"We need to create a bank for the poor' suggests Nobel Peace Prize winning microfinance pioneer"

Australian Broadcasting Corporation

Broadcast: 09/10/2014

Reporter: Leigh Sales

Banks need to change, with the banking system geared to the rich, so microfinancing attempts to create a bank for the poor according to Nobel Peace Prize winner and anti-poverty campaigner Muhammad Yunus.

Transcript

LEIGH SALES, PRESENTER: One of the world's most accomplished anti-poverty campaigners, Nobel Peace Prize winner Professor Muhammad Yunus, is currently in Australia. The professor is spreading his message of a hand up, not a hand out. He's a pioneer of what's called microfinance. He sat down with me this afternoon to explain.

Muhammad Yunus, welcome to the program.

MUHAMMAD YUNUS, NOBEL PEACE LAUREATE: Thank you.

LEIGH SALES: Let me ask you a question that I'm sure you've been asked very often, but that I have to assume not everyone would know. What is microfinance?

MUHAMMAD YUNUS: Well it's - the whole thing started because the conventional banks that we see around us, they're focused on serving the rich people, the wealthy people. They're not going to serve people at the lower level and so on. So we need something in the lower level to serve people, financial services. So we created something which serves extremely poor people, bring financial services to the extremely poor people. Started in Bangladesh in 1976, started giving loans without collateral to people in the villages, particularly focused on women.

LEIGH SALES: Over the 40 years, how has it evolved and how effective has it been?

MUHAMMAD YUNUS: It has spread a lot. Almost every country in the world has micro credit programs, including in Australia. So that way I would say it has picked - people picked it up. But the intention of the micro credit was to change the banking system. That has not changed. So the existing banking system is based only with one kind of bank, which are bank for the rich. So we need to fill up the gap which is left vacant by creating bank for the poor and Grameen Bank is a bank for the poor.

LEIGH SALES: What's in it for banks though to do that because I presume people without collateral are high risk and how do you know that they're going to pay it back?

MUHAMMAD YUNUS: Well, given the evidence all over the world right now, you can't say high risk because even in the USA where we work, our repayment rate has been near 100 per cent - 99.4 per cent. In Bangladesh, it's always 97 per cent-plus throughout our whole history, with floods and cyclone...

LEIGH SALES: And how have you done that?

MUHAMMAD YUNUS: The way we designed the system. It always works. Not only we do it, everybody else who does it has a very high repayment record. So that way the high risk is not a valid question, valid explanation why they don't do it, so they have to find some other explanation.

LEIGH SALES: The World Bank has found that the beneficial effects of microfinance are higher for women than for men. Why is that?

MUHAMMAD YUNUS: Because women take it very seriously. They use their money very judiciously. They're very careful about how they use their money. And impact of the money in the family is always better if you enter the family through women because she shares the benefit with other members of the family. You don't see it as much when the man is the (inaudible) in the family.

LEIGH SALES: Is there an assumption in this model that everyone is entrepreneurial, that if you give somebody a small amount of money, they will be able to turn that into a business?

MUHAMMAD YUNUS: That was the controversy that I created in the beginning because people are saying you can only lend money to entrepreneurial poor. I said, "I don't believe that. I'm not looking for entrepreneurial poor." If you're poor, I'll lend you money. And I said, "My assumption is all human beings are entrepreneurs, with no exception." Simply society never gave them an opportunity to bring out that ability of entrepreneurship into the real world. So I would say, given the opportunity, every human being can bring out their entrepreneurial ability.

LEIGH SALES: So what sort of things are you doing in Australia?

MUHAMMAD YUNUS: I have been invited by the Bangladeshi Architects in Australia. They are having their annual conference and talking about social business and other Australian organisation became interested in what we do.

LEIGH SALES: What do you mean by social business?

MUHAMMAD YUNUS: Social business, again, the whole world is familiar with one kind of business: business to make money. So the world is a kind of money-chasing world where everyone is having a business, business to have maximization of profit and so on. That's what we have been told. And I'm saying that that converse human being is a sort of money-making robots. So I'm saying there's another kind of business. One business is a business to make money, which is a self-serving business, which is a selfish business; and I'm saying people have selfishness as well as selflessness, but selflessness is not allowed in the business world.

LEIGH SALES: But there are many major corporations that have programs to do with social responsibility these days and in fact lot of businesses would see it as a useful marketing or useful public relations tool, so don't those things co-exist in businesses that can make money, but also be socially responsible?

MUHAMMAD YUNUS: One is a business which is to make money, but on the side they do some good work. That's fine. What I'm talking about is a business itself. That is the business.

LEIGH SALES: What's the incentive for you to invest then, other than altruism?

MUHAMMAD YUNUS: It is the selflessness part of me. I feel happy about that I have done something which makes me happy when I look at them. I feel that I have done something for people. I keep saying that making money is a happiness. Making other people happy is a super happiness. So it's a question of how you want to make yourself happy.

LEIGH SALES: Returning to microfinance specifically and trying to give people I guess a leg up out of poverty, the Australian Government has recently cut its projected foreign aid spending. In your way of looking at the world, is there a role for foreign aid, for just pure handouts from government to people?

MUHAMMAD YUNUS: It's very important to have the foreign aid. After all, lucky countries, privileged countries, prosperous countries can share their good luck with the poorer neighbours, poorer friends in other countries. So that, I will say it's very important. But it can be redesigned. It doesn't have to be the way it is done. For example, one of the things I see needs to be redesigned: that all the foreign aid money goes to the governments. The Government of Australia gives the money to the government of another country. And government uses this money to whatever program they have. I think there are better way of doing things. You can encourage people to use this money and create institutions to create that money. One suggestion that I would give for foreign aid people: why don't you give this money to country A where you're giving the money and create a social business fund so that people can come up with the problem-solving companies and invest in that.

LEIGH SALES: You were awarded the Nobel Prize in 2006. How did that change your life, if indeed it did?

MUHAMMAD YUNUS: Well, it has a big impact in anybody's life. It's such a powerful award, it's a prize. There are many prizes in the world, but nobody talks about. But this is one prize, suddenly, everybody's interested in it. So, global attention is on you. Whoever you are, whatever you have done, everybody knows about it, and great respectability, great credibility, suddenly it comes to a person, who, on the previous day, just like another ordinary person.

LEIGH SALES: It must be at the same time a little disorienting.

MUHAMMAD YUNUS: In a way because you are not used to that role. Suddenly that role comes. The doors you couldn't open before, you couldn't come anywhere near the door, suddenly those doors get opened, you're invited in, so you are very distinguished guest anywhere. So that gives you tremendously different role. And if you know you are using it properly, then you can get your job done much more better way than before.

LEIGH SALES: You've got to hustle.

MUHAMMAD YUNUS: You've got to hustle, right.

LEIGH SALES: It's been a pleasure to talk to you. Thank you very much.

MUHAMMAD YUNUS: It's my pleasure. Thank you.

Source - http://www.abc.net.au/7.30/content/2014/s4103991.htm;