Today's date:
Spring 2008

Turning Beggars Into Entrepreneurs

Muhammad Yunus, founder of the microcredit Grameen Bank in Bangladesh, was awarded the Nobel Peace Prize in 2006.

Dhaka -- Many people think microcredit is only useful for the entrepreneurial poor, and that there are not too many of them. "If you give it to 90 percent of the poor," they say, "it won't work. They don't know how to make a business." To hear this burns me up. It is wrong. The fact is, all human beings, without exception, are entrepreneurs. It is part of human nature.

That some people are seen as entrepreneurs and others are not is because of the society in which we live. For some, society hasn't offered the opportunity to unleash that capacity. But the ability is there.

Very early on, this was Grameen Bank's experience with women. At first they said, "You must only offer loans to my husband. He handles the money." They didn't believe they had any entrepreneurial ability. Today, our bank has 7.5 million borrower/ owners, 97 percent of whom are women. Poor women also dominate the board of directors of the bank, which has 27,000 employees and 2,500 branches.

Unleashing entrepreneurial ability is like prospecting or drilling for oil. You know the oil is there, you just have to figure out how to get to it and get it out of the ground. There may be false starts, but finally you get to it. The same is true with entrepreneurial ability. It is a gift inside. Once you recognize it is there, you just have to unwrap it and put it to use.

Nothing proves this more than our experience with beggars in Bangladesh. At some point in the lives of women or men who become beggars, all other options have failed. All they can do to feed themselves and their children is beg for their livelihood. Soon, it becomes a daily routine as they go from house to house, hoping for some charity.

So, we said to these beggars, "As you go door to door begging, why don't you carry some merchandise with you to sell, some cookies or candy or toys for the kids? After all, you are going there anyway. It is not extra work. If it doesn't work, you can go on begging. But at least here is another option. You don't have to rely on charity but can earn your living." On average, we lent them $15 to $20 to buy their merchandise, which they had to pay back out of their profits.

Today, 100,000 beggars take part in this program. No one has ever been trained. We just give them the money and tell them to figure out on their own what will sell.

Ten thousand of these beggars have become full-time entrepreneurs. Some of them became "personal shoppers." Often, a woman who is at home in Bangladesh cannot go to the market. If she needs some matches for cooking, she must ask her husband to bring them. As always is the case with husbands, they forget. Now, when the beggars come, the housewife asks if they can go buy the matches for her and bring them back. Some even give the beggars small shopping lists for items they need at the market.

The other 90,000 in this program are what I would call "part-time" beggars on their way out of reliance on charity in their own time, at their own pace. I like to say they are "restructuring their business," closing down their "beggar" division and building up their "sales" division. This takes time.

It is a remarkable thing to see how lending a mere $20 to a beggar can transform his or her life so dramatically. When I ask these people how their lives have changed, they tell me: "When we were beggars, people often wouldn't even open the door. They just talked to us through the window. Now that the family knows we bring something, they open the door and give us a stool to sit down. Sometimes the kids come running around to see what we have."

It is not the money these new entrepreneurs talk about, but the respect and recognition they now get. They have gone from the humiliation of being a beggar at everyone's door to being a salesperson with dignity. That is a very big return indeed for the investment of a handful of dollars.