Thursday, August 16, 2007
Everyone should be able to do business: Nobel Prize winner
Nobel Peace Prize winner and founder of the Grameen Bank in Bangladesh Muhammad Yunus was recently invited to visit Indonesia by President Susilo Bambang Yudhoyono. The Jakarta Post's Abdul Khalik, Veeramalla Anjaiah and Matheos Messakh caught up with Yunus before his departure Sunday. Below are excerpts from their discussion:
Question: Your profile is very unique, changing your career path from being a professor to a banker. What inspired this change?
Answer: The reason was we were experiencing famine in Bangladesh ... when I was teaching at one of the universities. So I saw how useless the theories that I taught were. I taught economic theories while people were dying.
So I went to the villages to see if I could be useful to anybody there. Then I tried to give loans to people who borrowed from money lenders based on trust. Nobody (else) would give money like that. So, I wanted to arrange a system with the banks. But after months of roaming around the banks, they couldn't open the door. So I offered myself as a guarantor. I said "I will sign your papers, your rules are protected and I will get the money". That finally worked. So I signed all the papers, took the money and gave it to the people.
And I took the responsibility of collecting it and taking it back to the bank. It worked. So that was the beginning of the whole thing.
What was the purpose of your visit to Indonesia? What is your opinion about micro-credit and micro-finance in Indonesia?
Well, I was invited by the President to give a presidential lecture. That was the main reason, and since I was coming (anyway), the Bank of Indonesia also invited me to give a presentation to bankers.
I came here (for the first time) some 12 years back. This is my fourth visit. I can see a lot of changes. Banks here have been doing micro-finance for a long time. They are doing well and there are lots of organizations, but still each one of them is small and sticking ... to government formalities. They (haven't) opened up in a big way. There are still lots of people in Indonesia who should be reached with financial services.
Do you think the kind of system you used in Bangladesh would work in a country like Indonesia?
The basic issue is that everybody should have the right to (access) financial services. Nobody should be denied on the (basis) that they are too poor to do business. The second issue is that you have money lenders in the country. I'm sure that there are money lenders in Indonesia.
I met with 27 groups who are doing micro-credit in Indonesia. Some are lending money to five thousand borrowers, some are (lending to) 10 thousand borrowers and some are (lending to) 70 thousand borrowers.
These are all NGOs. The common question I asked was, "what is holding you back? Why have you stuck with that number?" They said "we have no money". It is because the law here doesn't allow NGOs to take deposits. Why can't we either organize a common fund or a wholesale fund, where any NGO can borrow money and lend it?
We have done it in Bangladesh. That's why micro-credit could spread. The next solution is to enable those NGOs to take deposits. Just create a law and call them micro-credit banks. Then create an independent regulatory body. When dealing with money, particularly public deposits, you need an independent regulatory body to avoid misuse.
BRI (Bank Rakyat Indonesia) has been offering credits to small-scale enterprises in Indonesia. How can they make a bigger impact on society?
In general, governments and micro-credit have bad chemistry. Because after all, the government is a political entity, and (it) is supposed to deal with poor people. But politics becomes (more) important than other aspects, including the economic side. And when people don't pay back (money), politicians don't push them too hard. After all, they are poor people.
An organization which works (at a) distance from the government can work much better than an organization close to the government. BRI, being a government organization, (has) this problem, not that they are bad people or inefficient people. Simply this closeness creates problems. And also, the government has to go through certain bureaucratic procedures which may not be appropriate for credit expansion to poor people.
Why do you believe so much in the poor?
The basic idea is that I believe that all human beings are born with unlimited potential, whether a child is born on the street or born in a palace. Poverty doesn't come with a person. It is created by the system that we created. So why don't we go back to the system to fix it up? Then nobody will be poor. That's my point.
We give opportunities to beggars and lend them money. We tell them that if they go from house to house, can they carry something to sell, some candies, some sweets, some toys, whatever they can sell. And (they) give people the option of whether they want to give (them) rice or they want to buy something.
We give them the money to expand (their business). The typical size of such a loan is about $12. With $12 she or he becomes a salesperson. Many of them are now quitting ... begging and have become sales people because everybody supported them.
During your visit did you explore opportunities for cooperation with Indonesian banks or institutions?
Not in a specific (sense) but definitely I'm sure this will bring us closer. The government themselves are pretty much interested. We discussed a lot about what steps need to be taken. This should not be stopped here. And the role of the media is to make sure this will not stop here.
The advantage of micro-credit is that it doesn't need the government all the time. It is civil society which needs to get it done. The government has to perform the role of creating an enabling environment. The law has to be fixed. Instead of pushing the government to do everything, we can just ask them to create an enabling environment and (then) leave it to the people.
Then, the provincial government can pick it up, the district government can pick it up, because you can make it as small as you want.