|
|
“Banker to the poor” Muhammad Yunus receives Nobel Peace Prize
11 December 2006 – The Norwegian Nobel Committee honoured Muhammad Yunus in Oslo yesterday for his pioneering work in microfinance, presenting him with this year’s Nobel Peace Prize. The award was shared by the Grameen Bank, the Bangladeshi institution that Professor Yunus founded more than 30 years ago. In 1976, Yunus first reached into his own pocket to grant a total of US$27 to divide into microloans to 42 extremely poor people in Bangladesh. One of the borrowers was a woman who made bamboo stools at a profit of just 2 pennies a day. She had previously relied on credit from a moneylender who bought the stools back from her at a price barely covering the cost of the bamboo. After a loan from Yunus, the woman was then able to sell her stools to the highest bidder and her profit skyrocketed US$1.25 a day. Known as the “banker to the poor,” Yunus challenged the idea held by most traditional banks that it was “bad business” to make tiny loans to poor people, long considered to be repayment risks. But research has since shown that poor people actually have higher repayment rates than conventional borrowers. In countries like Bangladesh, Benin and the Dominican Republic, repayment rates are as high as 97 per cent. Microfinance has proved especially effective in empowering poor women, who often make up the majority of microfinance clients and have the best credit ratings. Women are also more likely to invest additional earnings in their children’s education and the family’s health and nutrition. Poor people, like all people, need safe and flexible ways to save money, access loans, insure against risk, and transfer money. Today, communities, non-governmental organizations, governments, the private sector and international aid donors are working together to build financial systems that offer poor people access to a wide range of financial services including savings, insurance, and remittance and money transfer services, as well as credit. Microfinance is now provided through a wide variety of approaches, from group lending methods in Bangladesh and community-led credit unions in Georgia, to novel approaches such as the cell phone companies in the Philippines that have initiated new ways to send remittances via mobile phones. In Eastern and Southern Africa, agricultural suppliers and other non-financial commercial entities are starting to provide financial services to their rural customers. Basic financial services can not only provide greater economic opportunities for poor people but also reduce their vulnerability to external shocks, such as natural disasters or fluctuating market prices. Such security is particularly important in rural areas of the developing world, where 800 million extremely poor people live and depend on agriculture and related activities for their survival. Rural financial services can provide poor people with the money they need to process their agricultural products in such a way that make them more marketable or even start their own small agribusiness. They can also facilitate the delivery of money transfers that urban and foreign workers send back to their families in poor, rural areas. Today, an estimated $250 billion flows into developing countries as remittances each year – more than double the funds from official development assistance. Yet most of the world’s poorest people lack critical access to the services that would otherwise help them accumulate assets, generate income and safeguard the health of their families. Among the world’s 3 billion people who survive on less than US$2 per day, more than 90 per cent do not have access to financial services. Last month, Yunus and 2000 delegates from over 100 countries gathered in Halifax, Canada, to launch the second phase of the Microcredit Summit Campaign, pledging to ensure that 175 million of the world’s poorest families are able to receive credit and other financial services by the end of 2015. Source: IFAD |
 |
 |
email this article