The 2006 Nobel Peace Prize was awarded today to the Grameen Bank of Bangladesh and its founder, Muhammad Yunus, for pioneering microcredit — using loans of tiny
amounts to transform destitute women into entrepreneurs.
Muhammad Yunus founded the bank in his native Bangladesh to lend small amounts of cash — often as little as $20.
- Text: Excerpts From Citation
The Norwegian Nobel Committee praised Dr. Yunus and Grameen for their “efforts to create economic and social development from below.”
Though it is not the first time the committee has chosen to honor economic development as a contribution to world peace, rather than the more usual diplomacy, rights advocacy or philanthropy, it is the first time the prize has been awarded to a profit-making business.
The selection seemed to embody two connected ideas that are gaining ground among development experts: that attacking poverty is essential to peace, and that private enterprise is essential to attacking poverty.
Dr. Yunus founded the bank in his native Bangladesh to lend small amounts of cash — often as little as $20 — to local people, almost always women, who could use it to found or sustain a small business by, say, buying a cow to sell milk or a simple sewing machine to make clothing.
Traditional banks considered such people too risky to lend to, and the amounts they needed too small to bother with. Dr. Yunus’s simple but revolutionary idea wasthat the poor could be as creditworthy as the rich, if the rules of lending were tailored to their circumstances and were founded on principles of trust rather than financial capacity. He found that they could achieve lasting improvements to their living standards with a little bit of capital.
Since its creation in 1983, Grameen has made a total of $5.72 billion in such small loans, and has turned a profit in all but three years, including $15 million in 2005.
“Across cultures and civilizations, Yunus and Grameen Bank have shown that even the poorest of the poor can work to bring about their own development,” the Nobel citation said.
The success of the Grameen Bank has inspired many imitators, and encouraged commercial banks in many developing countries to take up microcredit lending as well.
The Peace Prize “looks like a fitting acknowledgment that the ways of the market are not necessarily evil, that markets can be harnessed as forces of good if done properly,” said Nachiket Mor, executive director of Icici Bank, India’s largest privately owned bank, which now has about $550 million in microcredit loans outstanding.
James D. Wolfensohn, the former president of the World Bank president, said by telephone Friday that the award testified to “the power of entrepreneurialism.”
“What it has to do with peace,” he added, “is that it gives dignity to families and hope to families. And it’s the lack of hope that is the greatest cause of bloodshed and intolerance.”
Dr. Yunus reacted joyously to the news of the prize, The Associated Press reported. “I am so, so happy,” he said in a telephone interview from Dhaka, the capital of Bangladesh, shortly after the prize was announced. “It’s really great news for the whole nation.”
The son of a prosperous goldsmith, Dr. Yunus has said that his mother’s generosity to the poor instilled in him from a young age a sense of duty to the poor.
M. Morshed Khan, Bangladesh’s foreign minister, said that he and Dr. Yunus grew up in villages less than a mile apart in southern Bangladesh and attendedthe same government high school in nearby Chittagong.
“I could feel from that time, he was a great achiever, and that one day he would do something important,” Mr. Khan said in a telephone interview from his home.
As a boy, he said, Dr. Yunus was the most studious pupil in the school, with little interest in sports. “He would pull out a book and read at the playground” during recess, Mr. Khan recalled.
The inspiration for Grameen Bank came to Dr. Yunus during a trip to the village of Jobra in Bangladesh during the devastating famine of 1976. He met a woman who was struggling to make ends meet as a weaver of bamboo stools. She needed to borrow to buy materials, but because she was poor and had no assets, conventional banks shunned her, and she had to turn instead to local moneylenders whose extortionate rates of interest consumed nearly all her profits.
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