March 12, 2012 / 9:41 PM / 6 years ago

Bangladesh Nobel winner in Glasgow poverty battle

LONDON (Reuters) - Bangladeshi microfinance pioneer Muhammad Yunus is gearing up for his latest assault on poverty and welfare dependency - in Scotland.

Bangladeshi economist and founder of the Grameen Bank, Muhammad Yunus, arrives at the Clinton Global Initiative Reception at the Museum of Modern Art in New York September 21, 2011. REUTERS/Allison Joyce

The Nobel Peace Prize-winning economist hopes to raise 1 million pounds ($1.56 million) in coming months to open the first European branch of his Grameen Bank in Glasgow by the end of the summer.

Glasgow and surrounding parts of western Scotland have some of the worst pockets of poverty in Britain. Life expectancy is below the national average and some families have been on welfare for three or four generations.

“If it works in Glasgow, it’ll work anywhere,” Colin McCallum, assistant vice-principal of Glasgow Caledonian University, which has a partnership with Yunus, said of his microfinance model.

Yunus launched Grameen in Bangladesh in 1976 by lending $27 to 42 impoverished villagers. The organisation is now in more than 40 countries and has made small loans totalling some $20 billion, usually to women, to help them set up a small business so they can stand on their own feet.

Grameen America has lent $24 million to almost 8,000 borrowers since it opened in 2008.

Under its business plan for Glasgow, which will be overseen by experienced managers from Bangladesh, Grameen expects to raise 3 million pounds over three years and lend an average of 1,000 pounds to 1,500 borrowers at an interest rate of 19.8 percent a year.

Rushanara Ali, the UK opposition Labour Party’s spokeswoman for international development, welcomed the symbolism of experts coming from a developing country to share their knowledge.

“If they’ve got solutions that work somewhere else, it doesn’t do us any harm to look at how we adapt them,” Ali, who was born in Bangladesh, told Reuters.

She and McCallum said overcoming an entrenched welfare culture would be one of the biggest obstacles facing Grameen in Scotland, not least because benefit payments are reduced if a claimant earns income.

“There will be challenges here and we’re not playing them down,” McCallum said. “But we ask the question: ‘Why wouldn’t it work in the UK?’”

On a visit to Britain last week to meet supporters and potential donors, Yunus said Grameen had no plans for now to set up shop elsewhere in Europe.

“We don’t plan. When we’re invited, we come and help set it up, like we are doing in Glasgow and as we did in New York, but we don’t bring money from Bangladesh to lend money here,” he told reporters.

Reporting by Alan Wheatley; Editing by Susan Fenton

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