HEADLINES OF THE DAY: ANOTHER 15,000 PEOPLE DIED YESTERDAY BECAUSE THEY WERE TOO POOR TO LIVE. THE RICH INCREASED THEIR WEALTH YESTERDAY BY $0.3 BILLION. THE 21st CENTURY VERSION OF THE FRENCH REVOLUTION IS ONE DAY NEARER.
“O Ye rich ones on earth! The poor in your midst are My trust; guard ye My trust, and be not intent only on your own ease.”
Bahá’u’lláh
A preview of the unpublished book A CIVILIZATION WITHOUT A VISION WILL PERISH: AN INDEPENDENT SEARCH FOR THE TRUTH by David Willis at willisdavid167@gmail.com. CHAPTER 1: INDIFFERENCE TO POVERTY (Part 72). This blog is a continuation of the review of FREEDOM FROM WANT: THE REMARKABLE SUCCESS STORY OF BRAC, THE GLOBAL GRASSROOTS ORGANIZATION THAT’S WINNING THE FIGHT AGAINST POVERTY by Ian Smillie published 2009.
Chapter 6: Dulling the Edge of Husbandry?
Where the invention of microcredit is concerned, macrocredit is usually given to Grameen Bank when the Bank’s founder, Muhammad Yunus, walked into a village near Chittagong University in 1976. By the end of 1976, BRAC was already five years old, had formed 75 cooperatives and smaller experimental groups of borrowers in Sulla, Manikganj, and Jamalpur. It had provided loan funds of more than Tk 1 million and had an idea of what worked. All inventions are a combination of knowledge, techniques, and concepts. They involve people, both as individuals – creators, inventors, and entrepreneurs – and as a society. The cultural, historical, and organizational context in which an idea is developed and applied is always a factor in it success or failure.
One of the most scathing attacks on a society’s apathy toward the poor
Over the centuries, ideas have been transferred through trade and migration, art, and religion. They have been fostered and held back by commerce, governments, and educational institutions. The idea of loans for the poor did not begin in Chittagong in 1976. nor did it begin with BRAC. 275 years earlier, Jonathan Swift, Irish cleric, nationalist, and author of Gulliver’s Travels, had done in Ireland precisely what Yunus did. Swift, whose 1729 satirical essay, ‘A Modest Proposal,’ remains one of the most scathing attacks on a society’s apathy toward the poor, deplored the inability of impoverished tradesmen to obtain credit in Dublin. In response, he set up a revolving loan fund with £500 from his own pocket, lending to those who had fallen on difficult times. He demanded no collateral, requiring only a guarantee from two neighbors.
Poverty in Ireland was as deep as any place on earth
Swift’s scheme was, in many ways, a progenitor of the Irish Loan Funds, which began in the late 1700s when poverty in Ireland was a widespread and as deep as any place on earth, and when fewer than 1% of the borrowers could sign their names. The Great Famine of 1846-1848 intervened when a million died and a million more emigrated, devastating the economy for generations to come. Another large credit operation for the poor in Germany was created in 1850. a similar idea, growing from the same kind of concerns, began in Quebec at the beginning of the 20th century. Rabindranath Tagore, winner of the 1913 Nobel Prize in literature, is less well-known for having pioneered the concept of collateral-free micro-credit in what is today Bangladesh.
An unending cycle of indebtedness
The problem with moneylending has been its often usurious nature. Where microlending in Bangladesh was concerned in the 1970s, moneylenders prevailed, interest rates were unregulated, and borrowers paid the going rate, which was almost always in excess of 100% and, in some cases, triple that. The result was an unending cycle of indebtedness, bonded labor, and poverty. Small loans at reasonable rates became an answer to these problems. The idea of microcredit was not new in the 1970s. The innovation lay in the design, the techniques that followed, and the results.
Chapter 7: The Learning Organization
In October 1973, OPEC nations in the Middle East slapped an embargo on the export of oil to all countries that had supported Israel during the recently concluded Yom Kippur War. Within months the price of a barrel of crude oil quadrupled. The long-term effects of the oil crisis would be global in nature, but they were most damaging to poor countries without the foreign exchange necessary to withstand the shock. Bangladesh was doubly punished, because as oil prices skyrocketed, the price of its primary export commodity, jute, dropped by 25%. in 1974 Bangladesh suffered the worst floods in 20 years. As famine spread, hundreds of thousands of people starved to death. A series of coups and counter-coups ensued.
The Rural Credit and Training Program (RCTP)
Against this backdrop of political instability and economic collapse, BRAC unveiled its plan for a new approach to rural development. The Rural Credit and Training Program (RCTP) that Abed proposed to Oxfam in August 1978 combined agricultural extension, farmer training in resource management and vocational skills, and extension of credit into a single package. The budget was set at $3.8 million over five years – a major undertaking for an organization whose entire income from all sources the year before had been $540,000. BRAC would apply its formula that would be tested and adapted as required, and each ingredient analyzed for its contribution to the end result.