Customer Reviews:
 Amazing read! June 18, 2008
Banker to the Poor is a really clear way of explaining what microfinance is as well as showing the drastic difference that $40 can make in people's lives. Shows the humanitarianism of microlending, why it's better than just giving people money, and how it can be a useful tool to help many people. I really recommend this book for anyone, and especially so for anyone interested in helping others or setting up programs to help others (my church is using microlending now).
 Life, liberty, the pursuit of happiness... and credit June 14, 2008
Muhammad Yunus constructed a system in Bangladesh to help the poorest of the poor get loans for tiny amounts of money. Since its inception 1980, variations on this system have spread all over the world with great success.
Yunus starts with the premise that credit should be a right, not a privilege, and the people who need credit the most are the ones locked out of the standard credit system. He recounts a story of a woman who makes bamboo stools. She borrows money to buy the raw materials from a middleman, and as repayment for that loan, she is forced to give the finished stool back to him. He then pays her 2 cents for her work. The raw materials cost only 22 cents, and if she just had that capital herself, she could buy her own bamboo and reap all of the profits from the final sale of the stool. But she doesn't have 22 cents and therefore is effectively a debt slave.
Most people who hear about the concept of microfinance for the poor immediately ask, "Why do poor people pay the loans back?" The answer provided in "Banker to the Poor" is multi-faceted and not wholly satisfying, but it is clear that the system does work. Repayment rates are generally higher than loans given to the so-called credit worthy in standard loan arrangements. A rate of over 98% has been achieved.
Repayment is encouraged by a combination of (1) a high level of interaction between bank workers and the borrower's communities, (2) fair and respectful treatment by the bank, (3) the formation local peer groups to encourage repayment, (4) short loan terms with weekly payments, (5) loans primarily to women, and (6) the fact that the borrowers know this is their one shot -- if they shirk repayment, they are screwed. Their *lives* are their collateral.
The book is an easy, entertaining read, and the enthusiasm of the author for the topic is clear. His stories of individuals who have risen out of poverty through micro-loans is stirring, but toward the end of the book, he talks about poverty in a more philosophical way, and one can't help criticizing his idealism. He proposes a version of socially-conscious capitalism that he claims could help eradicate poverty from the entire world. Under his proposed system, corporations would be motivated by the sum of social utility and profit, not just profit alone. It's a nice thought, but it seems a little naive. But perhaps it takes such unbridled idealism to truly make an important difference in the world, as it seems Yunus has done.
Interesting read... June 6, 2008
I have seen Dr. Yanus speak on the topic of Micro-Lending in person, at a consortium in Los Angeles. I was interested and inspired by both the man himself, as well as his ideas. I think that both he, and his workers at Grameen are deserving of the Nobel Prize for Peace. The book is told in his own words and the reader is exposed to both his humility as well as his fierce passion as an advocate for the poor. I found the book both readable and informative.
RS
Innovative, hopeful, and thought-provoking May 28, 2008
1 out of 1 found this review helpful
There's no question that in most of the world, poor people are left out of the money cycle. Since the really poor don't have anything of value (the thinking goes), how can we trust them with anything? Why loan them money? How on earth would they pay? We'd be foolish to believe they would. Also, what would a person with no means actually do with a loan? They certainly don't need that kind of money.
Mohammad Yunus and his creation, the Grameen (Village) Bank, contradict this traditional banker thinking. This book gives a history of Professor Yunus himself and tells the story of how he came to create and grow the bank that eventually won a Nobel Prize for its microcredit programs aimed at exceptionally poor people, especially women. I found the early chapters, about Yunus' personal life growing up in eastern Pakistan, his time in the US, and his return to a newly formed Bangladesh interesting. They provide an appropriate background for his later work in the village near the university where he taught economics, beginning with the first loan he made himself - $27 to 42 people!
I found it quite an easy read, although it is outside my own field of expertise. I appreciated the pace up to the last couple of chapters, which seemed to come bowling at me with enormous speed (though maybe that's on purpose given the organization's seeming explosive growth in the 1990s and beyond). I would have been interested to also read about how a typical loan actually gets used and repaid - it's difficult for me to imagine what a borrower's balance sheet might look like that she would be able to put the full amount to work immediately and still be able to make a payment in 1 week. How much return would you really see on a goat or whatever in the first week? I just don't know. I also found myself questioning the seeming need for loan after loan after loan - I'm not convinced that this is completely a good thing, but it wasn't dealt with at much length in the book so I don't know how typical that is or what it really indicates. The last chapter, dealing with the future of the bank and Yunus' desire for a parallel economic system based not on profit but on social progress seemed a little weird to me, but I'm not an economist. It seems like more trouble to re-invent the wheel than to put the car we already have on another path.
One thing I found especially compelling is Yunus' development of specific measurable outcomes and goals for his bank's members. The bank's Decisions are interesting in that they seem to have been agreed on by the members themselves, not driven from above. I also appreciated his list of indicators to assess poverty level - although this was somewhat glossed over in the text, these measurable outcomes are applicable to any on-the-ground assessment of functional poverty or non-poverty. If this was the only thing in there, it would still be worthwhile. Read this book. Whether you agree wholeheartedly, scoff openly, or something in between, you'll find it thought provoking.
economic micro-lending = macro social leverage May 15, 2008
4 out of 4 found this review helpful
Muhammad Yunus was born in 1940, the third of fourteen children, to an extremely devout Muslim family in Chittagong, the largest port city in Bangladesh. After studies at Chittagong University, and then University of Colorado and Vanderbilt (where he earned his PhD in economics), Yunus returned to help nation-build in Bangladesh, which had declared its independence from Pakistan in 1971. The independence movement had taken its toll; three million people were dead and 10 million were refugees. In 1974, a famine struck.
As he tried to alleviate the broad and deep poverty in his homeland, Yunus came to "dread" his economics lectures. They were tragically far removed from the everyday lives of normal people. In a theme that would characterize much of the rest of his life, Yunus almost completely abandoned classical book learning in favor of listening to and learning directly from the extreme poor -- the millions of Bangladeshis living off two cents a day. In 1976 he loaned $27 to 42 villagers, and thus was born what eventually became the Grameen Bank (grameen means rural). As of the publication of this revised autobiography in 2003, Grameen and its many replicants had made $3.8 billion of micro-loans to 2.4 million families in over 100 countries. The borrowers themselves own 93% of the bank equity, 95% of the loan recipients are women, and the repayment rate on the loans is 98%. For all that, in 2006 Yunus and Grameen won the Nobel Peace Prize (not to mention more than two dozen honorary doctorates).
Yunus is an excellent writer and story-teller. He shares at length about the many criticisms, myths, and prejudices he's had to face, especially from the "obtuse ineptitude" of governments and the sclerotic bureaucracy of aid organizations (he's particularly critical of the World Bank). He has tremendous faith in the initiative, skill, resilience and creativity of the poor. They're the ultimate entrepreneurs. "Not one single Grameen borrower requires any special training" (205), or any collateral, for that matter. Conversely, Yunus also believes that the poor have many things to teach the rich. When the World Bank's president Barber Conable bragged to Yunus about hiring the best minds in the world, he responded that "hiring smart economists does not necessarily translate into policies and programs that help the poor." Spurning conventional wisdom about development aid and economic categories of the liberal left and the free market right, Grameen's success speaks for itself. As a follow up, see Yunus's newest book called Creating a World Without Poverty: Social Business and the Future of Capitalism (New York: Public Affairs, 2008).
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