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October 13, 2006
Yunus and the Grameen Bank Win the Nobel Peace Prize
I couldn't believe my ears this morning. One of my heroes had just won the Nobel Peace Prize.
Muhammad Yunus is the founder of the Grameen Bank of Bangladesh, a truly pioneering institution in the fight against rural poverty. As a young man in the early 1970s, Yunus spent time in the US on a Fullbright scholarship; when he returned home to Bangladesh, which was in the midst of a famine, he realized the current system of poverty alleviation simply wasn't working.
So Yunus created the Village (Grameen in Bangla) Bank. Rather than lending money to typical bank borrowers, Yunus decided that his loans would go to the poorest of the poor - farmers, village women, even beggars. The bank developed a system of offering microloans - loans often less than $100, the kind of amount that any other bank would never have bothered to award to its customers. In Bangladesh, though, a loan of $50 or $75 to a rural villager can mean the difference between abject poverty and ipermanently mproving the quality of life for their family. Microloans allow them to establish a kiosk selling dry goods, buy new farming implements, even pay for health insurance. They take the burden off extremely low-income households and give them a fighting chance to achieve prosperity.
Many bankers scoffed at the idea that a microloan program could ever work in a place as poor as Bangladesh. Surely, most borrowers would default on their loans and cause Grameen to go bankrupt. But Yunus proved them wrong. Of nearly $6 billion loaned over the last 30 years, an astounding 98.85% has been recovered.
The Grameen Bank has had a profound effect on the women of Bangladesh. Approximately 95% of the bank's borrowers are women - this, in a country where women historically had little to no economic independence. Because of Grameen, millions of Bangladeshi women have started their own businesses and prospered. One of their best known accomplishments is the digital divide initiative known as the Grameen Phone program. Women are given loans to start small telecom businesses in their home village. They receive a mobile phone and training, then make that phone available to villagers for community use. For villages with no other telecommunications link to the outside world, the Grameen Phone program has created new opportunities for local residents while helping women achieve improved socioeconomic status. It's proved so successful that Grameen is now replicating the initiative in Rwanda and other central African countries.
Perhaps what's most exciting about this Nobel selection is that the people of Bangladesh can rightfully claim that they as individuals have won a share of the Peace Prize. Approximately 94% of the bank is owned by its 6.6 million borrowers - the farmers, the women entrepreneurs, the beggars - while the remaining six percent is owned by the government of Bangladesh, which of course represents the people. No matter how you slice it, this years Peace Prize has been rewarded to the Bangladeshis themselves. Muhammad Yunus may be the one standing in Oslo this December - and rightfully so - but he will be standing on the shoulders of millions of Bangladeshi citizens, each of whom must be swelling with joy this day.
Learn more about the Grameen Bank, as told by Muhammad Yunus himself:
Full disclosure: some of you may remember that the Grameen Foundation funded my March 2005 trip to India's Baramati conference. One of the results of that trip was my Indian video blog, Baramati Bus Stop. If you haven't watched it before, take a look:
Posted by acarvin at October 13, 2006 9:35 AM
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