poverty is not caused by a person’s unwillingness to work hard or lack of skill. As a matter of fact, a poor person may work very hard—even harder than others—and he has more skill and time than he can use. He languishes in poverty because he does not receive the full worth of his work. Under the existing social and economic institutional arrangements, someone else always comes in between and skims off the income that was due to him. The existing economic machinery is designed in such a way that it allows this process of grabbing to continue and gather strength every day, so that the earnings of others can make a handful of people richer and turn a large number of people into paupers.

“A poor person cannot arrange a larger share or return for his work because his economic base is paper-thin. If he can gradually build up an asset-base, he can command a better share. Land to the landless will help build up this base. There are other forms of assets that will improve his economic situation. Credit, for example; it is a liquid asset. The recipient of credit can decide which particular tangible form he will convert this asset into…With financial resources at his disposal, an individual is free to build his own fate with his own labor. Nothing can match the spirit of a free human being…

“Removal of poverty must be a continuing process of creation of assets by the poor at a steady rate. Poor people know what they must do to get out of the rut. But the people who make decisions refuse to put faith in their ability…”

For more on Asia’s greats like Yunus, read RMAF’s series of books on the RM awardees, “Great Men and Women of Asia”. I found writing some of the stories in the books very inspiring because many of these great men and women were just like you and me when they set off.

I had the chance of listening to Yunus when he was here in 2001 to address “Grameen replicators”. He mentioned then that the RMAF award helped boost the microfinance movement that he started in the 1970s in a small village in Bangladesh through small loans to the poor, especially women. The Grameen way has since taken root in many parts of the world.

When asked why Grameen has a bias for women, Yunus replied: “Because women are good people. Poor women are a good credit risk, even in the most difficult economic times. They are the best judge of their own situation and they know best how to use credit when it is available, especially when supervised and encouraged by their peers. Small business loans pave the way to breaking their poverty cycle. In just one program operating in Southern Luzon, over 1,000 women and their families crossed the poverty line between 1997 and 2000.”

The Grameen-style microfinance movement is growing in the Philippines. In 2001 repayment rate was at 93 percent. Interested in mocrofinancing? Contact Philnet at

Microfinance is not in the curriculum of business schools. Maybe it is learned first and best in the school of the heart. And on the ground, like Yunus did.