"The pen is mightier than the sword." For nearly a decade, Brahm has used newspaper articles, magazines and authored over 20 books to explain current affairs, reshape stalled negotiations, and provide a communication platform to Asian leaders and policymakers. His writings reveal underlying central challenges facing Asia over the past decades.

This Bank Deposits Trust

Written by Laurence Brahm - Published by South China Morning Post on 10/31/2006

Muhammad Yunus, who is known to the world as the “banker to the poor”, addressed a Beijing audience last week. The Nobel Peace Prize laureate is the founder of Bangladesh’s Grameen Bank, which pioneered a grass-roots credit model that lends money based on trust in people.

Professor Yunus has put a new spin on humanism with his declaration: “Credit is a human right.” His words resonated in the ears of his Chinese hosts. “For the first time, poor women have received the Nobel Peace Prize”, Professor Yunus told a Beijing reception, in a reference to his bank’s borrowers. “When awarding it, they did not realise that the prize had been given to poor women who must struggle for their lives.”

Professor Yunus returned to his native Bangladesh in 1972, after teaching economics in Tennessee. He realised that the economic theories he had learned in America would not alleviate the famine he found at home. His training in institutional economics involved thinking in millions and billions of dollars about big infrastructure projects. But, among poor people, a loan of only US$10 or US$20 was enough to change entire lives for the better.

Professor Yunus went on to develop his micro-credit concept, which empowers people with both cash and self-esteem. Most commercial lenders wouldn’t consider lending money to people without collateral. But Professor Yunus did – revolutionising the concept of seed credit for starting up businesses.

“Everyone is interested in how much money we lend, how we get paid, how the money is returned, how accounts are kept – everything about money,” he said. “But the Grameen Bank is not about money. Ninety per cent of Grameen Bank is about people. The bank’s only collateral is trust.”

When somebody gets a micro-credit loan from the Grameen Bank, it’s an expression of trust that they will repay it. “If someone trusts her – with what is, for her, so much money – she will work so hard [to repay that trust],” he said.

Officials from the Poverty Relief Department of China’s State Council refer to Professor Yunus’s micro-credit model as they develop similar schemes throughout the mainland. But the trust factor remains problematic in the mainland. Trust in most forms is nonexistent in mainland society today: corruption is rising at a faster rate than the gross domestic product, and financial scams are everywhere.

But China is seeking practical paths to close the gap between the urban rich and rural poor, and Professor Yunus presents a fresh model: 58 per cent of the Grameen Bank’s borrowers have moved out of poverty. Even here, Professor Yunus provides new criteria. The mainstream institutional approach to assessing people’s escape from poverty looks at their annual, per-capita income.

But his organisation asks more relevant questions of its borrowers: “Do you have a roof over your head and warm clothes for winter? Do you have safe drinking water and sanitation, and are your children in school?” This pragmatism has caught the attention of non-governmental organisations and governments worldwide. Now it’s being studied by mainland officials faced with bringing massive numbers out from poverty.

The so-called “Washington consensus” on the benefits of open markets upholds models of capital flows, sudden privatisations and other measures designed as “shock therapy” for laggard economies. Its failures contrast with Professor Yunus’ approach, which empowers people not only with cash, but a newly awakened pride in their own identities.

The Nobel Peace Prize has gone to an Asian offering an alternative path to both economic betterment and self-confidence. It uses simple tools of common sense and Asian values of compassion. But has a death knell really rung for the Washington consensus? Is this the beginning, perhaps, of a new “Asian consensus”?

A hint of an answer appeared on a welcoming bouquet in Beijing, which carried a banner saying: “There is nothing more powerful than an idea whose time has come.”


Laurence Brahm is a global activist, international mediator, political columnist and author. He is the leading advocate of a fresh development paradigm - The Himalayan Consensus - an innovative approach to development.

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