Historically, commercial banks have been institutionally biased against women and blocked credit to the poor by demanding something no poor person has access to: collateral. Muhammad Yunus, founder of the Grameen Bank, the world’s largest and most successful microcredit institution, was born in one of the poorest places on earth, the country (then part of Pakistan) of Bangladesh. As a professor of economics, he was struck by the discrepancy between the economic theory taught in universities and the abject poverty around him. Recognizing that the poor remained poor because they had no access to capital, no collateral for loans, and borrowing requirements so modest that it was not cost-effective for large banks to process their needs, Yunus started experimenting with small, collateral-free loans to landless rural peasants and impoverished women.
In 1983, Muhammad Yunus founded the Grameen Bank with the rule that clients had to find four friends to borrow with. If any of the five default, all are held accountable, building commitment and providing community support. Initial loans are as little as $10 and must be repaid with 20 percent interest. Nearly 20 years later, this revolutionary bank is flourishing, with more than 1,050 branches serving 35,000 villages and 2 million customers, 94 percent of them women. Ninety-eight percent of Grameen’s borrowers repay their loans in full, a rate of return far higher than that of the rich and powerful.
More importantly, the clients are transforming their lives: from powerless and dependent to self-sufficient, independent, and politically astute. The real transformation will be felt by the next generation: a generation with better food, education, medication, and the firsthand satisfaction of taking control of their lives, thanks to Yunus’ vision, creativity, and confidence. Together with fellow defender Archbishop Desmond Tutu and select other independent global leaders, Yunus is a member of The Elders, who work together for peace, justice, and human rights.
In the “Combating Poverty” lesson featuring Muhammad Yunus, students begin by collaborating on a description of “poverty,” considering what it means to live in poverty, how it affects people’s lives, and ways that they can work together to end poverty with the help of loans and banking. Learners also engage in interactive activities, role-playing as a bank officer to determine if fictional applicants have the credit, character, capital, and capacity for loan approval, and examine the financial and social constraints that may prohibit impoverished people from securing loans and credit. As educators guide students through the methodology of microcredit banking to end the cycle of poverty, students reflect on the approaches of Muhammad Yunus and investigate other microfinancing groups to support as a class, including WomensTrust in Pokuase, Ghana, and the Microcredit Summit Campaign.
Because all the activities involve independent or group research that can be done online, this lesson plan fits into either virtual or in-person classrooms, with opportunities for discussion and collaboration on Zoom or with classmates.