OSLO/DHAKA, 14 October 2006 — The Bangladeshi founder of a bank that specializes in helping the poor access microbusiness loans without collateral won the Nobel Peace Prize yesterday.
Muhammad Yunus, the 65-year-old economist who has been dubbed the “banker to the poor”, and his Grameen Bank that he founded in 1983 will share the $1.4 million prize.
“I am so, so happy, it’s really a great news for the whole nation,” Yunus, the first Bangladeshi to win a Nobel Prize, said when reached by telephone shortly after the prize was announced.
In his acceptance speech, Yunus said he would use the prize money to develop high-nutrition low-cost food for the poor.
“Every single individual on earth has both the potential and the right to live a decent life,” the Nobel Committee said in its citation. “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.”
Bangladeshi Prime Minister Khaleda Zia congratulated Yunus. “This is a much-awaited prize,” she said in a statement. Foreign Minister M. Morshed Khan said: “The world has stood in admiration for the tremendous and selfless service that you have rendered to the poorest of the poor bringing hope to the hopeless and giving them a cause of life.”
Bangladeshis in Saudi Arabia cheered Yunus for making his country proud. “This is the best news for us during the holy month of Ramadan,” said Kawsar Choudhry, president of Jeddah-based Brihattar Sylhet Shamiti, a major organization of Bangladeshi expats. “We’re all so happy. It’s great news for our country where Yunus’ microcredit finance programs have helped improve the lives of millions of poor people.”
Bangladesh Ambassador to Saudi Arabia retired Brig. Gen. Ikramul Haque said this is a day for all South Asians to be proud of. “We’re delighted and Yunus rightly deserves this award,” he said.
Sri Lankan Ambassador A.M.J. Sadiq told Arab News that his country has benefited from Grameen Bank loans. He said Yunus’ expertise is being sought by a prominent commercial bank on the island nation to introduce self-help projects among poor women. “Yunus has helped Bangladeshi women to live with dignity by engaging them in lucrative projects,” said Mohammed Shaheed Mohammed Hussein, principal of the Bangladesh International School (English section) in Riyadh. Grameen Bank has been instrumental in helping millions of extremely poor people — even beggars — obtain business-development loans at the so-called microlending level.
“All human beings have an innate skill — survival skill,” Yunus told Bangladeshi media after news broke of his Nobel kudos. “The fact that poor are still alive is a proof of their ability to survive. We do not need to teach them how to survive. They know this already.”
The average Grameen loan of $200 is smaller than any other bank would offer, but has gone a long way toward helping the world’s most economically disadvantaged. These loans are used to startup microenterprises, such as street stalls, that can be the difference between a person starving in an alley and selling in the street.
“Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty,” the Nobel Committee said in its citation. “Microcredit is one such means. Development from below also serves to advance democracy and human rights.”
Loans go toward buying items such as cows to start a dairy, chickens for an egg business, or mobile phones to start businesses where villagers who have no access to phones pay a small fee to make calls. Grameen Bank was the first lender to hand out microcredit, giving very small loans to poor Bangladeshis who did not qualify for loans from conventional banks. The World Bank has since taken up similar financial mechanisms. No collateral is needed and repayment is based on an honor system. Grameen Bank claims to have 6.6 million borrowers, 97 percent of whom are women, and provides services in more than 70,000 villages in Bangladesh.
The bank says it has lent $5.72 billion to more than six million Bangladeshis since 1983.
A key to encouraging repayment of these loans is that recipients are put in groups of five and once two members of this group have borrowed money, the other three must wait for the funds to be repaid before they get a loan. This peer-based merit system encourages loan repayment because it opens up more opportunity for further lending to relatives or friends.
Yunus has drawn praise for developing and advancing microcredit, not just in Bangladesh, but across Asia, Africa and into the Middle East. The program has been credited with helping poor women to advance their lives and pull them out of poverty. The World Bank has set up similar programs in different regions, including Latin America and Africa.
Grameen has since expanded its forms of alternative credit by offering housing loans, financing irrigation and fisheries as well as offering traditional savings accounts.
The Grameen Foundation was established in 1997 and now has a worldwide network of 52 partners in 22 countries that help some 11 million people across Asia, Africa, the Middle East and the Americas. Yunus said in a 2004 interview with the Associated Press that his “eureka moment” came while chatting to a shy woman weaving bamboo stools with calloused fingers.
Sufia Begum was a 21-year-old villager and a mother of three when the economics professor met her in 1974 and asked her how much she earned. She replied that she borrowed about 5 taka (nine cents) from a middleman for the bamboo for each stool. All but two cents of that went back to the lender.
“I thought to myself, my God, for five takas she has become a slave,” Yunus said in the interview. “I couldn’t understand how she could be so poor when she was making such beautiful things.”
The following day, he and his students did a survey in the woman’s village, Jobra, and discovered that 43 of the villagers owed a total of 856 taka (about $27).
“I couldn’t take it anymore. I put the $27 out there and told them they could liberate themselves,” he said, and pay him back whenever they could. The idea was for the people to buy their own materials and cut out the middleman.
They all paid him back, day by day, over a year, and his spur-of-the-moment generosity grew into a full-fledged business concept that came to fruition with the founding of Grameen Bank in 1983.
Yunus was born in 1940 to a well-to-do family in Chittagong, a business center in Bangladesh. His father was a successful goldsmith who always encouraged his sons to seek higher education.
He has said that his biggest influence was his mother, Sofia Khatun, who always helped any poor who knocked on their door. This inspired him to commit himself to eradication of poverty.
Yunus lives modestly in a two-bedroom apartment at Grameen Bank’s headquarters in Dhaka with his physicist wife, Afrozi, and their daughter Deena.
Yunus was an outstanding student who won a Fulbright Fellowship to do PhD at Vanderbilt University in Tennessee state in the United States in 1965. He returned home in 1972 to become the head of the economics department at Chittagong University. He found the situation in newly independent Bangladesh worsening day by day.
Former US President Bill Clinton said in his election campaign that Yunus deserved a Nobel Peace Prize and cited the experiment of Yunus as a model for rebuilding the inner cities of America.
— Additional input from Mohammed Rasooldeen, K.S. Ramkumar and agencies
