‘Banker to the Poor’ revisits PH, sees partners growing

MANILA, Philippines — Bangladeshi banker and Nobel laureate Muhammad Yunus believes that communities, if given access to capital and the tools of entrepreneurship, can lift themselves out of poverty.

It was the principle that defined his public life and brought him to the Philippines decades ago, where he found the bond among neighbors strong but the grassroots mechanism for social services weak.

He then partnered with local social enterprises—businesses driven by missions transcending the pursuit of profit—in hopes of making them not only financially viable but empowering for their host communities.

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Many of the nonprofit organizations he worked with, like the Negros Women for Tomorrow Foundation and Ahon sa Hirap Inc. (Ashi), have since operated with the same optimistic mindset that earned Yunus the Nobel Peace Prize in 2006: Microcredit—making capital available through small collective loans—is the lifeline for borrowers not exactly appealing to banks.

When Yunus returned to Manila last week, he was happy to see his partners thriving with their own network of micro-entrepreneurs across the country.

“In some countries, microcredit goes in the wrong direction—[what was supposed to be a] social enterprise suddenly wants to make profit, but the Philippines retained the whole spirit, where they make money but it is used for people to benefit from,” he told the Inquirer.

“We are very impressed by their progress and commitment,” added the 84-year-old, who came for the Philippine edition of Social Business Day, an annual conference organized by his Dhaka-based think tank, Yunus Center.

The man made it his personal mission to promote microfinancing, having witnessed its transformative results in impoverished Bangladeshi villages.

Focus on women

Then teaching economics at Chittagong University in 1976, he became a frequent visitor to a nearby slum area, in a village called Jabra, where he saw how even the smallest of loans could have a large impact on the quality of life. The women, for starters, no longer fell prey to usury just to have seed money for simple building materials for a stall, like bamboo.

Turning insights into action, he established the Grameen Bank, considered the world’s first microfinance institution. It extended loans to organizations who borrowed as a collective, with their members serving as guarantors for each other’s repayments.

In the Philippines, the model found a fit in Ashi, a nonprofit established in 1989 by University of the Philippines Los Baños professor Generoso Octavio. Today, the microcredit facility mainly caters to women in low-income communities in Metro Manila, in the provinces of Laguna, Rizal, Quezon and Cavite, and in the Bicol region.

Most of its beneficiaries were directed toward small but sustainable, nontraditional enterprises such as organic farming and waste segregation.

For Yunus, this approach is a much better alternative to the so-called “5/6” system imposed by loan sharks, as it is called derisively in the Philippines.

Still, he is not one to gloss over practices that use microfinance for predatory motives. He cited examples in Cambodia, where some borrowers got heavily indebted to the point of losing tracts of land that they had put up as collateral.

Conviction

“Microfinance really means helping poor people, poor women especially,” he said. “We don’t want to make money for ourselves and we want to change people’s lives. That is the social business.”

“But there is also such a thing as ‘false’ microcredit, those who make money for themselves—it’s [still] basically loan sharking,” he added.

And ironically, in his own home country, this “Banker to the Poor,” who is credited with lifting millions out of poverty, recently went through a major legal battle and political storm.

In January, he was convicted of violating Bangladesh’s labor laws in a trial decried by his supporters as politically motivated. Longtime Prime Minister Sheikh Hasina had accused him of financial wrongdoing and “sucking the blood of the poor”—but Yunus’ supporters said these allegations were an attempt to discredit him because he once considered setting up his own political party to challenge Hasina.

Yunus is out on bail and still faces more than a hundred cases, including for corruption and more labor law violations. Before arriving in Manila, he said, he was worried about missing the Philippine conference because of his conviction in January, which imposed a six-month prison sentence.

And no, he is not “going into exile or seeking asylum from afar” just to keep those cases at bay. “Why would I leave my country and all the work that I’ve done? Whatever they (the Hasina administration) want to do … I’m not going anywhere.”

In the Inquirer interview, he also took note of some similarities between Bangladesh and the Philippines, such as the concentration of wealth to a few, leaving those at the bottom with hardly any political power.

“But the case I’ve been making my whole life is: poverty is not created by the poor people,” Yunus said. “It’s created by the system that has blocked every opportunity for that person.”

“When you give a person the chance to become an entrepreneur and make something for himself, you would be surprised at how smart people can be,” he said.

‘Alternative civilization’

This is why Yunus has set his sights on yet another larger-than-life goal: to create a network of social enterprises large and influential enough to form an “alternative civilization,” one capable of tackling global challenges, like climate change, in its own way.

But to do that, he said, businesses must subscribe to a “new kind of capitalism” where wealth is shared and not “squeezed out for one’s self.”

“Absolutely social entrepreneurship is the key to the whole thing because there we don’t want to make money. We want to solve problems.’’

“People say ‘you’re crazy: [would] anybody want to do such a thing?’ ” Yunus said. “It’s optimistic, but this is our hope, this is our commitment, this is our desire. Unless you have that desire, you’ll never get there.”