Here's a story that shows what a difference just one person -- one person --
can make in life. He's a wonderful choice for the Nobel Peace Prize.
Stan Spiegel Portland, ME
A Bangladeshi economist yesterday won the Nobel peace prize 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 10m kronor cheque (£800,000) for his work in creating a nation of entrepreneurs.
The Nobel committee said their 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," it said in its citation. "Microcredit is one such means. Development from below also serves to advance democracy and human rights."
Mr 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.
Bangladesh's prime minister Khaleda Zia, a childhood friend and schoolmate, thanked him 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, Mr 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 Bill Clinton was the governor of Arkansas, he approached Mr Yunus to help them replicate its model in his state.
Mr Yunus's insight was to recognise that the surest route out of destitution was to help the poor to help themselves. As a professor of economics in 1974 he was astonished to learn that women in a nearby village making bamboo stools could not make money because they were being charged extortionate rates of interest. The outstanding loan, which ensured a life of penury, was just $27 (£15).
Instead Mr 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 slowly became a fully 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 $5.7bn, in a country where almost half the country's 140 million people live in poverty.
Today Mr Yunus' bank has 6.5 million borrowers in Bangladesh, 97% 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 enrolment rates," said Debrapriya Bhattacharya, director of Policy Exchange, a thinktank in Dhaka.
Mr Yunus has recently pointed out that Bangladesh has been reducing poverty by 2% a year since the turn of the millennium. If sustained this rate of poverty reduction will see the country halve the number of poor people by 2015.
Mahfuz Anam, editor of Bangladesh's Daily Star, said: "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."
But Mr Yunus' hard-nosed approach extends to a refusal to respond to beggars. "I feel bad - sometimes I feel terrible - that I'm denying the person," Mr Yunus told Reuters in a 2004 interview.
"I would rather try to solve the problem than just give them a hand and take care of them for the day."
How it works
Microfinance is lending to poor, often illiterate, people who have no collateral, no business experience and who therefore cannot normally borrow from the banks.
In the developing world the poor often work at home with raw materials bought with borrowed money.
The finished wares have to be sold back to the moneylenders, leaving scarcely enough, after repaying the loan with interest, to feed the family. So to make the next batch of goods poor people have to return to the moneylenders.
A failure to repay a debt ends up with people paying by working. The result is bonded labour, often with the children bearing the burden of unpaid debts.
Microfinance banks break the cycle by lending to the poor to buy raw materials. This means the workers can sell at a fair price on the open market, a price which means enough to service the debt, feed the family and make a profit.
To ensure that debts are paid, money is lent to groups, often women, who appear to respond better to financial terms.
Less than a dozen clients guarantee each other's loans and a default by one could result in the entire group being penalised.
The resulting peer pressure means repayment rates exceed 95%.
The idea has spread across the globe. More than 10,000 microfinance institutions are in existence with a loan portfolio exceeding $7bn (about £3.8bn).
Most of them are very small, with a client base of less than 2,500.
http://business.guardian.co.uk/story/0,,1922390,00.html
yrs, andreas www.andreas.com
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