Banking on beggars!
This one here - is especially for Rincy, Naveen and Gurudutta. You have been anxiously waiting for the Part II of our saga of the Prophet of the Bonsai People - Muhammad Yunus. So, here we go….
Professor Yunus, who made micro-credit a new chapter in money banking and public finance, after lending money to the poor without collaterals and paperwork, had yet one more frontier to conquer.
This time, lending money to beggars.
So he called his people and said, go lend money to beggars. And why not? At what level does someone give up and accept the life of a beggar? When all social systems fail. So, they were not the problem - the system was.
Professor Yunus told his people that each person working at the Grameen Bank must lend to one beggar. Only one, per person. That it had to be one and no more, was a strict requirement.
He would not accept lending to the beggars as a charitable, volume game. His idea wasn’t your anonymous, no-skin-in-the-game, loan mela of the nationalized banks. His people had to know the beggar, respect him as a person, and believe that the man (or woman) can redeem himself. And then lend.
Only a handful came forward and lent to a few beggars. Others watched, as they always must. Then the floodgates opened. They too came forward. All the 27000 people who work for Grameen Bank.
The beggars were given small loans. No freebies, loans. They were asked to repay the loan at their convenience and without interest. No pressure. There was an interesting angle to this arrangement though - each time the person pays back, he or she becomes eligible to borrow an even larger amount of money.
So, what did the beggars do? Every beggar, like a salesman, has a route. He follows it based on his own judgment of effort versus yield. Nothing has changed from that model. Except that, now the beggars go to their points of call, armed with knick knacks, toys, story books, small food items - they offer their clientele the option to give them alms but suggest they buy something from him instead of giving alms.
A miracle started to take place in the lives of many beggars. It was not about their economic self-sufficiency. It was about the redemption of human respect that they had lost. All their lives, they were given their alms or turned away from outside the doorstep of a householder. Now the householders ask them in so they can inspect the merchandise, the children can touch the toys or the housewife can scrutinize the merchandise closer. Now the children tell them what they must bring the next time they return. The beggars started to turn a new leaf - they never thought they could come in. 10,000 beggars do not beg anymore. Many more have now opted to become, “part-time beggars”.
Meanwhile, what is happening at the Bank?
The 27000 folks at the bank, who witnessed one miracle or the other, came to professor Yunus and protested the unfairness of his diktat of one-beggar per banker. It was not okay to restrict them to only one beggar. How could the professor underestimate their capabilities? After all, they had proven the model was working, it could work. Each one-lend one was such an archaic model!
Finally, the Professor relented. Now, each person at the Grameen Bank can lend to up to four beggars! And that is the story of a 100,000 beggars who are clients at the Grameen Bank of Bangladesh.
Next week, I must tell you about something very different - it is about budding entrepreneurship and what I learnt from three very different and young people at a TiE event I was invited to moderate at Bangalore.
Until then, Go Kiss the World!
Best wishes,
Subroto
The Bonsai People
Yesterday I had the privilege of listening to the Nobel Laureate, Muhammad Yunus speak for the second time in my life. The first time, I had heard him speak under a makeshift shamiana in the courtyard of a village school on the outskirts of Bangalore.
He was speaking to a motley crowd of poor women, school teachers, a few micro-credit missionaries and some folks like me. He wasn’t a Nobel Laureate at that time.
Last night, he was speaking to specially invited people at a five-star hotel in town.
Senior Government officials, newspaper editors, industry captains, educationists, writers and people who really belong to the upper crust thronged the venue.
On both the occasions, he was agnostic to his surrounding; he spoke the same language and had the same message: The poor are bonsai people. When you look at a bonsai tree, there is nothing wrong with the inherent capacity of the seed - be that of a giant redwood or a banyan tree. It is not the seed in the flowerpot, but the flowerpot that makes the plant what it is.
The ‘flowerpot’ in the conversation of course is the society we have built. With its restrictive paradigms the society has pushed poor people and bounded them to become the economic bonsais.
What kind of paradigms does our evolved society create?
Banks are financial institutions for the rich. They need collaterals to lend money, lawyers to do the due diligence and need legal documentation before doing anything at all. What happens after all that? Comes a sub-prime crisis, the same smart banks write off trillions of dollars. They cannot even cash-in their collaterals.
Grameen Bank in Bangladesh, on the other hand, lends to the poor, takes no collaterals and has no lawyers and most of their borrowers being illiterate women - the bank has no use of documentation. But you know what? More than 98% of their borrowers return the money - on time. That lesson from Professor Yunus I had learnt, under the makeshift shamiana at the village school.
Last night, I learnt two new lessons.
Danone, the Euro 12.78 billion, French food giant set up a joint venture with Grameen to make and sell yogurt to the poor of Bangladesh. They have researched the micro-nutrients that the malnourished children in Bangladesh need and created a formulation that is just right. Twice a week, a child can have the yogurt and in a year’s time become healthy.
This is no MNC doing its vile, blood sucking at the bottom of the pyramid via a gullible NGO. Danone and Grameen have done this as a “social business” - a new kind of capitalism in which the impact is more important than profit. Profits get ploughed back to create more goodness and no party takes out a dividend.
With the formulation in sight, Danone showed Professor Yunus the container design for the to-be-launched yogurt. Professor Yunus had a good look at it. Guess what did he ask them next? He asked them, what the container was made of. When they told him that it was plastic - similar to what they use everywhere else in the world, he requested that they design something new and something that was environment-friendly. So, Danone went back to the drawing board. They soon returned with an answer. They had found their Chinese counterpart capable of producing a container out of corn starch that was bio-degradable when discarded.
“Discarded”? Now what was that?
Professor Yunus was back on their back. How could they make a poor child pay for a container that had to be discarded? The poor do not discard things! Why couldn’t the child eat the container? After all, we eat ice-cream cones - don’t we? So, why not a food container that is also food? Why plastic?
So, Danone is now back at work and soon, knowing that great organization, we will hear of the breakthrough.
By the time the soft-spoken, ‘banker to the poor’ had finished delivering his talk it was well past nine in the night. No one had stirred. Then it was the turn of the charismatic
Dr. Devi Prasad Shetty - host for the evening - to propose a vote of thanks. Instead, he had a child-like request to make.
“Tell us about the beggar story, Professor Yunus”, he pleaded.
Like a possessed mendicant, the messiah of micro-finance went back to the microphone on the podium and told his story about the 100,000 beggars. Let me tell you about that one, next week.
In the meantime, Go Kiss the World
Best wishes,
Subroto
