Nobel Peace Prize for Professor Muhammad Yunus and the Grameen Bank
17 October 2006
The announcement of the awarding of the 2006 Nobel Peace Prize to Dr Yunus
and the
Grameen
Bank for “their efforts to create economic and social development from
below” has been greeted with acclaim by many inside and outside the
international development community.
Gareth Thomas was delighted to hear of the award. He noted that “giving small loans to families and businesses plays an important role in tackling the scourge of poverty, hunger and illiteracy around the world. Bangladesh stands as a beacon for those people in poorer countries trying to raise money to run a new business or pay for healthcare”.
In Bangladesh itself, the country’s press and local communities, especially all those with Grameen branches in their midst, have been electrified by the news. In South Asia as a whole, the award has brought a surge of confidence to commentators’ views on the region’s own contribution to poverty reduction. Indian leaders such as Prime Minister Dr Singh and Congress President Sonia Gandhi commented on Dr Yunus’ achievements and his earlier statement that “there cannot be peace if there is poverty”, a view endorsed by the Nobel Peace Prize Committee.
Other microfinance organisations (MFI’s) alongside Grameen, have pioneered
successful microfinance approaches and grown to become large and successful
institutions in Bangladesh. In the 1980’s and 1990’s international donor support
played a very significant role in providing finance for loan funds in these
institutions. DFID’s own support to microfinance institutions such as
BRAC,
Proshika,
BURO Tangail, and others through
CARE,
covered over 25% of poor households in the country.
Large MFI’s are now generating sufficient funding from their own resources, and from international capital markets. In the now second generation of microfinance, attention by local MFI’s has switched to efforts to assist the extreme poor who are not amongst the clients of mainstream microfinance providers.
Even though microfinance has been hugely successful, recent evidence shows that further refinement and innovation will be needed to reach the very poorest people. As a result, DFID’s recently announced £40m “Prosper” programme is working with the Bangladesh Bank and a specialist public/private partnership, PKSF, to promote innovations in the financial sector, including in microfinance. Other DFID programmes such as the Char Livelihood Programme, and multi-donor support to BRAC’s “Challenging the Frontiers of Poverty Reduction” programme are working with the extreme poor, in ways that will enable some of them to graduate in due course to joining microfinance programmes.
The Nobel Prize award to Dr Yunus and the Grameen Bank is fitting recognition of a sustainable development methodology that works for millions of poor people around the world. Dr Yunus first started out providing collateral free loans to poor women in 1976, an initiative which grew into the Grameen (meaning “village”) Bank. The model has been replicated by the Grameen Foundation to reach 2.2 million families in 22 countries outside Bangladesh. The challenge now is to replicate the microfinance industry’s success through development approaches that reach the extreme poor.
Grameen has branched out and has made innovative investments such as in
GrameenPhone,
which promoted the use of "village phone points" where rural women started
mobile phone businesses to widen access to all in the village. CDC, 100%-owned
by DFID, supported GrameenPhone's expansion programme between 1999 and 2003
providing US$16.7m in investment. Dr Yunus himself is to now move ahead with
plans for "social business enterprise", promoting businesses that retain rather
than distribute profits, and with "healthcare services for the grassroots". The
latter target is of course central to DFID too, and we will be interested if Dr
Yunus can bring his energy and innovative approach to this sector too.
Links
