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Lending to beggars and other shocking ideas
Posted by Kevin Salwen on 08.26.2010Share

Nobel Peace Prize laureate Muhammad Yunus is such a novel thinker that I find myself marveling at his audacity. By now, you likely know his story: an Econ professor during Bangladesh's brutal famine in the early 1970s, he began lending to the poor. Tiny amounts, so that the borrowers could get out of the clutches of loansharks. How tiny? A total of $27 to 42 people. (Shocking that those miniscule loan amounts could trigger such serious indenture issues.)

That enterprise grew into the Grameen Bank. Today, Grameen lends $100 million a month, money it raises from deposits. The borrowers remain the poorest people in the country -- the same class of people, by the way, that make up the deposit base. Let other banks cater to the wealthy; the poor are great credit risks, Yunus contends. And Grameen's 97-98 percent repayment rate is testament to that.

Yunus came to Atlanta this week and I had the good fortune to listen to and briefly meet this audacious visionary this afternoon at Southern Polytechnic in Marietta. He's the kind of person you just listen to with a "What is he going to say next?" ear. Consider: "We can create a world in which the only place you would be able to see poverty is in poverty museums. Someday, schoolchildren will be taken to visit these museums to see what poverty was like."

Possibly my favorite part of his talk was Yunus's description of Grameen's program of lending to beggars. Yes, beggars. "We said to them, 'As you go from house to house, would you care to carry merchandise that you could sell? You could give people an option: to give or to buy, maybe cookies or fruit, bananas for example." His concept, of course, was that everyone craves the dignity of providing for themselves (a concept, by the way, that often seems to get lost in our Westernized notion of charity).

The loans-to-beggars program started small, with only a few hundred beggars. It grew and grew; loans were repaid. In 4 1/2 years, it has now grown to an amazing 100,000 beggars in the program. Now the best part: Many of the beggars completely transitioned to sales, to work with dignity; in fact, by Yunus's count, more than 18,000 beggars have stopped begging completely.

Why not more, you ask? Yunus replies with a laugh: "Begging is their core business. No one changes their core business overnight." As a sidenote, Yunus added, the borrowers know which houses are sales houses and which houses are giving houses. He quips, "These beggars didn't go to Harvard Business School, but they still know market segmentation."

During his talk, the ideas keep flowing, all focused on helping people in poverty.

-- Grameen has helped build a new nursing college, which draws its students from the worst economic class. Students' school fees are provided as a loan, jobs await on the other end, and the repayments happen when they begin earning money. The result: Health care improves in Bangladesh, the toughest poverty cases become wage earners and society blossoms.

-- Yunus believes that there can be 2 kinds of companies: straight capitalists, which are in business strictly to make money (we know these all too well), and social businesses, which are there to create jobs or solve other social ills. Those businesses focus far less on paying shareholders; instead their goals are to break even and help society. In Bangladesh, for instance, Danone has created a highly nutritional yogurt with Grameen's help. That product is sold roughly at cost to help heal children with malnutrition issues. Profit: zero, if you measure profit the traditional way. But few would argue it isn't profitable for society as Bangladeshi children grow up healthier.

-- I'll leave you with my favorite Yunus thought, which fits perfectly into The Power of Half mindset: "Human beings are selfish, there's no denying that," he told the audience. "But human beings are also selfless. Can we build businesses built on some of that selflessness?" Amen.

At the end, during his book signing, I presented him with a signed copy of The Power of Half, and explained briefly our family story. He grinned, stuck out his hand and said, "I love that." His handlers then whisked me away.

Love the idea of a poverty museum! I wonder what we could put in it? In all of my work, I have never met anyone that has wanted a hand out, they want a way out. I think we need to work harder at listening to people in the USA and not assume we as providers know what they need. I truely believe that our goals in the USA for "social services" should be that we put ourselves out of business and with a date and time that it should be happening. If you would use and example of a food pantry/bank, their mission usually revolves around ending hunger...but they show success in their programs by an increase in participants...how is an increase in people using these support services a success? Thanks for sharing your experience!
Posted by Kelly at 4:19pm on 08.28.2010