The Father of Microcredit – Muhammad Yunus

“If you imagine, Some day it will happen. If you don’t imagine, it will never happen.”- Prof.Muhammad Yunus, Noble Laurette

In today’s times when we think of Entrepreneurs, Changemakers and Innovators only the names of Elon Musk, Jeff Bezos, Bill Gates, Steve Jobs, comes up. Real entrepreneurs and innovators are those who have created an impact in each and every individual lives-from the rich to the poor, even without you knowing them. They have created impact not for their own personal gains and getting richer, but to create true wealth in the society. These are few such inspirational people we will be seeing in the weekly ImpactCreators article.

The first person we want to share is responsible for creating not just livelihood opportunities for the poorest of poor but is known as the Father of Micro-Credit, Nobel Laureate Professor Muhammad Yunus. He is the father of microcredit, the father of social business, the founder of Grameen Bank, and of more than 50 other companies in Bangladesh. For his constant innovation and enterprise, the Fortune Magazine named Professor Yunus in March 2012 as “one of 12 greatest entrepreneurs of our time”.

He was rated #2 Top Global Thinkers of all time.

The World Bank estimates that more than 500 million people have benefited from microfinance-related operations which was innovated by him.

Microfinance, also called microcredit, is a type of banking service provided unemployed or low-income individuals or groups who otherwise would have no other access to financial services. It allows people to take on reasonable small business loans safely, allowing them to become self-employed through their own micro-financed businesses., and in a manner that is consistent with ethical lending practices.

The majority of microfinancing operations occur in developing nations, such as Uganda, Indonesia, Serbia, and Honduras. Like conventional lenders, microfinanciers charge interest on loans and institute specific repayment plans.

While Microfinance is not a new concept, the first organization to receive attention was the Grameen Bank, which was started in 1976 by Muhammad Yunus in Bangladesh.

The journey of Muhammad Yunus from a social entrepreneur to winning Nobel Peace Prize is extraordinary.

In 1976, during visits to the poorest households in the village of Jobra near Chittagong University, Yunus discovered that very small loans could make a disproportionate difference to a poor person. Village women who made bamboo furniture had to take usurious loans to buy bamboo, and repay their profits to the lenders. Traditional banks did not want to make tiny loans at reasonable interest to the poor due to high risk of default.

Yunus had a strong belief that, given the chance, the poor will repay the money and hence microcredit was a viable business model. Yunus lent US$27 of his money to 42 women in the village, who made a profit of BDT 0.50 (US$0.02) each on the loan. Thus, Yunus is credited with the innovation of microcredit.

In December 1976, Yunus finally secured a loan from the government Janata Bank to lend to the poor in Jobra. By 1982, it had 28,000 members. On 1 October 1983, the pilot project began operation as a full-fledged bank for poor Bangladeshis and was renamed Grameen Bank (“Village Bank”). By July 2007, Grameen had issued between US$6.38 billion to 7.4 million borrowers. 

A simple solution was created for a complicated problem. The determination shown by him led to the success of the Grameen microfinance model. This has inspired similar efforts in about 100 developing countries and even in developed countries including the United States. Many microcredit projects retain Grameen’s emphasis of lending to women. More than 94% of Grameen loans have gone to women, who suffer disproportionately from poverty and who are more likely than men to devote their earnings to their families.

For his work with Grameen, Yunus was named an Ashoka: Innovators for the Public Global Academy Member in 2001. In the book, Grameen Social Business Model, its author Rashidul Bari said that Grameen’s social business model (GSBM) has gone from being theory to an inspiring practice adopted by leading universities (e.g., Glasgow), entrepreneurs (e.g., Franck Riboud) and corporations (e.g., Danone) across the globe. Through Grameen Bank, Rashidul Bari claims that Yunus demonstrated how Grameen Social Business Model can harness the entrepreneurial spirit to empower poor women and alleviate their poverty. One conclusion Bari suggested to draw from Yunus’ concepts is that the poor are like a “bonsai tree”, and they can do big things if they get access to the social business that holds potential to empower them to become self-sufficient.

He is one of seven individuals to have received the Nobel Peace Prize, the United States Presidential Medal of Freedom and the United States Congressional Gold Medal. Other notable awards include the Ramon Magsaysay Award (1984), World Food Prize (1994), International Simon Bolivar Prize (1996), Sydney Peace Prize (1998), The Prince of Austurias Award for Concord (1998) and Seoul Peace Prize (2006).

He also the second recipient of the Olympic Laurel at the Tokyo Olympics 2021 for his extensive work in sport-for-development including founding the Yunus Sports Hub, a global social business network that creates solutions through sport. He has collaborated with the IOC on several projects including educational elements of the IOC Young Leaders Programme, the “Imagine” Peace Youth Camp and the Athlete365 Business Accelerator – the first comprehensive entrepreneurship programme to help career transition for Olympians.

In his speech he said, “You, athletes of the world, can provide the leadership in transforming this world and create a world of three zeros: zero net carbon emission, zero wealth concentration to end poverty and once for all, zero unemployment by unleashing the power of entrepreneurship in everyone.”

He is truly inspirational for his work in young and old alike. He has been a champion for youth and has started Yunus & Youth.  He believes in combining the next generation’s passion to change the world with the knowledge and experience of traditional corporations to promote sustainable global development and economic growth. This programme has created more than 4000 Social Entrepreneurs in more than 60 countries around the world.

In an interview in 2019 he said, “The young people of this generation have so much power because of technology, communication, interactions. So they should be using these instruments, they should take over the leadership of the world rather than waiting to become – as they describe – the future leaders of the world; they are not the future leaders of the world, they should be the present leaders of the world. And make things happen for themselves, otherwise they will be caught in the same system that created all these problems and goes on creating them.”

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