A Man With a Very Different Kind of Bank
Call it an investment in peace.
In 1976, a Vanderbilt-trained economist named Muhammad Yunus dug into his own pocket and lent $27 to a group of impoverished Bangladeshi women so they could buy raw bamboo to make and sell furniture in their village. He didn't ask them for collateral. They didn't have any. He didn't even tell them when they had to return the money.
But they soon did, earning enough not only to pay Yunus back in full but also to put more food on the table to feed their families.
Since then, Yunus and his Grameen Bank have doled out more than $5 billion to millions of otherwise destitute entrepreneurs, mostly women and most in tiny increments of less than $300. The result, which has since been replicated by a growing collection of "microcredit" lenders around the world, has done what giant institutions like the International Monetary Fund and the World Bank have often failed to do: pull tens of millions of people out of poverty by helping them help themselves.
Describing microcredit lending as a "liberating force," especially for women, last week the Nobel Foundation awarded Yunus and his bank the Nobel Peace Prize, noting that "economic growth and political democracy cannot achieve their full potential unless the female half of humanity participates on an equal footing with the male."
In choosing to award both Yunus and his for-profit bank, the Nobel committee has also lent credence to the increasingly popular notion among development experts that democracy-and, indeed, peace itself-is best achieved by channeling simple, if enlightened, self-interest.
Yunus wholeheartedly agrees. "Charity is not an answer to poverty," he writes of the company's business model, which last year helped Grameen log $15 million in profits. "It only helps poverty to continue. It creates dependency and takes away individuals' initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty."
This story appears in the October 23, 2006 print edition of U.S. News & World Report.
advertisement
