Muhammad Yunus and Mike Milken: A Conversation
Description"Poverty," says Muhammad Yunus, "is not created by poor people. It is institutions that create poverty."
With that simple understanding, Yunus has helped millions of poor people in his native Bangladesh by creating a bank that loans them small sums of money to start businesses and improve their standards of living.
His efforts earned him the Nobel Peace Prize in 2006, the first ever awarded to an economist.
In a talk at the Milken Institute with Chairman Michael Milken, Yunus described how the simple idea of giving even the poorest person access to capital as a means of empowering them grew into the Grameen Bank, which today has 2,500 branches and services in more than 79,000 villages throughout Bangladesh, as well as 7.3 million borrowers, 97 percent of whom are women.
He and Milken agreed that improving entrepreneurs' access to capital is one of the most important tools available for economic development worldwide.
"Two-thirds of the world's population have no access to financial institutions," Yunus said. "And in a world where you need a dollar to make a dollar, they never get that first dollar."
Milken called access to capital the key to prosperity.
"Investing in small and medium-sized businesses will bring prosperity to every part of our planet," he said.
Yunus said one reason the Grameen Bank has succeeded (and it does make money, he pointed out) is that mainstream financial institutions didn't view it as a threat, since they lent money to people deemed not credit-worthy.
As a result, Grameen Bank was able to create business people out of individuals as diverse as beggars and housewives. (One company offshoot, Grameenphone, has 16 millions subscribers in Bangladesh today, thanks in part to the many "telephone ladies" who rent their phones to other villagers for calls.) With a low default rate of around 1 percent, Yunus has proven that people everywhere can succeed in business if given the resources to do so.