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.
How it works
The resulting peer pressure means repayment rates exceed 95%.
Most of them are very small, with a client base of less than 2,500.
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