Profile: The Nobel Prize-winning founder of Grameen Bank began his microfinance business with just $27 shared by 42 women. Today his empire stretches far and wide.
Muhammad Yunus: Great deeds grow from small loans
He takes the lectern in a blue kurta and white salwar trousers, the kind of clothing that befits a man who can afford to be humble.
Muhammad Yunus is the man you invite to speak at your university commencement or, as at this conference in Abu Dhabi, to motivate capitalists to do good. The thin cotton outfit, topped by a tan Nehru vest from his home country of Bangladesh, suits his public image - that of the Nobel Peace Prize-winning economist who pioneered microfinance, the business of making small loans to the poor to help them to start small businesses.
Grameen, the bank he founded in the 1980s, gave rise to a series of copycat institutions around the world that sought to eradicate poverty through community lending. It was one of the first examples of social enterprise, the marriage of business and philanthropy that today brings solar-powered lamps to African villages and low-cost baby incubators to Indian mothers. To this date, Grameen Bank, which was awarded the Nobel jointly with Mr Yunus, is the only business to have won the prize.
In the twilight of his career, Mr Yunus, 72, should be basking in his accomplishments, teaching others to follow his path. Instead, he is defending his business empire and even his seemingly fireproof legacy - the concept of microcredit and its role in lifting people from poverty.
The stakes are great. Today Grameen and Mr Yunus give their name to 48 other businesses, including Grameenphone, Bangladesh's biggest telecommunications provider and the state's top taxpayer, as well as fishery, software and knitwear spin-offs. Many of them are joint ventures with major global corporations, including BASF and Intel.
Grameen America, a developed-world microcredit bank, is expanding in New York, Omaha, San Francisco and Detroit. Altogether, Grameen business assets are estimated to total US$1.6 billion (Dh5.87bn).
"I have never calculated that - but it's enormous," says Mr Yunus.
Little wonder, then, that the Grameen empire has attracted the attention of Bangladesh's government. That Mr Yunus chose to launch a political party in 2007 - Citizens' Power, a movement that ultimately failed - has not helped to win the sympathy of the ruling faction.
Last year he was removed as the head of Grameen Bank, in which the government owns a 3.4 per cent stake, on the grounds that he was past the state's mandatory retirement age. Sheikh Hasina, the prime minister, called Mr Yunus a "bloodsucker of the poor".
Now the government is targeting the other Grameen offshoots, using Grameen Bank's stake in them as a justification for state involvement. Mr Yunus has been called to court on charges ranging from defaming a local politician to selling questionable yogurt.
"People say you must be a rich man, you have so many companies going for you," says Mr Yunus. "I say, no, I am not. I created these companies but I never owned a single share. It never entered my head to make money from these companies. I created these companies to solve problems."
Today, development institutions are examining the cost of solving such problems. In 2010, more than 80 farmers in India who defaulted on microcredit loans committed suicide. Did those very institutions created to help people - from Grameen to the microfinance banks it inspired across the third world - create more problems than they solved?
Mr Yunus attributes the tragedies to "mission drift", where microcredit banks chased profits by indiscriminately giving out loans or staging initial public offerings.
"You assure your investors you can make a lot of money by lending money to the poor people," says Mr Yunus. "That is the message loan sharks gave. That's not what microcredit is.
"Once you want to make money, you're deviating in the wrong direction. Because your whole focus is making money, you become aggressive. You want to make big money, you look for the growth and put pressure on people." The situation seemed far simpler in 1976, when Mr Yunus made his first loan. It was in a village called Jobra near the University of Chittagong, where the economist taught, and the cash came from his pocket: $27 shared among 42 women. They repaid it.
Mr Yunus had spent his early years in a nearby village himself, the third child in a family of nine, the son of a jeweller. It was the 1940s, and today's Bangladesh was then the recently-independent East Pakistan.
He joined the Boy Scouts. That and his university studies in economics later on took him to Canada and then to the United States, where he studied on a Fulbright scholarship and earned a doctorate from Vanderbilt University in Tennessee. In Nashville, he published a newsletter for the Bangladeshi community from his house.
After returning to Bangladesh, he rejected business - he had already founded a successful packaging company - and government work - he had been appointed to the planning commission - in favour of teaching at the University of Chittagong. In that time, he discovered the women in Jobra. They had access to loans only from local moneylenders, who often charged interest rates topping 100 per cent.
"The problem is, if you are poor, you cannot take a sip out of this ocean," he says. Recalling the difference between traditional banks and the one he would create, he casts himself as a modern-day Robin Hood. "They go to the rich. I go to the poor. They go to the city to do their business. I go to the rural villages. They ask for collateral. We said forget it. Poor people have no collateral."
He began by asking other banks for loans, then redistributed the money in small tranches. The microloans targeted women, who were thought to be more likely to pay back the money and help their children.
In 1983, Grameen became an official bank. But Mr Yunus remained on the fringes until two decades later the Nobel committee called.
"Suddenly, out of obscurity you've become known to everyone," he recalls, taking a break on the sidelines of a lunch buffet after giving a speech in Abu Dhabi. "Things that you have probably said the same thing before, but nobody paid any attention - they think it's silly, so funny. But suddenly when you get the Nobel, these become wise words."
Someone stopped and reminded him that his next appointment was approaching. Mr Yunus took the time to issue a warning.
"You have to remember that this visibility and credibility may not last long. Because there's a new guy who's coming up with a new prize and so on - and people are turning in that direction."