(Click for link to Wikipedia biography)
The Norwegian Nobel Committee finally got it right this year, awarding the Peace Prize to a great man who has done the world a great service, Muhammad Yunus of Bangladesh. While I will admit to having never heard his name before this morning, but I have been a huge fan of the revolutionary concept that he developed, microcredit. In fact, I think that it may be the best way of fighting poverty yet developed.
Yunus founded Grameen Bank in 1983 in order to do what no other bank would, loan very small amounts (usually less than $200) to poor families in order to help them improve their livelihood. This new concept has proven extremely effective, as the duty of repayment motivates the borrowers to build a successful business. The vast majority of borrowers are able to successfully go into business, and 98.85% of al Grameen loans are fully repaid. Microcredit is also a sustainable form of charity, as microfinance institutions can use the minimal interest that they charge to pay some of their operating expenses.
Yunus is also helping to elevate the status of women in Bangladesh, because 97% of his loans go to women. Why? Because they usually have a family to take care of an hence are extremely motivated to create a successful.
Today, microcredit institutions based on the Grameen Bank model exist all around the world. Grameen Bank itself claims 6.6 million borrowers and provides services to 70,000 different villages around Bangladesh. The best part is that all of these people were helped not by massive government handouts, but by good old-fashioned capitalism applied in a clever manner.
Congratulations to Muhammad Yunus and Grameen Bank for winning the 2006 Nobel Peace Prize. You more than earned it!