The fall of the poverty wall

His ideas may revolutionize the way capitalism works: Nobel Prize laureate Muhammad Yunus, founder of the microcredit movement, spoke at the Allianz Forum in Berlin to mark the start of the Allianz "Microinsurance Life Stories" exhibition and the presentation of a new study examining the effects of microcredit.

 

On November 9, Berlin celebrated the 25th anniversary of the fall of the Wall in impressive style. A 15km long light installation brought back to life the structure that had caused so much sorrow. A thousand illuminated balloons marked the course of the Berlin Wall – and eventually broke free of their ties. Germany's best friend, Mikhail Gorbachev, released the first balloon to float towards the skies over Berlin. The second balloon was set free by a man who was introduced the day after the celebrations at the Brandenburg Gate by Peter Spiegel, Head of the Genisis Institute for Social Innovation, as a person "who, like Gorbachev, is capable of tearing down walls inside people's heads." With these words Spiegel was welcoming Nobel Peace Prize laureate Muhammad Yunus to the Allianz Forum.

 

 

Yunus: Tipping point in the fight against poverty

 

Together with Genisis and the Senate of Economic Affairs Allianz hosted the presentation of a new study on the effect of microcredits at the Forum at Pariser Platz. In his speech, Spiegel spoke of a barrier in the fight against poverty that Yunus had torn down. According to Franz Josef Radermacher, the head of the study and prominent representative of the Global Marshall Plan Initiative, we sometimes wonder whether an individual can still make a difference. "Yunus is one of those tipping points," said Radermacher. The Bangladeshi economist pioneered the concept of microcredit, a concept that earned him the Nobel Peace Prize in 2006. In the recent past, the concept  has been abused as a profit-making scheme, leading to increasing criticism. The study, entitled "Microcredit - Addressing an Ongoing Debate", defends Yunus' original concept, in which poverty was not something to be capitalized on, but rather saw those in poverty as part of the solution.

 

 

Study defends the Grameen idea from accusations that it is profit-hungry

 

Host Wolfgang Ischinger emphasized the importance of distinguishing between microfinance providers in his opening speech. Allianz' microinsurance program currently has 35 million participants. Along with providing access to financial resources comes great responsibility, according to Ischinger, who is Allianz Global Head of Government Relations. "The most important aspect of this program is to have a clear understanding of the customer base, so that you can offer effective protection against risk and construct a long-term equitable balance between customers and providers." Ischinger then pointed to the Allianz 'Microinsurance Life Stories' exhibition, in which eight international journalists demonstrate how successfully the idea of microfinance has been implemented in reality.

„Treading the town, harvesting hopes“ 2nd best in the contest “Microinsurance Life Stories”.
"Treading the town, harvesting hopes" 2nd best in the contest "Microinsurance Life Stories".

Yunus himself described vividly how everything began in the mid-1970s, during the great famine in Bangladesh. This was the first time that he lent money, his money, to people in need. He was turned away from banks, who told him that those in poverty were not creditworthy. This experience led to the Grameen Cooperative Bank and the Grameen family pressing forward with microcredit, insurance, foundation and social business. “In 2014 for the first time the bank had more money deposited by savers than it gave out in loans,” said Yunus in his speech. Social business plays a key role in the fight against poverty. This term, coined by Yunus, describes a business model that focuses exclusively on solving social and socio-ecological problems. The company does not pay a dividend. Instead, profit is reinvested. In Yunus’ way of thinking, social businesses multiply the effect of the original loan, and in doing so, help the population to reach a certain level of prosperity.

Meanwhile, the Grameen network has spread across the whole world. Many young people in Bangladesh who now attend school and university have the first generation of Grameen customers to thank for these opportunities. However, this idea is not automatically passed down by parents, and instead needs to be continually re-ignited, as shown by the following anecdote. Yunus was recently asked by a group of students why they should go to university, given that there were no jobs available at the end. Yunus replied: "Job is an outdated term. Use your education. Your place is not amongst those who are looking for jobs, but amongst those who found social businesses and create the jobs."

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Nicolai Tewes
Allianz SE
Phone +49.89.3800-4511
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