Muhammad Yunus: Banker to the Poor Microfinance and the Grameen Bank

Check-In Can someone quickly summarize what you’ve learned about Yunus/Grameen Bank/Microfinance so far? How did it get started and how does it work?

The Chapter 58 Trust My experience in Ghana Group Loans Education and Savings Accounts Challenges and Results Micro-Insurance

Effectiveness “The elephant in the room is the question: If microfinance doesn’t accomplish anything positive, then why are 128 million poor families busy taking loans? Should we assume that poor people simply don’t know what’s in their best interest? Or do we need to look more deeply into the way poor people survive?” What is most effective about microfinance? What does this mean in terms of Leadership from a Development perspective? (Partridge) Talk about the end goal of microfinance. It’s not about making poor people rich, but rather, giving them more stability in their income over time. Living on $2/day does not mean that you earn $2/day...it means that sometimes you earn $4-5 and sometimes you earn none. The loan gives you both stability AND a way so slowly increase the borrowers income over time. With this, their children can go to school and be more successful (and healthier) than the previous generation, and so on... Partridge example of people knowing the best way to manage their cattle (older cows should not be put down to save on costs/have meat, because they know all of the places to find water during dry spells)

Microfinance vs. Traditional Banks Traditional banks won’t make loans to the poorest of the poor...why? What other development theories have we learned about that partially explain this? What did Yunus have to say about the role that governments should play in microfinance?

Rates and Efficiency “Grameen rates are, in fact, considered low among microlenders, whose administrative costs are far higher than that of traditional banks.” Why do you think their administrative costs are higher? Do you think there is cause for concern about organizational efficiency? Why or why not?

Borrowers Why do you think the Grameen Bank focuses almost solely on women?

Food for Thought with Mr. Bahlke “Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty,” the Nobel Committee said in its citation. “Microcredit is one such means. Development from below also serves to advance democracy and human rights.”