Friday, October 13, 2006

A Nobel Prize for a Noble Endeavor

Not many things will get me hopping out of bed at 5:30 in the morning. Girls crying? Yes. Random news bit? Not usually. But today was different. Today, the first thing I heard was that
Muhammad Yunus and the Grameen Bank had won the 2006 Nobel Peace Prize. This is amazing in that, while richly deserved, it was--at least in most quarters--completely unexpected. There were so many other high profile nominees and Muhammad Yunus is not exactly a household name. Yet.

I first learned about Muhammad Yunus and Grameen Bank after Thomas met him through work and come away amazingly, infectiously energized and awestruck--not something that he does every day (the awestruck part, that is). So I did a little research on Mr Yunus, an American-educated Bangladeshi economist, and became a fan.

The idea behind the Grameen bank is that small--very small--loans can make an incredible difference in people's lives, and that that positive change can spread through the community. When we think "loan" we're probably thinking, minimum, a couple thousand. But Grameen Bank deals in micro-finance with loans not in the thousands of dollars, but in the tens of dollars. If I remember correctly, the first loan Mr Yunus made--while he was a college student--was less than $20. It was all the money he had in his pocket. But it was paid back, on time and with interest, and thus began Grameen Bank, which has now made loans to more than six million people.

Grameen Bank is decidedly not "trickle-down economics" which gives tax breaks and incentives to the rich and hopes that they will then invest more in industry, which will in turn create more jobs. Grameen turns that model on its head by making small loans to people that regular banks won't touch. Those who, in some cases, have nothing but their word and a business idea to offer as collateral. And these "risky" loans have paid off in a big way: Since the bank started, it has made more than five billion--yes BILLION--dollars in loans of which an astounding 99% has been repaid. Want to guess the repayment rate for the typical banking industry? Try "Not even close." Because of this, Grameen has been able to turn a profit every year but three. The people who pay off the loans come back for more to expand the initial business or to create a new one. They hire workers and buy raw materials, spreading the wealth throughout the community.

Grameen Bank's borrowers own 94% of the bank, which has more than 2,000 branches and more than 18,000 employees. And the vast majority of the borrowers, and so the bank's owners, are women.

Mohammed Yunus understands that poverty is at the root of much of the world's ills and that empowering the poor of the world to take control their own lives is the only solution that makes sense. And that this solution benefits not just the borrowers themselves, but the entire world. So kudos to the Nobel selection committee for seeing past the dazzle of more famous nominees in presenting the Nobel Peace Prize to Mohammed Yunus and Grameen Bank.

1 comment:

K said...

www.modestneeds.org

a small charity that does something similar here in the states. I give each month.

Check it out.