Fighting Poverty Means Changing the Rules

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Empowering people can change the economic landscape.

So we said, ‘Why are we giving it to men then? Why don’t we give money to women only?’ and we changed our policy. Ever since, we have given priority to women and today they amount to 96 percent of our customers.

Poverty has many faces, changing from place to place. Although it has been studied for hundreds of years there are still areas of the globe plagued by poverty. Former U.S. President Bill Clinton recently secured nearly $2 billion in commitments to tackle a variety of global problems after brainstorming with some of the world's richest and most influential people.

They’d do well to take the lead from Bangladesh, once steeped in poverty and misery. In a little over three decades as an independent country, Bangladesh has made significant progress in reducing poverty and improving the lives of its people.

Muhammad Yunus, head of the Economics Department at Bangladesh’s Chittagong University, began a movement in the 1970s that overturned many conventional ideas about banking and helped millions of Bangladeshi families break away from poverty’s grip. It started in a village next to the university campus where he was teaching in the mid-’70s. Yunus found that even for a very small amount of money people had to go to the moneylender. Banks would not lend money to poor people. “We cannot lend money to poor people, because they have no collateral, no security,” they said. “Without collateral, the bank cannot work.”

Yunus began a movement that overturned many conventional ideas about banking and his work has earned him dozens of awards from around the world. “Our principle is that the less money you have, the higher priority you are given,” he explained in an interview with Vision Magazine. “We lend to people without any jobs, without any land, without any income. And we focus on women.”

Today the Grameen Bank has 6.4 million borrowers, and 96 percent of them are women. This too is a complete reversal of the conventional banking system, because conventional banks focus on men. “We saw that money that went to women brought so much more benefit to the family than the same amount going to the family through the man,” comments Yunus. “So we said, ‘Why are we giving it to men then? Why don’t we give money to women only?’ and we changed our policy. Ever since, we have given priority to women and today they amount to 96 percent of our customers.”

In the 1990s poverty in Bangladesh shrank by 9 percent, stemming in large part from strong, sustained economic growth - twice the average rate of other low- and middle-income countries. Every year around one million jobs are created for new entrants to the country’s work force, many of whom are women.

Over the past twenty years this new banking policy has brought remarkable changes to Bangladesh. There are now more than 2000 branches of the Grameen Bank across the nation. The results show in the social development index: in 2005, China was first; Cape Verde was number two and Bangladesh was third. And it’s happening because female empowerment in Bangladesh freed millions from the grip of poverty.

Read the full interview at Vision Magazine.

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Edwin Stepp
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