Microcredit Lender Wins Nobel Peace Prize

The AP reported today that a microcredit lender and his bank won this year's Nobel Peace Prize.

Bangladeshi economist Muhammad Yunus and the Grameen Bank he founded won the Nobel Peace Prize on Friday for their pioneering use of tiny, seemingly insignificant loans - microcredit - to lift millions out of poverty.

Through Yunus's efforts and those of the bank he founded, poor people around the world, especially women, have been able to buy cows, a few chickens or the cell phone they desperately needed to get ahead.

This is what the Nobel Peace Prize should be like every year. It should reward people who do something to help people in the world to escape from poverty and oppression.

Grameen Bank was the first lender to hand out microcredit, giving very small loans to poor Bangladeshis who did not qualify for loans from conventional banks. No collateral is needed and repayment is based on an honor system.

Anyone can qualify for a loan - the average is about $200 - but recipients are put in groups of five and once two members of the group have borrowed money, the other three must wait for the funds to be repaid before they get a loan.

Grameen, which means rural in the Bengali language, says the method encourages social responsibility. The results are hard to argue with - the bank says it has a 99 percent repayment rate.

Yunus's told The Associated Press in a 2004 interview that his "eureka moment" came while chatting to a shy woman weaving bamboo stools with calloused fingers.

Sufia Begum was a 21-year-old villager and a mother of three when the economics professor met her in 1974 and asked her how much she earned. She replied that she borrowed about five taka (nine cents) from a middleman for the bamboo for each stool.

All but two cents of that went back to the lender.

"I thought to myself, my God, for five takas she has become a slave," Yunus said in the interview.

"I couldn't understand how she could be so poor when she was making such beautiful things," he said.

The following day, he and his students did a survey in the woman's village, Jobra, and discovered that 43 of the villagers owed a total of 856 taka (about $27).

"I couldn't take it anymore. I put the $27 out there and told them they could liberate themselves," he said, and pay him back whenever they could. The idea was to buy their own materials and cut out the middleman.

They all paid him back, day by day, over a year, and his spur-of-the-moment generosity grew into a full-fledged business concept that came to fruition with the founding of Grameen Bank in 1983.

In the years since, the bank says it has lent $5.72 billion to more than 6 million Bangladeshis.
Worldwide, microcredit financing is estimated to have helped some 17 million people.

Last week (reported here on KHOU-TV's website Friday) Cindy Sheehan claimed at a book signing that she was one of the finalists for the Nobel Peace Prize. No doubt for helping the world solve its problems by setting the example for bashing President Bush.

But Sheehan didn't win. The Bush-bashing Peace Prize already went to Jimmy Carter, back in 2002. Here's a list of the past Nobel Peace Prize winners.

Grameen Bank's current customers are 97% women. With his microcredit, he hasn't lifted them out of poverty as we would define it. He hasn't filled their lives with luxury. But what he has done is help them get out of a spiral of economic bondage so they can feed themselves and their families and gain the hope of making a better future for themselves. He has probably helped more women improve their lives than all the hot-air-producing people discussing women's issues over at the United Nations.

Congratulations to Muhammad Yunus and the Grameen Bank. This award is well-deserved.