Nobel Peace Prize winner an inspiration to Rotary microcredit projects
13 October 2006 - Dr. Muhammad Yunus, the Bangladeshi economist who pioneered the idea of microcredit loans that inspired many Rotary projects, has won the 2006 Nobel Peace Prize.
At the 1999 RI Convention in Singapore, Yunus received Rotary's highest honor, the Award for World Understanding*, for his work helping the poor start businesses through microcredit loans from Grameen Bank. The award money of US$100,000 went directly to the Grameen Bank.
"Dr. Yunus' simple idea of microcredits has revolutionized humanitarian assistance efforts," said Past RI President James Lacy in 1999. "This award recognizes the tremendous results of the Grameen Bank, which has empowered people worldwide to advance their standard of living. As fellow humanitarian activists, the members of Rotary greatly admire his work for economic empowerment."
Through Rotary programs such as The Rotary Foundation's Humanitarian Grants and World Community Service, Rotarians initiated their own microcredit projects. Since 1984, Rotary-sponsored village banks have been established in 12 countries. Through The Rotary Foundation, Rotarians are currently involved in more than 60 microcredit projects around the world.
In 1976, Yunus experienced a "eureka" moment in the village of Jobra, Bangladesh, while talking to a bamboo stool maker. When he learned the woman had to purchase her daily supply of bamboo on credit (for the U.S. equivalent of about 25 cents) from a trader who in turn purchased her stools for next to nothing, the professor from the nearby Chittagong University didn't think twice about loaning her a quarter.
He then went out to find out that other villagers had fallen into similar financial traps for loans totaling $27.
"I was stunned. My reaction was obvious. I gave $27 from my pocket to release them from the hard conditions of money lenders and traders," Yunus told Rotarians at the 1999 convention.
With money in their pockets, the workers were able to buy the materials for a day's work weaving chairs or making pots. By the end of their first day as independent business owners, the excited entrepreneurs had actually turned a profit on their handiwork and soon paid back the loan.
"I started thinking that if I can make so many people so happy with such a small amount of money, why shouldn't I do more of it?" Yunus said.
He started the Grameen Bank after finding that villagers couldn't get traditional loans from lending institutions. Today, Grameen Bank gives the poor access to modest loans without collateral. The loans have been tremendously successful, especially with women, in lifting families out of poverty. And Grameen's impressive 98 percent repayment rate is the envy of many top banks around the world. The microcredit system is now at work in dozens of countries.
About Grameen - "When we started giving out tiny loans under a system which later became known as the Grameen Bank, we never imagined that one day we would be reaching hundreds of thousands, let alone five million, borrowers".
Grameen Bank - "Provides credit to the poorest of the poor in rural Bangladesh without any collateral. At Grameen Bank, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall development of socio-economic."
Grameen Family - "There are now more than two dozen organizations within the Grameen family of enterprises. These include the replication and research activities of Grameen Trust, handloom enterprises of Grameen Uddog and fisheries pond management by Grameen Motsho or the Fisheries Foundation."
What is Microcredit? "Microcredit is the extension of small loans to enterpreneurs too poor to qualify for traditional bank loans. It has proven to be an effective and popular measure in the ongoing struggle against poverty, enabling those enterpreneurs."
The Norwegian Nobel Committee awarded the Nobel Peace Prize for 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 can not 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.