Please share your comments on this article, especially on the highlighted portion. Thanks.
__________________________________________________ _______________________
By FARID HOSSAIN, Associated Press Writer
Fri Oct 13, 5:42 PM ET
DHAKA, Bangladesh - The simple yet revolutionary idea of loaning tiny sums to poor people looking to escape poverty by starting businesses won Bangladeshi economist Muhammad Yunus and the Grameen Bank he founded the Nobel Peace Prize on Friday.
Yunus' notion — today, known as microcredit — has spread around the globe in the past three decades and is said to have helped more than 100 million people take their first steps to rise out of poverty.
Some bought diary cows, others egg-laying hens. In recent years, money for a single cell phone has been enough to start thriving enterprises in isolated villages without phone lines from East Asia to West Africa.
"Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty," the Nobel Committee said in its citation in Oslo, Norway. "Microcredit is one such means. Development from below also serves to advance democracy and human rights."
The 65-year-old economist said he would use part of his share of the $1.4 million award to create a company to make low-cost, high-nutrition food for the poor. The rest would go toward setting up an eye hospital for the poor in Bangladesh, he said. The food company, to be known as Social Business Enterprise, will sell food for a nominal price.
Yunus is the first Nobel Prize winner from Bangladesh, a poverty-stricken Southeast Asian nation of about 141 million people on the Bay of Bengal.
"I am so, so happy, it's really a great news for the whole nation," Yunus told The Associated Press after the prize was announced. He was reached by telephone at his home in the Bangladeshi capital, Dhaka.
His joy was shared by those his microcredit program has helped.
"I can't express in words how happy I am," said Gulbadan Nesa, 40, who five years ago used $90 from the Grameen Bank to buy chickens so she could sell eggs. She's since taken more loans and expanded into selling building materials.
"Not long ago I was almost begging for money to feed my family," she said from Bishnurampur, her village in northern Bangladesh. "Today, I've got my own house and enough money to feed my children and send them to school."
Grameen, which means rural in the Bengali language, was the first lender to hand out microcredit, giving small loans to poor Bangladeshis who did not qualify for loans from conventional banks. No collateral is needed for Grameen loans, which average about $200.
But there is social pressure to repay. Recipients form groups of five and members qualify for future loans only if all are current on their old ones.
The results are hard to argue with — the bank says it has a 99 percent repayment rate.
The bank says it has loaned $5.72 billion to 6.6 million Bangladeshi, 97 percent of whom were women, and today provides services in more than 70,000 villages.
The success has allowed Grameen to expand its credit to include housing loans, financing for irrigation and fisheries as well as traditional savings accounts.
But Grameen is not without critics, many of whom focus on the bank's high interest rates. Its business loans carry a rate of 20 percent, significantly higher than the 10-15 percent charged by commercial banks.
"While the poor pay 20 percent interest for their loan, the rich pay much less. It can't be called social justice," said S.M. Akash, an economics professor at Dhaka University.
Reports routinely circulate in Bangladesh's media of people being forced to borrow from second or third sources, often at higher interest rates, to repay Grameen loans. But almost no one is willing put their names to such criticism in Bangladesh, where Yunus was considered a national hero even before the Nobel Prize was announced.
How much impact Grameen has had on Bangladesh's economy also remains an open question.
Poverty has decreased since Grameen was founded in 1983. Bangladesh's per capita income has grown from $280 in 1985 to $440 in 2006, according to World Bank figures.
While the bank was "a factor" in that success, economists "can't apportion exactly how much credit has to go with Grameen," said Jonathan Morduch, an expert on microfinance at New York University.
And even if per capita income has increased, overwhelmingly Muslim Bangladesh remains one of the world's poorest countries, a land beset by political unrest and the ever-present specter of another military coup.
In fact, the spread of Yunus' and Grameen's microcredit schemes around the world — they are now considered a key approach to spurring development — is arguably one of the few bright spots for Bangladesh since it won independence from Pakistan in 1973.
Worldwide, microcredit financing is estimated to have helped 92 million families last year alone, according to Jove Oliver, spokesman for the Microcredit Summit Campaign, part of the Washington-based Project Results Educational Fund.
Yunus told The Associated Press in 2004 that his "eureka moment" came while chatting to a shy woman weaving bamboo stools with calloused fingers.
Sufia Begum was a 21-year-old mother of three when he met her in 1974 and asked how much she earned. She replied that she borrowed about five taka, the equivalent of 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.
The following day, he and his students did a survey in the woman's village, Jobra, and discovered that 43 villagers owed a total of $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.
Over the following year, they all paid him back — day by day.
___
Bangladeshi Nobel Prize Winner Muhammad Yunus
Reply With Quote
Posting Permissions
