Cedric Wilson

More than one billion persons throughout the world will go to bed hungry tonight;1.2 billion people live in squalor without clean water to drink and, every three seconds somewhere, a child under the age of five, dies because of poverty. Yet, global trade has soared to unprecedented levels and total income worldwide continues to expand at fascinating rates.

A recent study by the World Institute for Development Econo-mics Research, in Helsinki, has revealed that two per cent of the world's richest adults own more than 50 per cent of global wealth.

At the other end of the spectrum, the poorest 50 per cent of the world's population owns less than one per cent of global wealth. The question that stares us in the face is: What can be done to address this enormous gap between humanities richest and the wretched of the earth? And can one man, one woman, make a difference?

A few Sundays ago in Oslo, Norway, economist Muhammad Yunus was awarded the Nobel Peace Prize for his contribution towards bettering the lives of the poorest of the poor in his country, Bangladesh.

Economists have inclinations towards grand schemes, elaborate models and bewildering solutions. Yunus' approach was simple. Perhaps nothing captures his approach more eloquently than the Chinese proverb: "Give a man a fish and you feed him for a day. Teach him to fish and you feed him for a lifetime."

Some 30 years ago, after going into the villages in Bangladesh, he was horrified at what he saw: hungry children, marginalised women and abject poverty. Then it stuck him that by providing small loans to the poorest of the poor he might be able to provide them with a ticket for a better life. That was how he started his Grameen Bank that provides micro-credit to poor Bangladeshi. In a sense not purely business, neither was it entirely altruism; he was in the business of altruism.

Self-interest

In establishing the Grameen Bank, Yunus was acting in contradiction to one of the fundamental principles of neo-classical economics: It is in the pursuit of self-interest that the whole society is better off and not through acts of altruism.

Adam Smith, the father of modern economics, in describing the virtues of the market had this to say: "Every individual endeavours to employ his capital so that its produce may be of the greatest value ... And is led by an invisible hand to promote an end which is not a part of his intention. By pursuing his own interest, he frequently promotes that of society more effectually than when he really intends to promote it."

Therefore, as an economist, Yunus would have known from the outset that Grameen Bank was a "bad idea". The objective of the Grameen Bank was not profit maximisation but something more elusive, more dubious: sustainability.

Beyond that, Yunus' banking operations were structured along lines that are seemingly counterintuitive - to put it mildly.

In a dominantly Moslem country, the bank accorded higher priority in lending hierarchy. Loans were given to people without collateral, and there was no provision for the use of legal means to recover loans in the event of a default.

On the surface, all of that seems like a recipe for disaster and perhaps conventional wisdom would suggest that he was simply just leaning against the wind. However, he saw good where others saw only ill; he believed that trust was more powerful than suspicion.

Today, the bank enjoys a 99 per cent repayment rate and currently has six million customers. Thousands of people's lives have been made better because they were able to access credit to start a chicken farm or purchase material to weave baskets, or some other endeavour that allows them to add value.

Poverty rate falls

Indeed, the poverty rate in Bangladesh has fallen by 10 per cent over the past five years and Yunus is recognised for playing a significant role in the improvement of these statistics.

The notion that "you must have money in order to make money" must be viewed as a life sentence of poverty for the world's poorest. Increasingly, there is growing acceptance that micro-credit can be a vehicle for a better quality of life for the 50 per cent at the bottom of the wealth pyramid.

There are lessons, however, to be learnt from the self-effacing and tenacious Nobel Laureate.

First, he knew that even as a single man, he could make a difference to the lives of many.

Second, he understood his culture and what could work. Thirdly, he was willing to challenge some of the most sacred principles in the discipline he learnt: economics. And finally, it takes years for a seed that is planted, particularly on rough terrain, to bear fruit.

In accepting the Nobel Prize, Yunus expressed the idea that poverty can one day become an artefact in the museum. But as far- fetched as the idea might seem, there is nothing like dreaming the impossible dream.

Cedric Wilson is an economics consultant who specialises in market regulations. Send your comments to: conoswil@hotmail.com.

Editors note: Dawn Ritch is on vacation.