In 1974 Professor Muhhamad Yunus was the head of the Economics Department at Chittagong University in Bangladesh. He took a group of students to look at the rural economy in a local village.

Here they discovered that the poorest people had to borrow extremely small amounts of money to buy tiny amounts of raw materials to make products to sell. One woman had to borrow the equivalent of 15p to buy the materials necessary to make a bamboo stool. She then had to repay the loan within a week with interest of 10%¹. At the end of the process she would have a profit of 1p.

Professor Yunus realised that one hope for the woman would be access to proper, reasonably priced credit. Against the advice of the mainstream banks he lent the equivalent of £17 to a group of 42 basket weavers.

Today the Grameen² Bank - as it has become lends to over 2 million of the poorest people in the world helping them to avoid loan sharks and to change their own living conditions. 94% of the people who borrow money are women and 98% of the loans are repaid. This is a much higher rate than that of the mainstream banking fraternity.

Men: Not such a good risk

Apparently in the early days of the bank it was found that when women borrowed money it was for economic purposes to buy raw materials, small machinery or other effects to help them support their families. Men on the other hand often used the money for drinking or gambling and were seen to be a bad risk.

To assist in making sure that there was co-operation and support for the women who were borrowing borrowers were grouped into cells. 5 women would consist one cell and the first woman's loan had to be repaid before the second woman could borrow and so on. This ensured that the women helped one another and encouraged the repayment of the money.