Nobel Peace Prize: A Big Award for Bits of Credit
DHAKA, Bangladesh—The simple yet revolutionary idea of lending tiny sums to poor people looking to escape poverty by starting businesses won Bangladeshi economist Muhammad Yunus and the Grameen Bank he founded the Nobel Peace Prize today.
Yunus's notion–today known as microcredit–has spread around the globe in the past three decades and is said to have helped more than 100 million people take their first steps to rise out of poverty.
Some bought diary cows; others, egg-laying hens. In recent years, money for a single cellphone has been enough to start thriving enterprises in isolated villages without phone lines from East Asia to West Africa.
"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 in Oslo. "Microcredit is one such means. Development from below also serves to advance democracy and human rights."
The 65-year-old economist said he would use part of his share of the $1.4 million award to create a company to make low-cost, high-nutrition food for the poor. The rest would go toward setting up an eye hospital for the poor in Bangladesh, he said. The food company, to be known as Social Business Enterprise, will sell food for a nominal price.
Yunus is the first Nobel Prize winner from Bangladesh, a poverty-stricken Southeast Asian nation of about 141 million people on the Bay of Bengal.
"I am so, so happy. It's really a great news for the whole nation," Yunus told the AP after the prize was announced. He was reached by telephone at his home here in the Bangladeshi capital.
His joy was shared by those his microcredit program has helped.
"I can't express in words how happy I am," said Gulbadan Nesa, 40, who five years ago used $90 from the Grameen Bank to buy chickens so she could sell eggs. She has since taken more loans and expanded into selling building materials.
"Not long ago I was almost begging for money to feed my family," she said from Bishnurampur, her village in northern Bangladesh. "Today, I've got my own house and enough money to feed my children and send them to school."
Grameen, which means rural in the Bengali language, was the first lender to hand out microcredit, giving small loans to poor Bangladeshis who did not qualify for loans from conventional banks. No collateral is needed for Grameen loans, which average about $200.
But there is social pressure to repay. Recipients form groups of five, and members qualify for future loans only if all are current on their old ones.
The results are hard to argue with–the bank says it has a greater than 99 percent repayment rate.
The bank says it has lent $5.72 billion to 6.6 million Bangladeshis, 97 percent of whom were women, and today provides services in more than 70,000 villages.
The success has allowed Grameen to expand its credit to include housing loans and financing for irrigation and fisheries, as well as traditional savings accounts.
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