There's no Nobel for war

The 2006 Nobel Peace Prize went today to Muhammad Yunus, a Bangladeshi who came up with the idea of lending tiny amounts of money to poor women who wanted to become entrepreneurs.

This 'microlending' by Yunus' Grameen Bank let families buy truly simple things like cows or cell phones that often were the only things they needed to pull themselves out of systemic poverty. Sums as low as $10 allowed them to start selling milk or find out how much their crops were really worth--and, since the vast majority of the bank's 6.6 million lenders since 1983 have been women, Yunus has profoundly changed society in his Muslim homeland.

I saw Yunus speak one night four years ago; I'd gone to a work-related event mainly for the chance to meet Walter Cronkite, but came away marveling that everyone didn't know Yunus' name.

He struck me as singularly modest but highly intelligent; someone who just went about directly helping people the way he best knew how, and who because of his startling effectiveness now found himself traveling in circles entirely foreign--but because of his charisma and the strength of his passion Yunus was able to interest pretty much everyone he met in his world.

It's a world that post-9/11 most Westerners know in only cartoon terms. Yunus' successes, as detailed below in the Times article, makes you realize how much better off we'd all be if instead of spending $200 million a day on the war in Iraq, with a total economic cost estimated at $1 trillion (!), we simply gave it all to Yunus to distribute to Muslim women all over the world.

Microloan Pioneer and His Bank Win Nobel Peace Prize

Anand Giridharadas and Keith Bradsher in the Times: ... Since its creation in 1983, Grameen has made a total of $5.72 billion in such small loans, and has turned a profit in all but three years, including $15 million in 2005. ...

Dr. Yunus reacted joyously to the news of the prize, The Associated Press reported. “I am so, so happy,” he said in a telephone interview from Dhaka, the capital of Bangladesh, shortly after the prize was announced. “It’s really great news for the whole nation.”

The son of a prosperous goldsmith, Dr. Yunus has said that his mother’s generosity to the poor instilled in him from a young age a sense of duty to the poor. ...

The inspiration for Grameen Bank came to Dr. Yunus during a trip to the village of Jobra in Bangladesh during the devastating famine of 1976. He met a woman who was struggling to make ends meet as a weaver of bamboo stools. She needed to borrow to buy materials, but because she was poor and had no assets, conventional banks shunned her, and she had to turn instead to local moneylenders whose extortionate rates of interest consumed nearly all her profits.

Dr. Yunus, then a professor of rural economics at Chittagong University, gave the woman and several of her neighbors loans totalling $27 from his own pocket. To his surprise, the borrowers paid him back in full and on time. So he started traveling from village to village, offering more tiny loans and cutting out the middlemen. Dr. Yunus was determined to prove that lending to the poor was not an “impossible proposition,” as he put it.

When he later formalized the loan-making arrangement as the Grameen Bank in 1983, the bank adopted its signature innovation: making borrowers take out loans in groups of five, with each borrower guaranteeing the others’ debts. Thus, in place of the hold banks have on wealthier borrowers who do not pay their debts — foreclosure and a low credit rating — Grameen depends on an incentive at least as powerful for poor villagers, the threat of being shamed before neighbors and relatives.

The bank’s 6.6 million borrowers so far have paid back 98.5 percent of their loans.

Photo of Yunus from Libertad Digital's Ideas.