“What good are those elegant theories in the face of the realities outside the classroom?” United Nations AIDS Ambassador and humanitarian economist Muhammad Yunus recalled asking himself. “Dying of hunger in a famine situation, is, I think, the worst form of death for any human being.”
Yunus addressed students Tuesday in Gaston Hall, when President DeGioia gave him the President’s Award for his humanitarian work.
Yunus discussed how his traditional macroeconomic perspective was transformed to one of microfinance after observing the poverty surrounding Chittagong University in his native Bangladesh, where he formerly taught economics and headed the department.
Investigating local poverty, Yunus said he discovered that the poor were capable of sustaining themselves financially based solely on a single loan. His survey of a local village found that its residents owed on average only $27, the repayment of which was crippling their small businesses.
By issuing them small loans with generous repayment schedules that do not require collateral, Grameen Bank, which Yunus founded, has brought more than 50 percent of its four million debtors out of poverty, providing evidence for Yunus’ vision.
He is now recognized for his contributions to the field of microfinance, defined as the issuing of very small loans to impoverished small entrepreneurs in need of capital to finance their businesses.
Yunus related the story behind his founding of the Grameen Bank through hypothetical dialogues between himself and those who opposed and supported the concept of the bank. The speech referenced the bank manager at Chittagong University, a typical village woman and female borrowers from the bank.
Yunus said he believes that poverty is not the fault of the poor, but instead is due to injustices in societal structure, which can be improved through education.
“It is not by accident that the poor are left out; it is by design that the poor are left out,” Yunus said.
Through Grameen Bank, Yunus has helped to ensure that all of the children who benefit from Grameen loans are enrolled in school, and that two annual Fulbright scholarships are now reserved for Bangladeshi students.
Yunus emphasized that 95 percent of Gameen Bank’s clients are women, who, though initially reluctant to accept loans, tend to be more financially responsible and better at utilizing scarce resources. The loan rate to women from other banks in Bangladesh is less than one percent.
