Business books.

Another Look At Third World Bank For Poor, This Time By An Outsider

May 06, 1996|By Reviewed by John Schmeltzer, a Tribune financial writer.

The Price of a Dream

By David Bornstein

Simon & Schuster, 358 pages, $25

It's a common practice of publishers to bring competing books to market simultaneously. There's no better way to leverage each other's advertising to promote sales of each other's books. Simon & Schuster is seeking to do just that by piggybacking David Bornstein's examination of the Grameen Bank in Bangladesh onto Alex Counts' look at the same operation in "Give Us Credit" from Times Books, which hit the bookstores last month. Bornstein's look at Grameen reaches bookstores Thursday.

While Grameen is the common fodder for the two books, they are dramatically different. Counts' book is an insider's view of the Grameen operations. Counts worked for Grameen for more than a year. Bornstein's book is an outsider's examination of the work the bank is doing in one of the poorest corners of the world.

Unlike Counts' book, Bornstein's focuses on the story of Grameen's work in Bangladesh. While a letter Counts sent to a friend in the U.S. prompted a CBS-TV story for "60 Minutes," it was Bornstein who brought the story of Grameen to the pages of an American magazine with his story last year in The Atlantic Monthly.

Bornstein researched his book on five-month visits to Bangladesh in 1992 and 1994. Once dubbed the "barefoot bank," Grameen is no longer the cute little project started by Muhammad Yunus, a Vanderbilt-educated economist. It's a bank with more than 1,000 offices, serving more than 35,000 villages and more than 3 million borrowers. Ninety-four percent of those borrowers are women. And it's now being copied around the world as others try to replicate the bank's success.

Modern commercial banking is really quite simple. Banks lend money to people they believe will repay the loan because the project they're proposing will generate enough cash flow to make the monthly or annual payments. Because of that, modern banks generally only lend to the most creditworthy--that is, those people with enough capital or collateral to repay a loan. Interest that people pay on the loan is used to generate profits and produce more money that can be lent.

Unlike at most banks, including all the others in Bangladesh, a would-be borrower from Grameen must demonstrate that her family's assets fall below the bank's lending threshold. And unlike most banks, a Grameen loan is for one year, except if it is for a home. Short-term loans generally are easier to repay than long-term commitments. And unlike other banks, Grameen only seeks to break even each year.

Bornstein outlines the history of Grameen and Yunus, its founder. But after the history, he tells the story through the eyes of its workers and several of its poorest borrowers. Bankers tell about walking each week through these abjectly poor villages lugging huge amounts of cash with little fear of being robbed. Borrowers tell how the bank has helped transform their lives. While still poor by whatever standard is used, they are more in control of their lives than they were.

It's an account that is gripping and informative. Here are people who for the first time in their lives have a little bit of money--in some cases it is the first time they've ever handled any money. Food or material always had been the means of exchange in their lives up to the point they received their first loan.

But in telling the story, Bornstein switches from first person to third person, which some readers might find disconcerting. While it can be effective in helping tell a story, the reader is left to struggle with Bornstein frequently interjecting himself into the story. And instead of adding believability to an already-believable story, the switching tends to confuse rather than clarify.

Still, the account, like Counts' story about Grameen, provides an opportunity to learn about successful efforts being made to combat some of the world's most intractable problems.

Yunus and Grameen, in some of the best poverty research undertaken anywhere, say their studies indicate it takes 10 to 15 years for a typical borrower to cross the poverty line.

While most of those who joined the bank when it was founded 20 years ago are no longer living in poverty, those who joined in 1989 or 1990 likely will still be poverty-stricken by the turn of the century. Shortening the time that it takes for a borrower to emerge from poverty is the challenge that Yunus says faces the world.

It's that challenge that the World Bank hopes to meet with the drive to raise more than $200 million to fund Grameen-style banks around the world.

Book excerpt

"Some see Grameen as an example of reinvented government. Muhammad Yunus disagrees. He sees his bank as an example of reinvented capitalism."