Why I recommend "Banker to the Poor: Micro-Lending and the Battle Against World Poverty"

Banker to the Poor: Micro-Lending and the Battle Against World Poverty

by Muhammad Yunus

I’ll start by saying that I think Muhammad Yunus is a remarkable man, who has done some outstanding, commendable things.

Unfortunately, his book, Banker to the Poor, is not well written and could have used a strong editorial hand. It is disorganized, roaming from one subject to another without logical sequence. This makes the book hard to read, which is unfortunate, because I think the story is worth hearing.

Also, the book does not cover some topics that I’d expected to hear about. For one, I had once read that there is an Islamic prohibition against loans. Since this is a book about microcredit in Bangladesh, you’d think the topic would be given a few pages. Instead, it is given a few paragraphs which do little to explore how this affects microlending in Islamic countries. I felt like the subject was pushed under a rug.

From p 108 there is the following exchange between a conservative mullah and a woman who wishes to join Grameen:

...
“Go to the moneylender, he is a good Muslim [!], ” answered the confused mullah.
“He charges 10 percent a week! If you don’t want us to borrow from Grameen, then you lend us the money.”
...

And on p 109-110, there’s this:

We believe that Islam is not at all a hindrance to the eradication of poverty through micro-credit programs. Islam does not inherently prevent women from making a living for themselves or from improving their economic situation. In 1994, the adviser on women’s affairs to the president of Iran came to visit me in Dhaka and … she said, “There is nothing in Shariah law or the Quran against what you are doing. On the contrary, what you are doing is terrific. You are helping to educate a whole generation of children. And thanks to Grameen loans, women can work at home, instead of sitting around.”
Many Islamic scholars have also told us that the Shariah ban on the charging of interest cannot apply to Grameen, since the Grameen borrower is also an owner of the bank. The purpose of the religious injunction against interest is to protect the poor from usury, but where the poor own their own bank, the interest is in effect paid to the company they own, and therefore to themselves.

That’s about the entirety of the discussion on the subject in this book.

Another topic I would have liked to see explored in more detail is the difference between pure charitable giving and the microcredit system. Why is it that lending small amounts of money with interest works better than giving small amounts of money with no interest charge? We all hear about horrendous waste and corruption that leads charitable contributions to go into the pockets of those who don’t need it. Why doesn’t that happen in this case? Clearly, because Grameen workers meet directly with the people who are getting the loans, in their houses, and a direct evaluation is possible (and on a side note, Grameen workers are devoid of corruption, how does that happen?).

Where do these poor people store their loan money – how do they avoid theft? Why can’t a similar program be set up that is purely charitable in nature; why must it only work if the money must be paid back? I don’t think these questions are adequately answered.

I’d recommend the book despite its weaknesses because it succeeds in demonstrating that poverty can be alleviated and even eliminated. It’s interesting to read the last couple of chapters, in which the author’s social theories are examined (he believes in minimizing government and replacing its social functions with “social-conciousness driven business”) – even if I don’t agree with them.

I’d also recommend skimming the book, which would help to get over the bumpy parts faster. You can slow down and chew on the parts that spark an interest.

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