Mohammad Yunus Discusses Micro-Lending.

Show: FRESH AIR
Date: JUNE 22, 1999
Time: 12:00
Tran: 062201np.217
Type: FEATURE
Head: A Crime Novel Set in the Balkans
Sect: News; International
Time: 12:06

BARBARA BOGAEV, HOST: This is FRESH AIR. I'm Barbara Bogaev in for Terry Gross.

Dan Fesperman is a reporter for the "Baltimore Sun." From 1993 to '96, when he was the "Sun's" European correspondent, he traveled extensively in the Balkans covering the Bosnian war. He was drawn to the mundane details of life in Sarajevo during the siege. How some women always managed to where the latest shade of lipstick, how civil servants maintained regular hours investigating prewar insurance claims in the midst of sniper fire and shelling.

The images stuck with him and gelled into his first novel, "Lie in the Dark." It's a murder mystery which features a homicide detective, Vlado Petric. He investigates the death of a top-level criminal justice official, and in the process uncovers a tangled web of Mafia profiteering that extends into every level of Sarajevan society; at times influencing the course of the war itself.

I asked Dan Fesperman to read from the beginning of "Lie in the Dark." In this passage he describes Vlado Petric's wartime apartment.

DAN FESPERMAN, AUTHOR, "LIE IN THE DARK": "Behind him, in the small living room and kitchen was all that remainder of Vlado's prewar world. For more than a year and a half his wife and daughter had been gone, evacuated to Germany. The door to his daughter's room hadn't been opened for weeks, nor had the door to his and his wife's old bedroom.

"He had gradually drawn his possessions and his existence together, partly because it kept him away from the windows -- more exposed to sniper and artillery fire. And partly to conserve the precious light and heat from his illegal gas hookups which burned fitfully and low under dwindling pressure.

"But it was also his way of burrowing in for the duration. Of tending his own weak flame against the forces that could blow it out. And approaching each day he had developed a keen sense of taste, of constant adjustment.

"Those who burn too brightly, he knew from watching, never lasted. They were the ones whose passions eventually led them running into "free-fire zones" screaming either in madness or in a final outpouring of impotent rage.

"But let your flame turn too low, fail to coax it along and you ended up at the other extreme, spent and empty. You saw them in doorways or hunched at the back of cafes: greasy-haired, staring vacantly, clothes in tatters.

"They never stopped retreating, ending up at the bottom of either a bottle or a grave."

BOGAEV: Dan Fesperman, welcome to FRESH AIR.

FESPERMAN: Oh, thank you.

BOGAEV: Your protagonist, Vlado, is acutely conscious of the irony of his job in the midst of wartime killing. When you were reporting on the war during the siege was it striking how well or poorly the criminal justice system functioned in the midst of the chaos of war?

FESPERMAN: It was striking to me that it functioned at all. In fact the first time I went I really -- that was one of the questions I had was what part of the civil order still functioned in any way. And I went to the courthouse, and the windows there, just like all the other buildings, most of them were blown out, covered with plastic. There was no heat, no electricity.

Yet you saw a smattering of legal notices posted on the board. And I began finding some judges, some attorneys to talk to. And sure enough, they were rolling right on with prosecutions of murders; civil suits were being pressed and won, which surprised me greatly. You would think perhaps that would only happened if some city in America was under siege, but it was happening there as well.

BOGAEV: Why do you think they push on with things like civil suits?

FESPERMAN: I think that normalcy, even of that type, has its own virtue especially when your world has become so abnormal. Those people tried very hard, most of them anyway, to try to live a normal life. Because had they just given in to the abnormality of the situation completely, they would have all gone crazy.

Some of them collapsed from this -- this feat of endurance after the war. They had tried so hard to keep an even keel during the war that once the shooting stopped they sort of began to crumble under the burdens that had developed over their heads all those years.

So, I think they kept on with these routines because they were comforting for them. I think it helped them live it out.

BOGAEV: How far did people press on with the institutions of normal society? Could you, for instance, get a parking ticket in Sarajevo?

FESPERMAN: You didn't get parking tickets anymore because basically cars were all over the place that had been shot, abandoned for whatever reason - blown to pieces. They did begin towing cars, however. They tried to run the trolley system several times. It was a bit of a silly idea, or a foolhardy idea actually, because it was sort of a moving target on a fixed path that the snipers could easily shoot at.

But they kept trying to get it up and running with every cease-fire because that was a very big symbol of normalcy of life. It was a symbol of defiance that they were going to keep trying to run things. But not many of the institutions kept going except such as the courts, criminal justice. Those were some of the few.

BOGAEV: What happens to the homicide rate during wartime, or during a siege like this in Sarajevo? Is that something you researched in working on the book? Do people tend to murder each other for the same reasons they always do -- jealousy?

FESPERMAN: Anecdotally, it went up according to an attorney I talked to. That's what got me interested in writing the book from the angle of a homicide detective. I had a chat with an attorney there, Jarco Bulic (ph), and he said he was very surprised that homicide rate did seem to be going up.

They didn't keep statistics of it during the war. That part of the civil structure did not keep going, but he said, just based on what he had seen and heard he was just amazed that it seemed to be increasing. There seemed to be more killings than ever. And they were of all varieties.

So, I think that flies in the face of what people remember in their reading about London, for instance, which during the blitz suicides dropped, people seemed to be a lot saner. And in thinking about it later, I think the great difference was that in London you sort of had a bombing on schedule. You had bombings at night. The sirens would sound. Then you'd have the all clear.

In Sarajevo, you never really had an all clear. It was maybe not as vigorous a bombing as during an evening of the siege -- during an evening of the blitz, but when you'd have it, it would be completely random. It might be 10 shells in an hour. It might be one shell in an hour. It might be 50 shells in an hour.

It would come and go with no apparent rhyme or reason, and so you never really knew when you were in danger. And as a result, something in the back of your mind told you that you were in danger all the time.

BOGAEV: I'm interested in this idea of people pacing themselves through a period like this. What were the characteristics that you observed that revealed how people paced themselves through the siege? How did they manifest that, I guess, that kind of emotional or psychological dulling?

FESPERMAN: I think one of the clearest signs was the women you would see in the street would very much maintain their daily rituals of makeup, dressing as neatly as possible. Even if they were no longer going to jobs but were going to just the market -- the bread line, the water line.

You saw an astonishing number of people who you would think in a situation like this that people would be so busy trying to survive and get heat and water and food that they would just maybe let everything else go to seed, but they didn't. And you would see people in the street just very obviously trying to maintain just the way they looked, the way they went about their lives everyday. They tried to do with as much semblance of their earlier routines as they could. I think that's how you saw it most.

BOGAEV: In one scene you describe people crossing "snipers alley," which is a facet of this Sarajevo war that people heard a lot about.

FESPERMAN: Mmm-hmm.

BOGAEV: And you write that how people crossed it told a lot about their mental state.

FESPERMAN: Mmm-hmm.

BOGAEV: Was there an accepted strategy or an etiquette to avoid sniper fire?

FESPERMAN: The longer the war went on that etiquette sort of fell to pieces for a lot of people. Early, and in fairness, when the shooting was heavier people ran. You had to run. Some people didn't cross at all.

Later, when the shooting became more sporadic, you had a this sense that the snipers were sort of watching and had reached a point where they were growing a little bit lazy, perhaps a little low on ammunition. And the etiquette that developed then was -- amongst some people was a sort of a "I dare you to shoot me" attitude.

These were people that you felt like the war was probably getting to them more. They would stroll with a studied casualness across the street as if nothing had ever gone wrong here. And you would see other people looking at them sort of shaking their head.

Other people would continue to run. Some people occasionally would just stand in the middle of a fire zone and almost invite it. And the snipers, on the other hand, at times seemed to have a code of their own. Where if you're going to pay them some respect and run or even if it's sort of a half hearted trot, they're probably not going to waste their energy or their ammunition.

At other times you got a sense that if they saw someone who was paying them no respect at all and just daring them to shoot, well, maybe they would shoot. Maybe they wouldn't. But it was an odd -- odd sort of phenomenon.

BOGAEV: How did people react when someone did get hit?

FESPERMAN: Just as they would anywhere at anytime. Once someone was hit it would change everything. It would be a pretty horrifying moment. People would scatter. They didn't want to be the next one to be hit.

Gradually someone would have the courage to -- if it was a particularly open area -- to get back in and try to pull them away or to check to see if they were alive. It was the same sort of horror and surprise and awfulness that you'd see at any sort of shooting.

When that happened there was no more of any sort of pose.

BOGAEV: My guest is Dan Fesperman. His new crime novel, "Lie in the Dark," is set in Sarajevo during the Bosnian Civil War. Fesperman is a reporter for the "Baltimore Sun" and wrote about the war while covering Europe from the "Sun's" Berlin bureau. We'll talk more after this short break.

This is FRESH AIR.

BREAK

BOGAEV: I'm talking with Dan Fesperman. His new crime novel, "Lie in the Dark" is set in Sarajevo during the Bosnian civil war.

Your plot involves smuggling of cultural treasures. I don't want to give away too much. Was that idea based on the reporting you did in Bosnia?

FESPERMAN: It was based on some conversations I'd had with some friends in Belgrade who were talking about the art moving around during and after World War II and how some of it had become, they thought, endangered during this war.

And also based on -- I had done some reporting about looting of cultural treasures and different parts of Bosnia. There was a report, never verified, but from a pretty reliable person in the, I think, the council of Europe's art recovery effort -- or art protection effort -- of -- I forget if it was -- I think it was a Croat -- Bosnian-Croat unit -- small unit -- that was going around a captured town in western Herzegovina. Going around in a village from prosperous home to prosperous home with an art appraiser in tow.

Some of this also had an aspect of whether -- it was particularly when they were destroying religious icons -- of just cultural homicide. They were trying to wipe out the culture of the ethnicity that they were trying to wipe out. And figured if they could wipe out their archives and their artwork and their places of worship and the icons hanging inside then they could go a long way toward destroying their identity.

BOGAEV: I'm curious how different writing about this war in fiction is for you from recording. Did you find that the writing was calling up impressions of the city and impressions of the people that you weren't really aware -- so much aware of while you were reporting?

FESPERMAN: Sometimes I think that would happen. I think what it called up more, which I perhaps wasn't as aware of at the time, was just I would try to put myself a lot more into the state of mind of someone who was living through this day after day after day.

And I found that in trying to insert myself into that I saw things differently. I reacted to things differently as I thought about them. I think that's what it did for me.

BOGAEV: Can you give an example?

FESPERMAN: I think in -- there's a scene in the book where I'm describing Vlado walking by a pick-up basketball game. And a shell sort of whistles in, and as it turns out it lands maybe two blocks away. And if you're new there you react to it, you sort of are not at all concerned about -- visibly showing that you're tensing up, you almost go into a crouch.

You look up, your eyes go wide. People there -- at first I thought it was nonchalance because they were so used to it. And then as I paid more careful attention, and as I began writing this book and I was back there at other times, I would notice in a different way. Sort of looking at it from their point of view.

The way that -- they were paying attention to it, but they had become very good at sort of acting like they weren't really. And they also were so attuned to the sounds and how far away that meant it might be that you would only see the briefest little flinch when the explosion would go off, if it was far enough away -- say, two blocks, three blocks.

And then they would just go right back in to what they were doing. And unless you were looking for it, you probably weren't going to see it. And if you were new there you probably would miss it completely because you'd be so busy just sort of being ready to get out of the way yourself.

BOGAEV: Did you wear a flak jacket as a journalist?

FESPERMAN: I did. There were some people there who sort of made it a point after a while not to. I think they saw that as a measure of being in solidarity with the people there, and they also said, well, you can still get shot in the head.

But I figured why -- I don't think I was ever there -- if I had been there month after month at one time I think I maybe would have gotten into that mindset too. But I don't think it was a particularly healthy state of mind to be in to think, well, I'm not going to wear a flak jacket. What good can it do me? And it's not fair.

And it's not fair. Everybody should have had one, but everybody didn't. And if you had one I think you were foolish not to take the precaution, because as a journalist you put yourself out into the open perhaps a bit more than you would've had to had you lived there full-time.

BOGAEV: Did you have to struggle at all with the idea of writing a suspense novel, which is I suppose is about Sarajevo instead of some sensitive psychological drama?

FESPERMAN: I don't -- no, I don't think I ever did. I felt like it was a setting that lent itself to this. I guess what I did not struggle with, but did give me a qualm every now and then was the aspect, gee, I'm going to write a novel about these people. And I'm going to use their - I'm going to turn their horrible situation into what I think is a great setting.

And you get this qualm inside and you think, well, how kosher is that? And then you -- but if you think about it, people have written novels in various degrees of seriousness about wars since wars have been fought. And that's not to excuse sort of exploiting people's situations to write fiction about them, but I think it's a good way of trying to understand the way people live through these things. Is to write fiction about them, whether it's suspense fiction or a crime novel or something deeper, psychological novel of relationships during the war.

However you want to slice it, if you're writing about it you hope that you're adding to some understanding not just about the way these things start and continue. But to how people deal with them day-to-day.

BOGAEV: My guest is reporter and novelist Dan Fesperman. His new book is "Lie in the Dark." It's set during the siege in Sarajevo.

Have you kept in touch with people you knew in the city?

FESPERMAN: I did for about a year or two with one fellow in particular who was -- he was about 21 when I first went there. And he had a girlfriend in Austria who had left the city. And he worked in the radio room where you made phone calls from, and would hear a lot of people's phone conversations out to other parts of the world. That was one of the few places you could call out from.

And I stayed in touch with him by letter, and I don't want to mention his name because eventually he wrote me from Austria and he had gotten out by -- he had gone out in a Bosnian army truck and they had gone out behind the lines one day. They had gone out over Mount Igmund (ph), which is one of the few ways you could get out beyond the siege lines, and it was precarious.

And he and a friend had decided that if they ever did that, if their unit ever did that, that they would desert, and they did. They jumped out of the back of the truck and -- in a village -- and got away. And he made his way out of the country to Austria.

And the last I heard from him was a letter about - must have been about two years ago -- about three years ago -- yeah, it was about three years ago. And he had made it, and I haven't heard from him since because he's moved on to other addresses. But I would love to get back in touch with him.

BOGAEV: That's how a lot of people -- a lot of men -- got away.

FESPERMAN: Mmm-hmm. Mmm-hmm. Yeah, you heard stories in fact about -- from these guys I hung out with. Once they would go up and do their once a week duty on the front line and then come back down and spend time with their friends. And they were 18, 19, 20; and had no military experience, no guns, no uniforms.

But they would -- they talked of mass desertions. They talked of 10, 12 people at a time sort of shouting to the other side that they were coming over, and they would get up and run across without guns. And they would be gone, and no one ever really knew what happened to them, but -- for better or for worse. But that did happen.

BOGAEV: Have you been back to Sarajevo?

FESPERMAN: I've not since after the war. I was last there in '96. It was already sort of taking on the feel of a colonial outpost in a Third World country. It was sort of sad. And just what I've heard from people that have been there since, I think it's become more so. Sort of a place where the foreign aid workers and the foreign investors pretty much provide all of the good jobs, or all of the jobs.

And it's almost those this colonial economy there where everyone is at the mercy of the benevolent occupiers.

BOGAEV: There's a lot of speculation now, now that refugees are returning to Kosovo about the future stability and the makeup of that region. I understand Sarajevo is now almost 90 percent Moslem and that after the war most of its Croats left for Croatia, Serbs went to Serbia.

Do you see Sarajevo as a model for what might happen in Kosovo in the next four or five years, this increased ethnic division and isolation?

FESPERMAN: It could be, and particularly in the way that the Serb civilians are dealing with it. In Sarajevo I think it was more so because not only were they -- well, I guess in Kosovo you have NATO troops coming in. But technically they're still a part of Serbia. So they can take some comfort from that. And perhaps hope to ride it out, and in the future it will be more like it was before.

In Sarajevo they knew they were becoming part of this Bosnian nation, and as a matter-of-fact the entity of it, which was the Moslem-Croat Federation, they knew there was no turning back, no going back to the old boundaries without some sort of new war.

And also the local leaders -- Karadic (ph) and the others -- were playing to their worst fears, and in some cases virtually ordering them to leave the suburbs of Sarajevo that were turned over to the Moslem-Croat Federation government. So, I think the exodus there was a lot more exaggerated than it will be in Kosovo.

You'll have an exodus, and are having it, in Kosovo. But it's not quite the sense of panic that you had in the Sarajevo-Serb suburbs after the war.

BOGAEV: Dan Fesperman, thanks very much for talking with me on FRESH AIR today.

FESPERMAN: Thank you.

BOGAEV: Dan Fesperman's new novel is "Lie in the Dark."

I'm Barbara Bogaev and this is FRESH AIR.

This is a rush transcript. This copy may not
be in its final form and may be updated.

TO PURCHASE AN AUDIOTAPE OF THIS PIECE, PLEASE CALL 877-21FRESH
Dateline: Barbara Bogaev, Washington, D.C.
Guest: Dan Fesperman
High: Dan Fesperman is the former Berlin Bureau correspondent for the "Baltimore Sun," 1993-1996. From there he extensively covered Bosnia-Herzegovina, Croatia and Serbia. He has drawn from his experience there for the setting of his new crime novel "Lie in the Dark." It is about a Sarajevo homicide detective who must do his job while corpses pile up from the on-going civil war.
Spec: War; Europe; Media; Lifestyle; Culture; Dan Fesperman

Please note, this is not the final feed of record
Copy: Content and programming copyright 1999 WHYY, Inc. All rights reserved. Transcribed by FDCH, Inc. under license from WHYY, Inc. Formatting copyright 1999 FDCH, Inc. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to WHYY, Inc. This transcript may not be reproduced in whole or in part without prior written permission.
End-Story: A Crime Novel Set in the Balkans

Show: FRESH AIR
Date: JUNE 22, 1999
Time: 12:00
Tran: 062202NP.217
Type: FEATURE
Head: The Grameen Bank
Sect: News; International
Time: 12:30

BARBARA BOGAEV, HOST: This is FRESH AIR. I'm Barbara Bogaev.

Mohammad Yunus has made a business out of an unthinkable banking proposition, to give loans to the poorest of the poor; people who have no collateral, no assets and no proven means of making a living. Out of this idea has grown the Grameen Bank of Bangladesh. Since the bank was founded in 1983 it's distributed more than $2 billion two and a half million people, with only one percent of those borrowers defaulting on their loans.

Ninety-four percent of the bank's clientele are women in rural villages who are also shareholders. The average first-time loan is less than a few hundred dollars. It goes to pay for a cow or a sewing machine that can help the women start their own businesses.

International aid organizations such as the World Bank have at times criticized the program as providing an insignificant contribution to economic development. But Yunus counters that the kinds of projects the World Bank and other development agencies fund, such as infrastructure building and skills training, do nothing to help the most desperately impoverished.

Other's agree. Now there are more micro lending programs in 43 countries, including in Europe and the United States. Mohammad Yunus has written about his efforts to pioneer micro lending in his new book, "Banker to the Poor."

Yunus was an economics professor in Bangladesh when he first conceived of micro-credit. I asked him what inspired him to venture outside of academia and personally research the roots of poverty in the small village near his university.

MOHAMMAD YUNUS, FOUNDER, GRAMEEN BANK; AUTHOR, "BANKER TO THE POOR": Bangladesh became an independent country in 1971. I was teaching in the U.S. at the time. And I participated in the campaign for creating an independent Bangladesh.

After the year was over in 1971 Bangladesh became an independent country, and we were very, very excited that now we have a country that we can build in our way. So, I went back to Bangladesh to participate in the building of the economy, which was totally devastated in the liberation war.

And I joined Chittagong University to teach. And instead of the country moving economically upward, it was sliding down very quickly downwards. And we ended up with a famine in 1974. And I find myself in a very strange situation teaching elegant and magnificent theories of economics that I learned from American University, and seeing myself in the midst of a terrible poverty situation; a situation of hunger and famine.

So I felt very empty about what I was doing, and I thought things that I was teaching didn't mean anything to anybody. These are almost like make-believe stories which do not exist. They're fairy tales about an economy which has no resemblance of the economy that is around me. So, I thought if I want to be honest to myself I should able to understand what life of these poor people is all about.

So, I wanted to learn about it, and I wanted to make myself useful as a human being to another human being in that difficult situation. So I would go around in the village next door to the university campus just to do that.

BOGAEV: How did you go about talking to people in the local village of Jobrah (ph) about their situation?

YUNUS: Well, it was very easy. I speak a local dialect and people didn't recognize me as a university teacher so I was just another person. I would go around and try to seek out extremely poor person and sit down with him, with her, talk to them about the day's problems. And so I'll see if there's anything I can do to address any one of those things.

And I saw how people suffered for a very small amount of money as small as $1, or less than a dollar. And the woman who really triggered this all, she was making bamboo stew, and I was talking to her because of the extreme poverty I see and the beautiful product she was making I couldn't reconcile how these both things can go together.

And she explained to me she makes only two penny a day. And I couldn't believe that anybody could work with such a beautiful skill just to make two penny a day. And she explained to me that she didn't have the money to buy the bamboo, which goes into the bamboo product.

And she had to borrow from the trader to buy the bamboo, and the trader enforces a condition on her that she has to sell the product to the trader at the price that he decides. So, that turned her into a bonded laborer -- a slave laborer.

And the cost of bamboo, I thought must be very high otherwise why should she -- she should not be able to buy it. So she told me that it cost 25 cents. And it was a big shock for me to see just because somebody could not come up with 25 cents to start a business that she knows very well, and she has to go to someone who turns her into a bonded laborer.

And then I went around to see if there were other people like her and I came up with a list of 42 people in similar conditions. And the total money they needed was $27. So that was the time I couldn't take it anymore, I just put my hand into pocket and came up with the money myself. Giving them, as a loan; telling them that they can pay me back whenever they are ready to. And they can sell their product wherever they get good price. And that was the beginning of it.

BOGAEV: Now, you made a proposal to the local branch of a government bank that they continue this process, that they continue to lend money to the poorest of the poor in this local village. What response did you get?

YUNUS: The manager fell from the sky when I said that, because he couldn't believe that anybody in their right mind think of lending money to the poor people. And he kept on explaining that a bank cannot lend money to the poor people because they are not credit worthy.

And I asked, "why do you think they are not credit worthy, have you tried it out?" He said, "no I didn't try it out, but everybody knows that they are not credit worthy. They are not going to pay you back. And they don't have the collateral, so they can't even come anywhere near the bank."

So I said, "I would like to try it out. Can you give me the money so that I can give the money to these people in the village." He refused. He said, "the bank laws do not allow me to do that." But he said just that I should see the city officials in the banking hierarchy and see if they would come up with any idea how to go about it.

And I took his advice and went around to see the higher officials. And everybody told me the same thing, it cannot be done. Poor are not credit worthy -- banks cannot lend money to the poor people. So I -- after a few days of this knocking at people's doors I decided to offer myself as a guarantor.

I said why don't I become a guarantor and get the money. And that took about six months of negotiation with the bank trying to accept me as a guarantor. And gave me the money for the people in the village.

BOGAEV: Did you ever get called on your...

YUNUS: ... no. No. They debated about what should be the maximum limit that I can borrow with my signature. They put a cap to my ability to draw money with my signature. The limit was $300. I said, OK, let me begin. See whether it works or not.

And I began. I gave the money to the people and people paid back. And I was very excited that the bank manager turned out to be wrong and I was right. When I mentioned this to the bank manager he said, "no. No. This is just the beginning and you're doing it only one village, that's why it worked. If you do it in two villages it won't work."

And I went -- I said let me try it in two villages. So, I did and really it came out just the right thing, everybody paid back. Then the bank manager said, "well, one village and two villages are about the same thing. What you should do, at least do it over five villages."

So I did it over five villages, but the bank manger didn't change his mind. He kept on increasing the number of the villages each I come out successfully. So I went ahead: 20 villages, 50 villages, 100 villages; still without any impact on his view.

So that's when I decided well, maybe I should create a bank for myself lending money to the poor people. So, I went to the government to seek permission and get a license to set up a bank. The government didn't feel very excited about it.

They thought this is not a really good idea to have a bank exclusively for the poor people. It took me two years to convince the government. Finally, in 1983, we got the permission to set up a bank. And we created Grameen Bank and kept on expanding our work.

BOGAEV: My guest is Mohammad Yunus. He's the founder and managing director of the Grameen Bank in Bangladesh. He pioneered the practice of micro lending, offering very small loans to the very poor to help them set up their own businesses. We'll talk more after a break.

This is FRESH AIR.

BREAK

BOGAEV: If you're just joining us, my guest is Mohammad Yunus, he's the founder and managing director of the Grameen Bank in Bangladesh. His new memoir about pioneering the process of micro lending to the poor is called, "Banker to the Poor."

Once you got Grameen Bank off the ground one of the first key requirements that you made of your borrowers is that each applicant join a support group of like-minded people seeking loans. What was the purpose of that requirement, and that's really become one of the key philosophies of your form of micro lending?

YUNUS: Even before we became a bank, this was there. We began with such an idea as how to make sure people do pay back. And one of the things we came out is to ask them to form a group of five people. And that became an essential feature of Grameen Bank.

And we also introduced weekly repayments. And when we became a bank we simply followed the same thing that we were doing anyway in the villages where we worked. It helps because people get more courage to get involved in business, particularly women.

Because we were encouraging women to participate in our work. And they felt really scared to do anything by themselves. So having four other friends with you adds to your initiative and your courage to enter into territory which you've never been before.

And also weekly repayments helps in a way, you are paying only small amount each time. So you don't feel a lot of burden on you. It's not a huge amount of money. So, it's a small amount of money and you can - it's almost like a bite size that you pay back.

BOGAEV: How much do people usually borrow?

YUNUS: In the beginning when we are starting out, a loan size was as small as $10, $15. But gradually the initial loan size increased as inflation made everything expensive. So I would say even today if someone, for the first time, joining coming to the bank and asking for a loan it would be about $35.

BOGAEV: How long does it usually take for someone to achieve a more financially secure position? How many, I guess you'd call it loan cycles?

YUNUS: Loan cycles, yes. Usually -- the studies that have been done shows that it could be as small as five cycles, or could be as large as 15 cycles. So anybody who has been in Grameen going through the five cycles of loan could get out of the participation, achieve some economic sustainability of her own -- this is the earliest entry into a self-sustaining position.

But this might be delayed for other reasons: not having marketing facilities or having sick people in the family or not having male persons in the family who could take the merchandise or whatever you're producing in the marketplace because women still can't go to the marketplaces. It's always dependent on male members of the family to carry things in the marketplace and sell it for you.

So all those things delay the progress. So it could take as long as 15 years. So now we're trying to see if we can reduce this gap from 5 to 15 years gap that we see. Can we make sure that someone gets over the poverty line in, say, eight years.

If you have been with Grameen and gone through eight cycles of loan, very high probability that you will be moving out of poverty. And how do we ensure that? This is -- these are the issues now we are handling.

BOGAEV: You set a goal also early on of ensuring that half your borrowers are women. Why was that such an urgent priority for you?

YUNUS: Well, when I began I was very critical of the banking system, I am still critical of banking system. At that time I was making two points against the banking system repeatedly. I was saying that the banking system is designed to keep the poor people out. That's why they invented this requirement called collateral, otherwise it doesn't serve any other purpose.

And then I said it's not only biased against poor people, banking system is also biased against women. If you look at all the banks in Bangladesh -- I said if you look at the gender composition of the borrowers not even one percent of the borrowers would be women. So there must be something wrong in their rules and their attitude which keeps the women away.

So when I began I wanted to make sure I reach out to the poor people and half the borrowers who are women. So this is a kind of reaction to what I saw banks were doing, and I thought that was unfair. So this was my fairness principle that I wanted to make sure half the borrowers are women.

But when I went to the women to invite them into Grameen Bank to borrow money from Grameen Bank they refused to join Grameen Bank. They said, no, don't give the money to me because I don't know anything about money, I don't know anything about investing money to run a business. Why don't you give it to my husband, he's the one who handles money.

So it took -- it was quite a bit of work for us to persuade women to change her mind and join Grameen Bank and take the money. Many of these women pleaded that she never handled money before, she never touched money in her life. So she is very scared. She doesn't want to get involved with something which will create trouble for the family. She thought touching money will create a problem for her and for the family.

BOGAEV: How did you get these women to overcome some of their objections or their disinclination to get involved with the bank? And I'm thinking many -- most of these women in a Moslem country are not willing to talk to, or shouldn't talk, to strange men without getting in all sorts of trouble I would imagine.

YUNUS: Well, that was another story. I was skipping that part. For me to talk to women, being a man, was very, very difficult. In the beginning I would take my girl students with me in the village, and I would sit under a tree or stand under a tree outside. And one of my girl students would go in and talk to the women and she would come back with their questions, their remarks. And I would clarify to my students what I had to say, and she would go inside.

So it was a kind of indirect contact, because (unintelligible) would not allow me to be in direct contact. So, it took a lot of time before I could really sit face to face and talk to them. It happened only after we got started with the money.

And people got so involved -- the women got so involved with the money discussion they forgot about (unintelligible) and everything else, and there were serious questions, serious proposals to me. And I was explaining to them they want to listen to me.

So gradually that distance was overcome. But even after overcoming the distance, it's not easy for them to join Grameen Bank. After -- the way we overcome this is by repeated contacts, repeated explanation. After all, it's -- when they said they don't want money, it's not their real answer. It's their fear, which has been accumulating on them for years and years.

So, it is -- you cannot peel it off in one roll. So, it takes a lot of time, a lot of examples, a lot of demonstrations before she gets interested in the subject. And usually it happens when one of the desperate women will finally say, "well, what can go wrong? Everything is wrong in my life. I have nothing to lose. Let me do it. Maybe I'll be able to make it."

So she wants to get started with a group and she will try out her friends, and finally they succeed in finding four friends to form a group. And when you see -- some of them took the loan from the bank and they're making money, then the news spreads like wildfire. Everybody says, "hey, you can do this. Look what she's doing. Everybody comes to talk to her."

And she becomes the real messenger of Grameen Bank. And women will talk for hours with her; how she did it, is there something that they cannot do. She said, no, it's a very simple thing. If you take money and raise a chicken you can raise chicken around (unintelligible). And I made this kind of money. And bank will give you this. And I can pay them -- I'm paying this...

So she becomes the one who is explaining to people in great details, and very convincingly because it is her life. It is not an official coming and telling her.

BOGAEV: My guest is Mohammad Yunus. He is the founder and managing director of the Grameen Bank of Bangladesh, which pioneered the concept of extending credit to the very poor. We'll continue our conversation after the break.

This is FRESH AIR.

BREAK

BOGAEV: Back with Mohammad Yunus, founder of the Grameen Bank of Bangladesh.

You also departed from tradition at Grameen Bank by handing out loans without providing any skills training first. The international community is pretty critical of this. Why give the credit first?

YUNUS: My argument is that people do have skills. The donors and the traditional development economists always arguing that people are poor because they don't have a skill. So before you can do anything they must be trained, they must be given a skill so they are ready to do something else.

My argument is all people have skills, even the poorest person, absolutely. Someone who cannot earn a penny for himself or herself have a skill. And the way I say it, I said the fact that the person is alive is an indication, is a proof, that he or she has a very important skill, and that is a survival skill. If we can only support their survival skill, we can move on from there.

And I've been arguing that all people, including the very poorest, have a lot more skills than they can use. They cannot use it because other pieces of it do not fit into it -- institutional support like financing and so on do not come forward to it.

So they cannot go -- move forward in using their excess capacity that they have. So credit helps because credit immediately creates a facility to use their excess capacity or excess skill that they have. So instead of giving them training, you just make -- create that enabling environment for them so that they can move on whit what they have.

And if they need -- if they exhaust their skill, they'll be looking for a skill which will be around in their own neighborhood. To adopt and move on and improve their condition. Also, I'm against skill training right away because that don't make it an easy way out for themselves. To spend a lot of money on training, give it an impression that they are really doing something, they're actually doing nothing.

So, I would say -- and they spend a lot of money on training. And it is actually -- the money goes to the -- basically to the trainers and the bureaucracy and everything. And the real net worth of the training, people using the training to make money, is a very, very small contribution in their own life.

So I said why spend money in that way, rather than help them to seek out their own skill and give them the money to find that skill wherever they want to.

BOGAEV: You've helped set up Grameen-type micro lending initiatives in developed countries, in Europe and in the U.S. How much of an obstacle is social welfare and attitudes among the poor as well as the society at large that are born of the social welfare state to your efforts?

YUNUS: It's a big, big barrier in developed countries where poor people are given charities in the name of public support. This takes every initiative from them, number one. Even people who would like to take credit, move out of the welfare regime they find it extremely difficult because welfare laws are so stringent. Once you're in you cannot get out even if you want to. So that is something one has to look very carefully, because welfare laws actually are built to keep people in welfare.

These were not designed to help people get out of welfare. So we have to look at the very design of it. It has a big door in getting in, but no opening to get out.

BOGAEV: Grameen has inspired a number of micro lending groups; one was Good Faith Fund in Arkansas under then-Governor Bill Clinton. There are other groups in the U.S. and in Canada. There's really some disagreement about the success, mostly because there's a really high default rate of perhaps 40 percent compared to one percent in Bangladesh and other developing countries.

The cost of administering loans is much higher and people have much more trouble breaking into the marketplace as entrepreneurs in a developed country compared to countries in the Third World. Do you still believe that micro lending is a viable approach to alleviating poverty in countries like the U.S.?

YUNUS: Oh, very much. If you agree that people need money to catch money and a country like the United States, banking systems do not make this money available to poor the people. If Grameen or a micro credit program similar to it can provide money to them they will find a way to catch more money.

So if we agree on that principle then it's a question of how to design that program so that we make sure we avoid the pitfalls, we don't make mistakes. When somebody do not pay back the loan, I always explain to my colleagues in Grameen Bank that it is not the fault of the person, it is the fault of the program -- it is the fault of the institution. They didn't know how to design that program.

So let's not concentrate on the default rate issue, default rate is a problem whit the design not of the people. And then I would say about the cost of it; yes, cost is very high because we are in a situation where the salary level is high, where the volume of loan is very small.

But at the same time you should compare it with the welfare cost. If you leave that person in welfare how much does it cost? Would you rather leave that person under a welfare situation or have an expensive credit operation so that one -- that person can now come out of the welfare situation and become a taxpayer himself and herself and contribute to the tax revenue. Rather than become a burden on the tax revenue.

BOGAEV: Mohammad Yunus, thank you very much for talking with me today.

YUNUS: Thank you very much, too.

BOGAEV: Mohammad Yunus is the founder and managing director of the Grameen Bank. His new book is, "Banker to the Poor."

For Terry Gross, I'm Barbara Bogaev.

This is a rush transcript. This copy may not
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TO PURCHASE AN AUDIOTAPE OF THIS PIECE, PLEASE CALL 877-21FRESH
Dateline: Barbara Bogaev, Washington, D.C.
Guest: Mohammad Yunus
High: Mohammad Yunus is the founder of one of the world's first "micro-lending" banks. These institutions loan money to poor people that other banks consider too risky. Founded in 1983, Grameen Bank in Bangladesh has provided over $2.5 Billion in micro loans. He has written about his efforts in the new book "Banker to the Poor." He is the former head of the economics department at Chittagong University in Bangladesh.
Spec: Financial Services; Economy; Poverty; Lifestyle; Culture; Mohammad Yunus

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Copy: Content and programming copyright 1999 WHYY, Inc. All rights reserved. Transcribed by FDCH, Inc. under license from WHYY, Inc. Formatting copyright 1999 FDCH, Inc. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to WHYY, Inc. This transcript may not be reproduced in whole or in part without prior written permission.
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