Muhammad Yunus, an economist from Bangladesh, also know all over the world as the “poor people’s banker” for having founded Grameen Bank (in Bangladeshi it means “Village Bank”), was awarded the 2006 Nobel Peace Prize. In the motivation for the award it was said that “first and foremost through Grameen Bank, developed microcredit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of microcredit that have sprung up around the world”.

I originally became involved in the poverty issue not as a policy maker, scholar, or researcher, but because poverty was all around me, and I could not turn away from it.”

(M. Yunus, 2007, “Creating a world without poverty”, page 44)

It was in 1972 that Muhammad Yunus, a young economics professor that had just obtained his Ph.D. from Vanderbilt University in the US, came back to his home country, Bangladesh, accepting the position of associate professor, as well as that of director of the economics department, at Chittagong University. The terrible famine that spread across the country in 1974 left a deep mark on him.

Therefore, he chose to deal with the problems afflicting the poor in Bangladesh in person, visiting, together with some of his students, the streets of Jobra village, close to Chittagong University, knowing that was going to be his actual “university” and its inhabitants his “professors”.

After meeting with Sufia Begum, Yunus understood what the problem was. “To provide food for her family, Sufiya worked all day in the muddy yard of her home making bamboo making bamboo stools – beautiful and useful objects that she crafted with noticeable skill. Yet somehow her hard work was unable to lift her family out of poverty.

Through conversations with Sufiya, I learned why. Like many others in the village, Sufiya relied on the local moneylender for the cash she needed to buy the bamboo for the stools. But the money-lender would give her the money only if she agreed to sell him all she produced at a price he would decide. Between this unfair arrangement and the high interest rate on her loan, she was left with only two pennies a day as her income.” (M. Yunus, 2007, “Creating a world without poverty”, page 46)

Continuing in his research he found out, to his great surprise, that it would have been possible to save 42 victims of loansharking by lending them 856 Takas, just less than 27 USD. The absurdity of the situation lead Yunus to offer from his own pocket the equivalent of those 27 dollars, although he knew that gesture, born purely out of compassion, couldn’t have been the solution to this problem. That was where it all began.

After numerous failed attempts at convincing some traditional financial institutions, which believed the poor were insolvent and they couldn’t access credit due to a lack of real guarantees, Yunus started a pilot project in Jobra village, putting his own money as a guarantee for loans. In the following years it became a success: the poor repaid the loans, always and in time! In 1977, thanks a fortunate encounter with the director of the Bangladesh Krishi Bank, A. M. Anisuzzaman, he could open a special subsidiary in Jobra to continue the experiment of lending money to the poor. Regardless of successes, banks did not change their mind, linking the excellent results mainly to the economist’s charisma: this encouraged Yunus to establish a bank by himself, uniquely for poor clients, which lent money without real guarantees, to unknown customers and without setting any legal procedures. In 1983 his dream came true under the name of Grameen Bank and with it a particular form of modern microcredit, whose main features are: central importance of women and of group loans, the absence of any type of collateral guarantees and juridical/legal paperwork, the contextual predominance of concepts such as “trust” and “mutuality” and, at the core of it all, a different vision of poverty and consequently of the means to “solve” it.