This afternoon a Bangladeshi economist and the institution he founded 30 years ago will receive the Nobel Peace Prize in Oslo, Norway. Muhammad Yunus, known to many as the "banker to the poor," started his journey toward creating the Grameen Bank in 1976 with a loan from his pocket to 42 desperately poor people in Bangladesh. The total loan amounted to $27 -- less than $1 per person. One of the 42 borrowers was a woman who made bamboo stools and a profit of just two pennies a day. Professor Yunus was shocked to learn that the moneylender who provided the loan required the woman to sell the finished stools back to him at a price that barely covered the cost of the bamboo resulting in a life of extreme poverty.
With a loan from Yunus, the woman could now sell her product to the highest bidder and her profit skyrocketed from two pennies a day to $1.25 a day.
Muhammad Yunus was trained as an economist, not a banker, and over the last 30 years he has broken countless rules of banking and other disciplines. He provided loans to the poor, not the rich; to women, not men; in small amounts, not large; and without collateral or any paperwork.
The world would be a much harsher place if these rules had never been broken, if no one anywhere had ever bothered to question the notion that the poor could not use or repay a small loan, had not questioned the myth that the poor are not creditworthy, or had not questioned the myth that says you cannot give a loan without collateral. The Nobel Peace Prize Committee is celebrating the work and breakthroughs of Muhammad Yunus, Grameen Bank, and all the other revolutionaries who have pioneered this remarkable intervention.
This revolutionary idea has spread all over the world and attracted the attention of Prince Talal, AGFUND president. Prince Talal admired the bright ideas of Yunus and was convinced of the importance of replicating this experience in the Arab region for the support of the development process. He met with Yunus, who was invited in 1996 to attend a symposium at "Al-Ahram Newspaper " premises in Cairo. During the symposium, Yunus presented his experience in establishing the Grameen Bank since it was an idea till it later became a reality with the concept of microfinance proved to be a powerful tool in poverty alleviation. That was the beginning of a fruitful relationship between Prince Talal and Yunus. This relationship has developed when Prince Talal created AGFUND Int'l Prize for Pioneering Development Projects in 1999, where Yunus was selected to be a member of its Higher Committee, chaired by Prince Talal. The committee consists of selected personalities around the world. This mutual relationship became stronger when Prince Talal launched the idea to establish banks for the poor in the Arab World and Yunus became a board member of the first Arab bank for the poor in the Arab World: The National Microcredit Bank in Amman, Jordan (NMB). Negotiations are under way for establishing banks for the poor in Syria, Yemen, Sudan, and Djibouti. Prince Talal has also launched an initiative to establish "the Arab African Apex Fund" during the Middle East/African region Microcredit summit in Amman, Jordan in 2004. Yunus has greatly supported this initiative and is still working with Prince Talal to support microfinance based on their mutual conviction of its significant role in reducing poverty and enhancing human development.
In another note, AGFUND has up to now co-funded 81 microfinance projects with the United Nations development organizations, MFIs and Arab NGOs in the least developed countries in the Middle East, North Africa, sub-Saharan Africa, South and Central Asia, Eastern Europe and Latin America.
Last month, Yunus joined more than 2,000 delegates from 112 countries at the Global Microcredit Summit 2006 in Halifax, Canada. At that summit, delegates launched Phase II of the campaign with two new goals for 2015: 1) reaching 175 million of the world's poorest families with microcredit, affecting 875 million family members and, 2) ensuring 100 million families rise above the $1 a day threshold, lifting half a billion people out of extreme poverty. This is a challenge to the microfinance movements in the least developed countries around the world. We have the potential to expand dramatically, but can we also make a profound contribution to the Millennium Development Goal of cutting $1-a-day-poverty in half by 2015?
As Muhammad Yunus says, "Poverty does not belong in civilized human society. Its proper place is in a museum." Let us work to use the awarding of the Nobel Peace Prize today as an impetus to put poverty in the museums, where it belongs.
By Nasser B. Al-Kahtani
© Arab News 2006
