David Roodman interviewed in a ABC news (Australian) radio story on Yunus.
From the Article
Here's David Roodman, Senior Fellow at the Centre for Global Development, and a leading blogger on microfinance, telling that story.
David Roodman: The story is that Muhammad Yunus was back from a Fulbright scholarship in the United States where he studied economics and got a PhD. And he was teaching at Chittagong University which is in the part of Bangladesh that he is native to, in 1975, 1976, and he was teaching all these beautiful abstract theories of economics that he had learned in the United States, and outside the window of his classroom people were starving. And at some point the cognitive dissonance if you could call it that became too intense and he felt inspired and motivated to go out into the villages around the university and find practical solutions for famine and poverty that he was witnessing all around him. And according to the story he tells, he met a very poor woman who made her living by making stools, and she would get the materials for these stools in the morning from a supplier on credit. And then spend the entire day doing this handwork and at the end of the day, sell the stool back for a very tiny profit. In effect, she was in debt servitude to her supplier. Yunus said he was shocked by the story and thought well if he could just offer her a loan to get her out of this bondage, she could do much better. And then he had a female assistant go and talk to other women in the village and learn that there were 42 people that could use small loans, which totalled $27 in value, and he was just shocked by the small amounts of money that could help these people. And so he just pulled the money out of his wallet and then over the following years that he worked with his students to develop a more robust system for making loans to the poor in what became the classic group-based microcredit model in which groups of five people, usually women, get together and vouch for each other.
Ali Riaz: In the mid-1970s when Professor Muhummad Yunus started his project, it was purely research-slash-activist project. Initially nobody actually paid attention to it because a. the overall the economy, overall the political situation and especially when he started (it was 1976, Bangladesh is under military rule and political situation is very much, it had descended into some sort of further instability because it's a military government. The founder president of Bangladesh, Sheikh Mujbar Rahman and all his close associates had been assassinated - Bangladesh never expected it.) But everyone was looking at the national scene, everyone was trying to get by and in some cases some sort of democratic resistance. It is in this context, Professor Yunus sort of looking at politics, he was trying to address the issue of poverty in a very small but innovative way.
David Roodman: A lot of people have the impression that microfinance was invented by Muhummad Yunus in Bangladesh in the late 1970s, which actually isn't true. I see him more as a kind of Henry Ford figure. Henry Ford did not invent the car, but he was a very effective entrepreneur who discovered ways to mass produce a useful thing, for lots of people and in that way changed the world. The ideas that are in microfinance for example the use of groups where the borrowers are liable for each other's loans can be traced easily back to the 1850s in Germany where credit cooperatives were developed to deal with poverty and hunger there, and you can even find some elements of these ideas going back to Jonathan Swift, the author of Gulliver's Travels. In Dublin in the 1720s, he made small loans to what he called "industrious tradesmen" - we might call them micro-entrepreneurs today, and he had weekly payments, just like Muhummad Yunus did, and he required each borrower to have co-signers who would be liable for the loan, if there was a default.