WORLD REGIONAL GEOGRAPHY

Lecture 6---The Grameen Bank, and Other Hopeful Developments

1. Hope
   1. Doom and gloom in class
   2. College as a place where they beat idealism out of you
   3. Today's lecture is about HOPE- about the idea that we can (and should) change the world, about how YOU can change the world, and about how geography can give you the tools to do it.
2. Development
   1. IMF/WB aimed at big projects-tried to industrialize to spur development
      1. Tractors-why are tractors not a good idea in India? (abundant labor-tractors put people out of work.
      2. Big dams: to increase hydroelectric power
         1. Sardar Sarovar dam on the Narmada River in western India
         2. Over 800 million USD on a 6 billion dollar project, will displace 24,000 farming families from their land, and evict 150,000 people from their homes
         3. Local people-the people who are supposed to be helped by this project-fiercely oppose it. They have become a widespread nonviolent resistance..
      3. So big development projects DO NOT ALWAYS WORK. What now? Should we throw up our hands, declare as Christ did that "The poor ye shall always have with you," and give up trying to help?
      4. There appears to be somebody in Bangladesh, which used to be part of India, who has the answer.

    

3. The Grameen Story
   1. Professor Mohammad Yunus
   2. Yunus believed that the problem of the poor was not just a lack of money, but a lack of CAPITAL. And that problem could potentially be solved by giving them access to credit.
      1. Creditworthiness of the poor
      2. "social collateral
      3. Yunus soon found that his project worked..
      4. So Yunus founded his own bank: The Grameen Bank. (6)
         1. "Grameen" means "village."
         2. The Grameen Bank targets the bottom 25% of the population.
         3. The Grameen Bank follows the fundamental principles that Yunus laid out:
            1. It makes small loans to the poor, mainly women
            2. It requires that those women have existing businesses, which are not farms.
            3. It requires that the loan be used to capitalize that small business.
            4. It requires weekly payments and weekly savings
            5. It requires that the borrowers join a credit group, and it lends to the group rather than to the individual
            6. It holds the entire group responsible for the loan (7)
            7. It also requires that the women follow the "16 decisions," which are aimed at effecting cultural change.
         4. borrowers have two forms of monitoring: their borrowing group, made of peers, and the center staff.
         5. Kinds of businesses
            1. Goat fattening
            2. Mat weaving
            3. Cell phones!
      5. Does Grameen work?
         1. Currently, GB is the largest rural finance institution in the country.
         2. It has more than 2.3 million borrowers, 94 percent of whom are women.
         3. With 1,128 branches, GB provides services in 38,951 villages, covering more than half of the total villages in Bangladesh.
         4. The repayment of its loans, which average US $ 160, is over 95%.
      6. What are the advantages of Grameen?
         1. It provides capital for enterprises, freeing women from usurers
         2. It helps and empowers women and the poor
         3. Encourages self-help and savings
         4. Can provide other training
         5. Reduces fertility
         6. Contributes to group solidarity
      7. What are the disadvantages of Grameen?
         1. High rate of interest-GB says 20%, but because of compound interest, it can be actually 72% per year.
         2. There are few alternative sources of credit
         3. High opportunity costs
         4. High dropout rate-about 4% of the women drop out each month
         5. Vulnerable to factors outside women's control
         6. Credit trap-like giving Visa cards to Freshmen
         7. Must be adjusted substantially to work in other cultures