13 Oct Microfinance Pioneer Wins Nobel Peace Prize
It’s official: the 2006 Nobel Peace Prize has been awarded to Mohammed Yunnus and Grameen Bank for work promoting microfinance as a tool for economic development. Yunnus and Grameen join an impressive list of past laureates.
Online betting odds had favored Indonesian president Susilo Bambang Yudhoyono (at 3-1 odds), according to one site, and Finnish ex-President Martti Ahtisaari (at 2-1 odds), according to another.
From the Norwegian Nobel Committee press release:
Muhammad Yunus has shown himself to be a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh, but also in many other countries. Loans to poor people without any financial security had appeared to be an impossible idea. From modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank, developed micro-credit into an ever more important instrument in the struggle against poverty. Grameen Bank has been a source of ideas and models for the many institutions in the field of micro-credit that have sprung up around the world.
I find this to be an inspired choice for the Nobel Peace Prize. Here are the details about Yunus from the Grameen Bank website: In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level. Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of £ 17 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty. Against the advice of banks and government, Yunus carried on giving… Read more »
I also agree that Yunus was an excellent choice – I do a lot of development finance work – don’t write about it that much, but do it as a pro bono practice that, interestingly, gives me a steady flow of international trasnactions to use in my IBT course. But I discuss microfinance, its benefits and limitations, in this post over at my blog (too long to put here), here.
OK, I’m in agreement with Professors Alford and Anderson. Oh happy day!