October 14, 2006


Micro-Credit Pioneer Wins Peace Prize: Economist, Bank Brought New Opportunity to Poor (Molly Moore, 10/14/06, Washington Post)

Bangladeshi economist Muhammad Yunus and the Grameen Bank he created won the Nobel Peace Prize on Friday for leveraging small loans into major social change for impoverished families.

The Grameen Bank's pioneering use of micro-credit has been duplicated across the globe since Yunus started the project in his home village three decades ago. Loans as low as $9 have helped beggars start small businesses and poor women buy cellular phones and basket-weaving materials.

"Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty," the Norwegian Nobel Committee said in its citation released Friday in Oslo. "Micro-credit is one such means." [...]

Yunus and the Grameen Bank are hardly household names outside of Bangladesh, but Yunus has been one of the world's most prominent and renowned leaders of poverty alleviation. The Grameen Bank model has been duplicated in more than 100 countries, from Uganda to Malaysia to Chicago's South Side.

The Bill and Melinda Gates Foundation recognized the bank's efforts in August, providing a $1.5 million grant to expand its work worldwide through the Grameen Foundation.

A gentle, soft-spoken man who has been feted by kings and presidents for his groundbreaking and tireless efforts to improve the lives of poor families, Yunus nonetheless has remained most at ease in the steamy Bangladeshi villages where the bank's clients -- mostly sari-clad women -- line up at makeshift tables to repay their loans.

Yunus launched the idea of the Grameen Bank after he returned to Bangladesh from the United States to take a teaching job in the economics department at Chittagong University.

Alarmed at the poverty created by ongoing famine, he and his students started an experimental project giving women $27 loans to buy straw to make stools.

The bank they created -- Grameen means "village" in the Bengali language -- not only defied conventional lending rules by making loans to the poorest of the poor, but challenged cultural taboos by giving most of the loans to women in a Muslim-dominated society where rural women at the time were seldom allowed to touch money or work outside of their homes. The bank issues most of its loans to women because Yunus discovered that they spent their money more carefully and paid back the loans in far high percentages than did men.

You're well past the End of History when the Peace Prize goes to a banker.

The Adam Smith of poverty: A Nobel prize for the genius who bet the bank on the world’s disinherited (Times of London, 10/14/06)

[P]rofessor Yunus had to fight hard for his heretical great idea: against husbands, mullahs, the development establishment and his own Government — it took nine years to get Grameen incorporated as a bank. His business model turns convention inside out: priority goes to the poorest and the bank relies on honour and peer pressure. To qualify, borrowers must form a group of five women who must decide which two should get the first twelve-month loans, and what they should be for. Repayments, in tiny instalments, start being collected at village level a mere week later, and only if the first two keep up their payments do the others get loans. The bank helps people to rebuild if their businesses are wiped out by disaster, but requires them to repay these loans, too.

This is, as Professor Yunus says, a business plan that relies on the “pride and strength and creativity of the poorest”. The Make Poverty History campaign has implanted the idea that all debt is a curse, but debt can be beautiful; it is by borrowing that people with nothing can escape. The poor are poor because they have no money. The Nobel Peace Prize tends to go to the good and great. This prize goes not just to Professor Yunus, but to the 6.6 million poor women who have liter- ally repaid his faith with interest.

Posted by Orrin Judd at October 14, 2006 9:31 AM

Is Micro-Credit Pioneer now a synonym for capitalist? Nowhere has that naughty word or capitalism appeared in any of the accounts I've read of this year's Peace Prize winner.

A Nobelist capitalist is quite the departure from the usual moonbats chosen for this honor. Collapse of the left? I'd say it's well on its way.

Posted by: erp at October 14, 2006 11:16 AM

I am thrilled that the Peace Prize, the most degraded of all the Nobels, actually went to someone who deserved it. I was afraid it'd go to Cindy Sheehan.

Posted by: PapayaSF at October 14, 2006 12:20 PM

I guess the idea of abandoning the Stalinist top-down international foreign aid model to help people by treating them as individual human beings capable of rationality* and responsibly in their own self-interest would be novel to sophisticated Swedish Socialists.

*(Ohh, I used a naughty word for these parts.)

Posted by: Raoul Ortega at October 14, 2006 1:43 PM

Mr. Ortega, rationality is not a naughty word, it is a naughty goal.

Posted by: Robert Mitchell Jr. at October 14, 2006 3:20 PM