I feel that a winner of the Nobel Peace Prize is always best understood in the context of the fire that was originally lit under them. No person or organization wins a Peace Prize unless they are driven to conquer forces that would cause most to throw their hands up and walk away out of sheer helplessness. In the case of this year’s winner, Muhammad Yunus, it was the famine of 1974 that snapped his world into focus:
There was a shortage of food in 1974 throughout the world. However, unlike some other countries that suffered from food scarcity, the situation in Bangladesh was rooted in the historic evolution of the society and others germinated from poor management of the food distribution system in the face of severe floods. After 1971, the majority of the Bangladesh population experienced a drastic drop in their standard of living mainly due to major disruptions in economy and society caused by the war of liberation. The damage caused by the war was colossal. According to the United Nations, the material damage amounted to about $1.2 billion, consisting of loss of fixed physical assets (particularly in the transportation system), damage to agricultural potential, and rehabilitation requirements. The task of rehabilitating returning refugees and other floating population was accomplished early but general economic activities could not be restored to a normal level even two years after independence. Consequently, economic activity lagged behind the levels achieved in prewar years. The downward spiral of real income and unemployment continued. The worst victims of this process were industrial workers, small peasants, agricultural labourers and low paid fixed-income earning groups. [Link]
It makes sense that many of the winners of this prize have had a Siddhartha Gautama-like moment when the veil was lifted from their normal view of a situation and they began to see the reality of what was always in front of them, subsequently finding it unacceptable to carry on any longer in the same manner:
When Yunus saw the disaster’s crippling effect during a university field trip, he felt that classroom economic theories were simply not doing enough to address the needs of those living in desperate poverty.
Soon after, Yunus handed out loans as small as $27 to a group of women in a village near the southern port city of Chittagong. His plan was simple: give the poorest of the poor money to begin income-generating projects that will help them support themselves. Yunus said he was convinced that people could take care of themselves, if they had just a little help. [Link]
And here, in my opinion, is the most important quality, not only in someone who has won the Peace Prize, but in people that are behind almost every great endeavor:
“While others talk, he acts. Prof Yunus has proved that poverty can be conquered,” says Thorat, chairman of the National Bank for Agriculture and Rural Development.
The banking community in India salutes Yunus because he has proved that the poor can organise themselves; save and, most important, are bankable. [Link]
In interviews today Yunus has been stressing how important women are to the success of microlending. You can almost always count on a woman to repay a loan in full and to make their lives and the lives of their families better through the loan. When I worked in Delhi this was common knowledge among the NGOs that worked with slum residents. The men usually drank or smoked the money away while the women flourished. That’s not to say of course that you shouldn’t lend money to men.
Let’s not forget either that Yunus did not win this prize alone but shares it with all the dedicated people who work at the Grameen Bank which he founded:
The Grameen Bank, once dubbed the “barefoot bank,” can no longer be described in quaint terms. With more than 1,050 branch offices that serve 35,000 villages and two million customers, 94 percent of them women, Grameen is the largest rural lender in Bangladesh, and the proportion of its loans that are repaid, 97 percent, is comparable to the repayment rate at Chase Manhattan Bank. Last year, after eighteen years of making small loans, Grameen had disbursed more than $1 billion; at the present rate the bank will cross the $2 billion mark sometime next year. “It’s like McDonald’s,” Yunus says. “People know the quality of our service. Our job at head office is to make sure it doesn’t deteriorate in any corner of the country…”To qualify for a loan, a villager must demonstrate that her family assets fall below the bank’s threshold. She will not be required to put up collateral; instead she must join a five-member group and a forty-member center and attend a meeting every week, and she must assume responsibility for the loans of her group’s members. This is crucial, because it is the group—not the bank—that initially evaluates loan proposals. Defaulters spoil things for everybody else, so group members choose their partners wisely.[Link]
NPR’s archives actually have two stories about microlending that are particularly worth listening to. One recent one serves as a good primer for those of you wondering how microcredit works. The second is a story from six years ago about how microcredit was working out in Bangladesh.
Finally, I’d like if some of you could revisit my post on microlending from a few months back. Unfortunately I posted it on the same day as the Mumbai train blasts and so it went largely ignored. Maybe some of you are excited and feel proud that a desi has won this award today. Excitement and pride don’t go very far however. Instead of sitting on the sidelines why don’t you make a loan yourself. If they give out Peace Prizes for it you got to figure it is worth it. Plus, as you will see in my old post, it will make you feel like a bad-ass.
