Banker of the Poor

The Norwegian Nobel Committee has decided to award the Nobel Peace Prize of 2006, divided into two equal parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social development from below. Lasting peace

cannot be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and human rights. (Announcement of the Nobel Committee for award of Peace Prize, 2006)


Professor Muhammad Yunus, a Bangladeshi, earned his Nobel Peace Prize for using a novel idea for helping the poor people. The concept of micro-credit “was first founded by a Pakistani, Dr. Akhtar Hameed Khan,” (see note at the end). Yunus developed it and used it to help the poor people in Bangladesh on a large scale by offering financial loans to them. Its ultimate evolution emerged as an unprecedented reality which is now recognized worldwide.

According to Wikipedia, “His (Yunus’s) first loan consisted of US$27 from his own pocket, which he lent to women in the village of Jobra – near Chittagong University (where he taught) – who made bamboo furniture. They had to take out usurious loans in order to buy bamboo. They then sold these items to the money-lenders to repay them. With a net profit of 5 Bangladeshi taka (0.02 USD), these women were unable to support their families. However, traditional banks were not interested in making tiny loans at more reasonable rates to poor people, who were considered repayment risks.”

Explaining how his Grameen Bank (Village Bank) was founded, Yunus said in his Nobel lecture, “I became involved in the poverty issue not as a policy maker or a researcher. I became involved because poverty was all around me, and I could not turn away from it. I found it difficult to teach theories of economics in the university classroom, in the backdrop of a terrible famine in Bangladesh. Suddenly I felt the emptiness of those theories in the face of crushing hunger and poverty…I was shocked to discover a woman in the village, borrowing less than a dollar from the money-lender, on the condition that he would have exclusive rights to buy all she produces at the price he decides. This, to me, was a way of recruiting slave labor.”

Most of the people who were exploited by the money-lenders were the women. Yunus tried to persuade the bank on the campus to lend money to the poor. The bank refused on the plea that the poor people were not credit-worthy. He offered to become their guarantor. He said, “I was stunned by the result. The poor paid back their loans, on time, every time! But still I kept confronting difficulties in expanding the program through the existing banks. That was when I decided to create a separate bank for the poor, and in 1983, I finally succeeded in doing that. I named it Grameen Bank or Village Bank.” The bank became a roaring success both in terms of sustaining itself and helping the poor in an incredible manner. Prof. Yunus said that presently the bank gives loans to nearly 7 million poor people, 97 percent of whom are women, in 73,000 villages in Bangladesh.

Prof. Yunus proclaims that poverty is denial of all human rights and it is a threat to peace. “Poverty is the absence of all human rights,” he proclaimed and that “the creation of opportunities for the majority of people – the poor – is at the heart of the work that we have dedicated ourselves to during the past 30 years.” In pursuit of Yunus’s objective to eradicate poverty, the bank has given out loans totaling approximately six billion dollars. “The repayment rate is 99 %.”

Yunus was born in 1940 in the village of Bathua in Hathazari, Chittagong. His father is Hazi (Haji) Dula Mia Shoudagar and his mother’s name is Sufia Khatun. After his family moved from their village to Chittagong, Yunus started his education at Lambazar Primary School. He completed his matriculation at Chittagong Collegiate School securing 16th position among 39,000 students. He completed his BA in 1960 and MA in 1961 from Dhaka University. He became a lecturer in economics in Chittagong College in 1961. On a Fulbright scholarship, he obtained his Ph.D. in economics from Vanderbilt University in 1969. He taught for a few years at Middle Tennessee State University before returning to Bangladesh where he was appointed professor in economics at Chittagong University.

Prof. Yunus was honored by the award of the 2006 Nobel Peace Prize. He gave recognition to the joint and collaborative efforts of his associates which culminated in Peace Prize award. He said in his lecture, “Garmeen Bank was born as a tiny homegrown project run with the help of several of my students, all local girls and boys. Three of these students are still with me in Grameen Bank, after all these years, as its topmost executives. They are here today to receive this honor you give us.” With his relentless and persistent efforts, Yunus brought his idea of helping the poor and eradicating poverty to the world scene and now his work is not limited to Bangladesh only but has spread out.

Before he was honored with the Peace Prize, Prof. Yunus had also received numerous other international awards and honors, which include the Ramon Magsaysay Award (1984) from Phillipines, the Aga Khan Award for Architecture (1989) from Geneva, the Mohamed Shabdeen Award for Science (1993) from Sri Lanka, and the World Food Prize by World Food Prize Foundation (1994) from the US. He was also nationally honored with President’s award (1978), Central Bank Award (1985), and the Independence Day Award (1987), the nation’s highest award.


Note

Akhtar Hameed Khan

According to Wikipedia, “Dr. Akhtar Hameed Khan (1914-1999) was a development activist and social scientist credited for pioneering Microcredit and Microfinance initiatives, farmers’ cooperatives, and rural training programmes in developing countries. He also promoted rural development activities in Pakistan, Bangladesh and in other developing countries, and advocated community participation in development.

He is particularly known for his leading role in the establishment of a comprehensive project for rural development, Commilla Model (1959) that earned him Magsaysay Award from Phillipines and honorary Doctorate of Law by Michigan State University in 1980. In 1980s he founded a bottom up community development initiative of Orangi Pilot Project in Karachi slums. He received wide international recognition and highest honors in Pakistan for these projects and a number of programs that were part of these projects, from microcredit to self-financed and from housing provision to family planning.

Khan was fluent in five international languages, and apart from many scholarly books and articles, published his collection of poems and travelogues in Urdu language.”