Peace Prize Winner Speaks on Using Microfinance for Poverty Alleviation

One year after winning the Nobel Peace Prize for creating a bank which hands out tiny loans to rural Bangladeshis, Muhammad Yunus spoke about using microfinance to combat poverty.

Yunus, founder and managing director of Grameen Bank, stressed the role of business as a way to do good for others.

“If you can become an angel for $27, do it more,” Yunus said to a packed house at the Institute of Politics Saturday morning.

The bank, which is 94-percent owned by its borrowers, has expanded over the past two decades. Since the bank began operations, 64 percent of its nearly 7.5 million borrowers have risen above the poverty line.

“Those brilliant people who made economic theory simplified their theories so that others could understand,” said Yunus. “They assumed humans to be one-dimensional...Profit-maximization was the only goal.”

But Yunus said his own goal was different. “Out of desperation, I forgot about those theories,” he said. Yunus loaned his own money to 42 debtors during a 1974 famine in Bangladesh, asking only that “they concentrate on their work and repay me when they could.”

Yunus noted the villagers’ gratitude, and after facing resistance from bankers in Bangladesh who refused to loan money to the poor, Yunus decided to start Grameen Bank in 1983.

Yunus denounced poverty, saying it was imposed by a man-made system.

“Since it’s artificial,” he said, “it can be peeled off.”

Responding to a question about further expansion of the bank, Yunus noted that 85 percent of the 120 million people with access to microloans are located in Asia. Yunus pointed to other nations where Grameen and its partners are expanding their reach, such as Argentina and Turkey.

Yunus’s speech resounded with the receptive audience, which gave him a standing ovation.

“His focus on social enterprise is what we really need to focus on,” said Josy W. Hahn, a first-year doctoral student at the School of Public Health. “We focus too much on the existing institutions in the classroom.”

“I think he laid out some intriguing proposals, although I wish he had given a fuller description of the system of social enterprise he proposed,” said Guy Stuart, an associate professor of public policy who specializes in microfinance at the Kennedy School of Government.

“We have placed a major focus on education to ensure that children can remain in school while parents work,” Yunus said in his speech.

Grameen Bank also provides nearly 50,000 scholarships to students from high school through graduate school.

“It would be great,” Yunus said, “to see some of these children at Harvard.”