Wed, Oct 18, 2006 - Page 9 News List

For Bangladesh's Yunus, credit is a right

After noticing that impoverished people in his country were paying extortionate rates of interest, the Nobel laureate started a microcredit bank that has handed out US$5.7 billion

By Randeep Ramesh  /  THE GUARDIAN , LONDON

A Bangladeshi economist won the Nobel Peace Prize on Friday for helping to lift millions out of poverty by lending tiny amounts of money directly to the neediest people on the planet.

Muhammad Yunus, the microcredit pioneer, and the bank he founded in Bangladesh, Grameen, were presented with the award and the US$1.5 million check for his work in creating a nation of entrepreneurs.

The Nobel committee said Yunus' efforts showed how working to eliminate poverty could result in peaceful development.

"Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty," the committee said in its citation. "Microcredit is one such means. Development from below also serves to advance democracy and human rights."

Yunus became the first Bangladeshi to win the Nobel Peace Prize and was immediately feted in his home country, where he is already a national hero.

Bangladeshi Prime Minister Khaleda Zia, a childhood friend and schoolmate, thanked Yunus for the "selfless service that you have rendered to the poorest of the poor, bringing hope to the hopeless and giving them a cause of life."

Although not a household name in the west, Yunus is a familiar name on the international development circuit, where he is known as "banker to the world's poor."

Such was his reputation that in 1987, when former US president Bill Clinton was the governor of Arkansas, he approached Yunus to help replicate his model in his state.

Yunus's insight was to recognize that the surest route out of destitution was to help the poor to help themselves. Working as a professor of economics in 1974, he was astonished to learn that women in a nearby village who made bamboo stools could not earn a living wage because they were being charged extortionate rates of interest. The outstanding loan, which ensured a life of penury, was just US$27.

Instead, Yunus lent the villagers the money to buy their own materials and cut out the middleman. They all paid him back, day by day, over a year, and his impulsive gesture became a full-fledged business with the founding of Grameen Bank in 1983.

"In showing that poor people could be productive and make money he broke with the old mindset that all aid should be about providing services like education and health," said Kevin Watkins, director of the UN human development report office.

Since then Grameen has lent US$5.7 billion in a country where almost half the country's 140 million people live in poverty.

Today Yunus' bank has 6.5 million borrowers in Bangladesh, 97 percent of whom are women.

Many say this alone has changed the fabric of the Islamic nation.

"This is a significant change empowering women. I think Grameen is powering a social revolution in our country. We have seen evidence of this in sharply increasing primary school enrollment rates," said Debrapriya Bhattacharya, director of Policy Exchange, a think tank in Dhaka.

Yunus has recently pointed out that Bangladesh has been reducing poverty by 2 percent a year since the turn of the millennium. If sustained, this rate of poverty reduction would see the country halve the number of its poor by 2015.

"He passionately believes that, like freedom of speech, credit is a fundamental human right and everybody should have access to it. Without access to money, how can you live is his view," said Mahfuz Anam, editor of Bangladesh's Daily Star.

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