Dr. Muhammad Yunus—Nobel laureate, founder of the Grameen Bank, and currently chairman of Yunus Social Business—recently visited USAID to address Agency staff about Lessons in Leadership. After his talk, he met with a small group of USAID leaders for a candid, open-ended conversation.

Dr. Yunus while visiting USAID. Photo Credit: USAID

Dr. Yunus is an inspiring man—he created Grameen Bank in 1974, when, as a professor of economics at the University of Chittagong in Bangladesh, he noticed with dismay the predatory loan-sharking that kept those in the nearby community in debt and poverty. After  walking around the village next to campus, he compiled a list of everyone trapped in this cycle; then, out of his own pocket, he paid off their debts in full—it cost him only $27. The bank that emerged from this small but transformative act became a pioneer in lending to the poor. To date, Grameen has disbursed $13.9 billion in 81,387 villages, to more than 8.4 million people —96 percent of them women. The overall repayment rate is 97 percent.[1]

At USAID, we are working to respond to President Obama’s challenge to end extreme poverty within the next two decades. The world has seen unprecedented progress in the last 30 years, with more than 700 million people rising above $1.25/day. The global extreme poverty rate was cut in half between 1990 and 2010, achieving the first Millennium Development Goal five years ahead of schedule. Still, more than 1.2 billion people are living in extreme poverty today.

But the revolutionary contributions of Grameen Bank and other civil society actors, such as BRAC, have made Bangladesh, in particular, a model for large-scale poverty reduction. Even without the sky-high growth rates of countries like China and India, Bangladesh has made comparable inroads against extreme poverty. Since 1990, for instance, India’s per capita GDP has grown at 4.8 percent per year, compared to only 3.5 percent per year in Bangladesh; yet Bangladesh has cut its extreme poverty rate more quickly than India has—2.3 percent per year versus 2.2 percent per year.

One of Dr. Yunus’s most illuminating insights was that “All human beings are entrepreneurs.” Grameen, for instance, has a program that targets Bangladesh’s poorest, who survive by begging. The Struggling Members Program has a simple proposition: rather than soliciting donations, members can use a small loan to buy merchandise and are offered an option: charity or trade. Grameen doesn’t set deadlines for repayments and allows the borrowers determine how much they need.  Interestingly, none asked for more than $20. Within a couple of years, 100,000 people had joined the program; 25,000 have since stopped begging all together. People, everywhere, are full of creative ideas and ingenuity, Dr. Yunus reminded us —sometimes we just need to figure out how to unlock this potential.

In tandem with a Yunus adage that “Everything starts with a seed,” USAID is working to sow the seeds through major creative initiatives like Feed the Future and Power Africa, by supporting bright new thinkers and entrepreneurs through Development Innovation Ventures and the Grand Challenges for Development, and by reimagining how we finance development and funding small-scale enterprises, such as in the new Pakistan Private Investment Initiative.

But we can do more. Dr. Yunus’s newest venture, Yunus Social Business (YSB), is looking to scale the ‘social business’ model—i.e., companies that are businesses in every respect, except they don’t seek a profit and have solving social problems as their core mission. “There is a business solution to every problem the poor face,” Yunus observed.

Before his talk, USAID and YSB signed a Memorandum of Understanding. “Our collaboration with Yunus Social Business is emblematic of our new model for development,” Administrator Shah said at the signing. (It is ) “…a model that harnesses partnership and innovation to advance sustainable solutions to some of the toughest challenges we face.” No challenge is tougher than ending extreme poverty.

USAID’s investments in health care and education, in protecting human rights and providing humanitarian assistance are essential. Our assistance can also be a spark—by partnering with social businesses, by partnering with the poor themselves.  We as an Agency have the ability to ignite the kind of catalytic, grassroots growth that could help eradicate extreme poverty in our lifetimes.

There is much we all can learn from the intense creativity and compassion of a Dr. Yunus, Nobel laureate.

 

[1] The accuracy of Grameen’s internal statistics has been questioned by some—e.g., David Roodman, of the Center for Global Development. He finds, for instance, a higher default rate, of 10.9 percent.