The WTO Is a Bulldozer for the Rich
Mohammed Yunus, head of the Grameen Bank in Bangladesh
and apostle of microcredit lending, sat down recently with NPQ to talk
about poverty, development, microcredit and globalization.
NPQ | The microcredit revolution you initiated
has now spread across the world. What is that state of that movement?
MOHAMMED YUNUS | In 1997 we invited all the institutions involved
or interested in microcredit lending, including the World Bank, to a summit.
During that summit we set a goal of reaching the 100 million poorest families
in the world, preferably through the women, with microcredit by the year
2005. We define microcredit as loans of $200 or less.
By the end of 2001, we had been able to reach 20 million of those families.
We have a ways to go, and we are working hard. In that year $7.5 million
was in Bangladesh, about one-third of the total worldwide lending. It
has the most intensive use mainly because we have the experience and infrastructure
up and running already. Then there are the Philippines, India and Nepal.
Africa and Latin America so far have done very little.
The real limiting factor is money. Yet, in the scheme of things, the money
required is not exorbitant-a total of $22 billion to meet the target of
100 million families, and half of that could come from market sources.
NPQ | In the meantime, the United Nations' Millennium Summit in
Monterrey, Mexico, has set the goal of reducing by half the poor of the
planet by 2015. Do you worry that the commitments of new aid from that
meeting will be largely wasted, going down traditional tubes?
YUNUS | Yes, I'm afraid inertia has already set the old machine
in motion. And putting more aid into the same old machine will yield the
same old results. The aid will likely go, as it has in the past, from
government to government, where it is allocated to "health"
or to "education" budgets. But the reality is that, even in
countries where the health system and education are "universally"
provided, they rarely get down to the absolute poor.
In any society, the upper half is capable of taking care of itself. It
is the lower half that is consumed by the worst poverty.
By contrast, microcredit is done by the private sector, which is better.
Governments cannot handle credit for the poor or, indeed, credit for anything
because it gets politicized. In many of the neediest countries, the money
just disappears. Soon, bureaucrats can't pay their own salaries unless
there is a new infusion of aid.
Microcredit can be done in a very small way. You don't need a big infrastructure.
And it is sustainable-unlike traditional aid, you don't need to keep pouring
in resources to keep it alive. Every $200 lent is paid back, replenishes
the pot and grows. The lending is mainly to women, helping to establish
their dignity and identity in the family. This in turn most helps the
children. The default rate is extremely low; the payback rate is as high
as 98 percent, something traditional banks can only dream about. And the
whole system works on trust, not collateral. And accountability is total.
It is easy to trace where each dollar goes because the sums are so small
and used for highly specific purposes.
In Bangladesh, where the experience has been most enduring and studied,
we've seen how income goes up, housing, education and even child mortality
improve as a result of a woman making her own business, for example by
buying a cow or a goat to produce milk for the local market or pots and
pans to open a tiny restaurant.
NPQ | Besides microcredit, what is the most important thing that
can reduce absolute poverty?
YUNUS | Information technology, not at the macro level, but at
the consumer level, the poor-woman level. For example, in Bangladesh we
had a program to provide financing for cell phones to poor ladies in the
villages. They, in turn, would sell phone calls to the other villages,
in effect, becoming the local telecom "utility."
This didn't require a huge government investment in land-line infrastructure.
No big "training" program. Today, there are 11,600 "telephone
ladies," each of whom covers two villages.
The telephone ladies in these villages not only were able to make a go
of their own business, but they could call and get medical information
where no doctors were available or they could check commodity prices in
the national markets to be sure local farmers weren't being underpaid
for their crops. So this information technology empowered the villagers
by removing the middlemen who often cheated them.
NPQ | Is globalization irrelevant to the really poor since they
are so far outside the world economic system?
YUNUS | On the contrary, it is very relevant. We live in a world
system. If globalization is taking away my job, it matters. If globalization
brings waves of machine-made textiles onto the market, how can my hand-made
shirts have any chance? It is both easier and cheaper now for the suppliers
to buy from the big factories than from me. So I lost my livelihood.
On the other hand, globalization is happening, and has been happening,
since the dawn of trade and travel. The Silk Road and Columbus were part
of globalization. It is not waiting for anyone's verdict. So it makes
no sense to be for it or against. You have to figure out how to use it-to
make it the right kind of globalization.
The way you make globalization right is to take advantage of it and not
be victimized by it. The way to do that is to find the resources to get
into the system-for the poorest that means microcredit finance and information
technology. Then, globalization will help reduce poverty more than anyone
imagined because the whole world, instead of the local market, becomes
a place to make a living. Instead of a traditional wage, the poor guy
can now make real money. Everyone will want the hand-made shirt instead
of the machine-made one.
Of course, for the right kind of globalization to work it must be regulated.
Today there is a lot of global traffic but no traffic control. If you
are big you can push through. If you are little you get pushed aside.
The rules must work for the slow driver with the beat-up tricycle as well
as for the 747 cargo jet. There must be room for the pushcart as well
as the supermarket.
All there is today is the WTO (World Trade Organization), which is little
more than a bulldozer for the biggest economies and companies to push
their way in to take over the markets of small producers. The big economies-like
the United States-say they must be able to sell everything in other markets,
but then tell the world "you can't sell steel or agriculture to us."
The just-passed US farm-aid bill increases subsidies to US farmers this
year by $83 billion-four times the total amount it would take to fund
microfinance for the world's 100 million poorest families for the next
That kind of globalization is not the right kind.
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