Madonna was not wrong when she sang, ‘it’s a material world, and I am a material girl’. I will give you two contrasting examples from the book ‘Saving Capitalism from Capitalists’ by Rajan and Zingales, about how varying access to money causes a difference in the lives of people in different countries.

The first example is provided by Bangladesh’s, Mohammad Yunus, the world’s foremost authority in making credit available to the poor. One day he came across Sufiya Begum, a young mother, who earned her living by making bamboo stools. She

needed Rs 16 everyday to buy raw materials. She did not have the money. Therefore she borrowed from a middleman who took her stools in repayment. She was left with Rs 1.50 as her daily profit.

Because, Sufiya barely survived from day to day, she did not even have the Rs 16 needed to get out of the clutches of the middlemen. If she had the money she could then sell directly to her customers and make vastly more than the Rs 1.50 she and her children survived on. Yunus founded the Grameen Bank in Bangladesh to take care of just such people who needed micro financing.

Most of us would, wrongly, be critical of the middlemen. Wrongly, because, it was the middlemen who enabled Sufiya to earn even the Rs 1.50. She would probably have starved along with her children without the ‘rapacious’ moneylender. The difference between us and Yunus was that he did something about what he saw. His Grameen Bank gives credit to the Sufiyas of Bangladesh at a reasonable rate of interest and the bank even manages to show a profit.

Our second example is from the US where a financial revolution has swept aside the moneylenders of yesteryear and replaced them with banks, stock exchanges, and lately with venture capitalists.

Government does not have to make laws against usury and money lending, people will always borrow at the lowest rate of interest they can get. Moneylenders prevail where government has prevented a financial revolution from happening by outdated rules and regulations.

Kevin Taweel about to graduate from the Stanford Business School in California had plenty of job offers but was not excited about working for a big company. He wanted

to run his own company, though he had no money. If he was in Bangladesh or Nepal, that would have been that. Not so in the US.

Kevin overcame the seemingly insurmountable barrier by using a still little known financing device called a ‘search fund’. This fund, in 1993, granted him $2,50,000, for his living expenses and for searching a suitable business, in return for a share if such a venture was eventually found.

18 months later Kevin found an emergency road services company. The owner wanted $8.5 million for the business. Again not a problem. Kevin managed to convince investors and bankers to give him the money by showing them how he could expand the business and do better than the existing owners. The time taken to raise the $8.5 million: less than 24 hours!

Kevin and his partner did make company grow rapidly; sales went from $6 million in 1995 to $200 million in 2001. Each dollar invested in the venture turned into $38 by 1999.

Everyone profited. The original owners could sell out instead of continuing to mark time running the business at far below potential. Kevin fulfilled his desire of running a company. The investors made enough to fund several other Kevins. The society benefited by having the assets pass from less productive to more productive hands. Employment increased. No one lost.

Money is of importance in this material world. If we want progress and a better life for our people, we must give them access to money. Money does beget money whether it’s the US or it’s Nepal.

Can this US process be duplicated in Nepal? Of course. Is it likely to happen? No,

because, the government is unlikely to sell off its banks, loosen restrictions on foreign investment and joint venture banks, make its currency convertible, bring in supporting legislation, or provide for security and law and order. Maybe sometime in the future …