Bangladeshi Financial Pioneer Wins Nobel Peace Prize
Muhammad Yunus won the Nobel Peace Prize for his creation of Grameen Bank, a bank that specializes in micro-credit loans to the very poor to help them establish their own businesses and get them started on a path out of poverty. According to the news story the first loan Grameen Bank made was only $27. Here is an interesting story of how Yunus’ loans have helped people out of a continuing circle of grinding poverty.
Sophia Khatoon, a 22 years old skilled furniture-maker in the tiny village of Jobra in Bangladesh, worked 7 long days a week, looked twice her age, and lived in abject poverty. She made stools and chairs out of bamboo, which she had to sell to a money-lender who provided the credit to buy the raw material. The price she received barely covered the costs.
Dr. Yunus, Professor of Economics at the University in the Southern port city of Chittagong who later founded the Grameen Bank – calculated that effectively Sophia was paying interest at the rate of 10% a day, more than 3,000% a year. Yunus could not reconcile the fact that a woman with such skill who worked so hard, produced such beautiful bamboo furniture and created wealth at such high rate was earning so little.
In fact the poor all over the world are trapped in such exploitation. While they work extremely hard and create enormous wealth, the middle-men, money-lenders and employers keep the fruits of their labour. The poor have no access to “institutional credit”, which you and I have, because they can not provide a collateral. The system keeps them firmly trapped in debt, poverty and exploitation.
With a loan of 50 taka (a few dollars), it took Sophia only a few months to establish her own little self-employment, increase her income seven folds and repay the loan.
Most of the borrowers at Grameen Bank are women (95%). The bank has almost 1,200 branches, services in 41,000 villages, and $3.2 billion in assets (link).
Grameen Bank started basically as an experiment and has helped lift millions (mostly women) out of poverty. Seems like a good choice to me for the Nobel Peace Prize.