San José, Costa Rica, since 1956

Grateful Borrowers Applaud ‘Banker to Poor’

GUÁPILES – Elizabeth Madrigal was surprised when she first met her benefactor. He was a small, gentle man, whose whitish hair framed a browned face with a playful smile.

He was nothing like the imposing Nobel Peace Prize winner she had imagined. Madrigal was one of several hundred Costa Rican entrepreneurs who last weekend met Muhammed Yunus, the Bangladeshi economist behind the small loans funding their projects.

Yunus – who won the Nobel Prize last year for founding Grameen Bank, a “bank for the poor” – spent the weekend in Limón  province, where Grameen has loaned money to about 3,000 Ticas to start mini-businesses.

“I never imagined someone that humble and simple,”Madrigal said.

Yunus spoke at an EARTHUniversity graduation Friday and spent Saturday talking to women who had received Grameen loans in the canton of Guápiles in Limón province.He browsed an exhibition of crafts, clothes and food – products of the businesses women started with loans of up to $200.

The branch has loaned $848,000 since it opened in April 2006 with a $1.3 million grant from Whole Planet Foundation.

Madrigal uses her $140 loan to buy clothes, perfume and accessories and resell them at a small profit. She meets every two weeks with Grameen representatives in Costa Rica to report her expenditures and discuss the progress of her business. She must repay the loan, plus 20% per annum interest, and can get a second loan after six months if she has a good track record.

The idea for this lending model dates to 1976, when Yunus, a university professor, coughed up $27 to help 42 people in a poor Bangladeshi village repay their loans. They treated Yunus like an angel, and his deed a miracle.

“If you can make so many people so happy with such a small amount of money, isn’t it time we do something more?”Yunus said, recounting the story to 90 EARTHUniversity graduates from 21 countries.

The idea inspired him to create Grameen Bank in 1983 to offer tiny, collateral-free loans to help people climb out of poverty through entrepreneurial activity. The bank now has 7.5 million borrowers, almost all women, in Asia, Latin America, Africa and the Middle East. It lends half a billion dollars every year, with average loans totaling $150.

“People ask me, how do you rely on the rules and procedures of Grameen Bank? We look at the conventional banks. Once we learn how they do it, we just reverse it. And it works,” Yunus said to roaring applause and laughs at EARTHUniversity Friday.

Yunus said Grameen is different from conventional banks because it prioritizes the poorest people, does not request collateral, and does not rely on lawyers. His eventual goal is a world without poverty.

“We will create poverty museums,” he said. “Because there are no poor people in the world, our kids will want to know, ‘what are these poor people you talk about?’” The Arias administration has also made poverty a key issue. A strong economy and state aid programs this year led to the biggest drop in poverty levels in decades, according to the National Statistics and Census Institute. Still, wealth remains unevenly distributed.

Some 20.2% of households in Limón are poor, compared with 13.7% in the Central Valley.

The United Nations Human Development Index, which measures life expectancy, education and wealth, puts southern Limón province on par with some of the poorest countries in Africa.

Arias said Friday that he would try to find seed money to expand Grameen’s operations to other parts of Costa Rica.

Some 64% of people who have borrowed from Grameen bank have crossed the poverty line, Yunus said.

Madrigal says the loans are so small that they haven’t changed her economic status much. But she already has caught the business bug. Next year, she plans to pool her loans with other women. They’ll buy tools to make crafts to sell to tourists passing through Limón.

“This helps, but it’s very little money,” she said. “Together we can do better.”

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