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Grameen Bank:     
A model from Bangladesh

(Article published in the May 17, 2006 issue of Manila Standard Today)

My OFW daughter Sarah (who up to now enjoys being mistaken for the famous teen singer) came home last Good Friday for a three-week vacation from her job at the Royal Bank of Scotland in Edinburgh and gifted me, as her pasalubong, with Muhammad Yunus’ autobiography, “Banker To the Poor.”

Staying for just a few years at the land of kilts and bag pipes must have applied a bit of the Scot on her.  The book was in paperback, obviously previously read through from cover to cover (by her, I found out later), and with newsprint pages bearing marks of having been previously dog-eared more than ten times my granddaughter’s Golden Retriever, Scottie. Like a dutiful Filipino father, I accepted with great pleasure, carefully not telling her that I could have picked up a more presentable copy myself at the National Book Store. 

Muhammad Yunus was a professor of economics at the Chittagong University which is located in a hilly section of the district from which it got its name, next to Jobra village, in Bangladesh.  To us outsiders, Bangladesh, with reason, is synonymous with poverty year in year out. But 1974 was particularly difficult for Bangladesh; it was a year of the great famine. In the context of this space and time, Professor Yunus and Grameen Bank began their journey. 

Much has already been written about Professor Yunus and Grameen Bank and I have nothing to add or subtract from either the man or his vision.  What I have, however, is the opportunity to point to the pages of  “Banker to the Poor”  as the validation of my private theory of incongruity, to wit, that non-conformity and hard headedness are the parents of progress and accidents are its yayas.

By all standards of conventional wisdom, Professor Yanus ought to have simply occupied a professorial chair in the ivory tower of Chittacong University.  Instead, he dirtied his feet walking the streets of Jobar.  The result was the Grameen Bank that grew, in the short span of 1974 to 1998, from a small pro-poor project in a village near school to world-renowned multi-billion pound effort against world poverty.

Muhammad Yunus had neither education nor training to be a banker; he was a professor of economics, a teacher of that branch of knowledge where it is acceptable for you to respond with an estimate when someone asks for your telephone number.  But he went into a lending activity that is almost as tedious as bean counting.  He began the Grameen project in Jobra with absolutely no prior experience of the pressure of meeting the month’s payroll; but he succeeded in demonstrating the commercial viability of lending to the poorest of the poor.  Everyone declared and foretold, as certain as any engineer can mathematically demonstrate that a bee is aerodynamically incapable of flying, that he would fail.  But he went ahead anyway, and like the bee, did his thing.  Professor Yanus was, fortunately, hard headed.   

He too broke some norms and some that he broke were sacred tenets to a few of my holier-than-me colleagues.  For instance, the professor’s early years, as he narrates them, hardly resemble the American tale of young George Washington and his father’s cherry tree. On the contrary, they are more like my own unwritten remembrances of the days of my youth in Gagalangin.

           Like all of us book-deprived children of the public elementary school system in Tondo, Muhammad Yunus, had a need to read and, to satisfy this need, he admits to having to “improvise, buy, borrow and steal.” At one time, a children’s magazine, Shuktara, published in Calcutta, listed the names of children who had won free subscriptions for winning a contest.  Young Muhammad Yunus was not a winner but he wanted a subscription.  So, he picked at random a winner’s name and wrote the publication to say that he had changed residence. He thus requested that the subscription he had won be delivered to a new address which was his neighbor’s.  This slight diversion was necessary so his father would not find out.

This is the first written admission that I know of of what we now call “identity theft” and, according to Professor Yunus, “it worked like a dream.” 

Thirst for knowledge may excuse that bit of deceit; but how about this?  Young Muhammad Yunus, like us public school boys in the late 50s, liked going to the movies and eating out, i.e. buying from vendors outside the movie houses. Like boy Yunus, we too did not receive enough pocket money from our parents.

To finance his youthful vices, young Yunus worked at his father’s shop and, during the peak seasons of business, took advantage of his father’s trust. In his words, “I helped myself to a few banknotes and coins from the drawer where he kept his loose change.  This embezzlement never amounted to much, but it was enough to build up a fund to meet my modest requirements.”

This was the same Muhammad Yunus who founded the Grameen Project, that later on turned into the Grameen Bank, that was founded on trust and honesty both of the Bank’s borrowers and workers.

But all these hard headedness and non-conformity would have been for naught were it not for the loving care of accidents.  Let us fast forward to how Grameen became a separate bank.  Professor Yunus’ admission: “Bangladesh has 120 million people, but it is sad to say that just a handful of people run things, and most of them are college or university friends.” Very familiar, isn’t it? 

          Professor Yunus had long dreamed of making Grameen a separate banking institution.  Of course, the government bureaucrats were against it.  But, accidents have a way of twisting fate. Sometime in 1982, he was in Comilla at the Bangladesh Rural Development Academy to present a paper on his idea of how the Grameen Bank Project which was then in its eighth year was go forward.  Before he could make his presentation, General Ershad, without the pretense of a preparatory declaration of a state of national emergency, simply took over the reins of government by outright  declaring martial law.  The delegates had to while the time away at the cafeteria since travel was restricted (in the same vein as our calibrated pre-emptive response) and Professor Yunus spent his time telling his friend A.M.A. Muhith about his dream.

Muhith, it later turned out, became finance minister in the new government and after several months called up Yunus to promise to help give Grameen the desired status.  By the sheer accident of being in the same place at an unfortunate time, Yunus’ dream of a separate juridical identity started becoming a reality.

Munith naturally met strong opposition from within the government but was able to enlist the help of Mr. Syeduzzaman who had direct access to the President.  By accident, he too was another Grameen admirer.  Mr. Syeduzzaman took the proposal directly to the President.  It is not clear how or even why Gen. Ershad assented, but he did.  Writes Professor Yunus: “When you already have the president’s approval, it a mere formality to present it in the cabinet which he presides over and which was created to aid him in discharging his duties.”  Smooth sailing from hereon, right?  Not so fast; it is so like the Philippines, and a few more accidents were needed.

          To craft the new bank’s charter, Professor Yunus enlisted the help of Dr. Kamal Hossain who played a central role in drafting Bangladesh’s new constitution.  How did he get the connect?  Professor Yunus had, as a colleague, a former student by the name of Muzammel who studied at Oxford University at the same time that Hossain was a resident scholar there.  They each other well and were, accidentally, admirers of Grameen.  Hossain drew up a 40-60 ownership structure, the bigger part belonging to the borrowers and the balance to the government. 

As in everything touched by governments, the final form reversed the ownership structure, it became 60% government and 40% borrowers.  Professor Yunus, though initially angry, had to accept reality.  Munith promised to restore the original proportions within two years but resigned in 1985 before he could fulfill his commitment.  Luckily, again, he was succeeded by Syeduzzaman who assured Yunus that he would stand by Munith’s promise.  Quietly, 75% of the bank became owned by borrowers and 25% only was retained by the government.

         Lack of space constrains me to stop here.  But I have no doubts that my thesis of incongruity as the mother of progress is adequately proven.   I leave it now to the more famous Sarah Geronimo to sing for me, “ergo stat thesis”.  For her and for those of her generation, I wish we had our own Yunus and Grameen bank to sing about.