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Microcredit and the Nobel Peace Prize |
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Monday, 04 May 2009
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Bangladesh is one of the poorest countries in the world. In 1974, the country was hit by a drought and famine, which killed more than 1 million people.
While trying to help starving villagers, Muhammad Yunus met a 21-year-old woman named Sufia Begum. She was burdened by a small yet crushing debt. She had to borrow money to buy bamboo to make stools. She received about 25 cents a day from the lenders. After repaying her debt in stools, she was left with 2 cents a day, barely enough to feed herself.
Yunus was an economist who received his PhD in economics at Vanderbilt University at Nashville in the US in 1969. In 1972, he returned to Bangladesh to become head of the economics department at a university.
The misfortune of the girl gave Yunus an idea. To break the vicious cycle of debt and poverty, he lent a total of $27 to her and more than 40 of her neighbors in the village. He allowed them to pay him back over the next year as their businesses began to produce more stable profits.
He tried to persuade a local banker to lend more money to the villagers, but the banker refused, insisting that they didn’t qualify for credit. So Yunus started his own bank to help the poorest of the poor lift themselves up. Most of Grameen Bank’s borrowers use the loans to start a business, buying, for instance, a cow, a rickshaw or materials to make cloth or pottery.
Three decades later, Grameen Bank has more than 6.6 million borrowers, 97% of whom are women. It has 2,226 branches and provides services in 71,371 villages in Bangladesh. The bank has made more than $5.7 billion in loans, in amounts averaging $130, and claims a repayment rate of more than 98%.
The microcredit invented by Yunus is now being copied all over the world to help the poorest of the poor. Bill and Melinda Gates’ Foundation has given more than $40 million to programs designed to provide loans, insurance and other types of financial assistance to these people, including a $1.5 million grant to Yunus’ Grameen Foundation.
In recognition of his contribution to help the world’s poorest people break out of poverty, Muhammad Yunus was awarded the Nobel Peace Prize in 2006.
Answer the following questions in complete sentences on your own sheet:
- Where is Bangladesh? Is it a rich country or a poor one?
- Who was Sufia Begum? Use your own words – in one or two sentences – to describe the problem she faced.
- What did Prof. Yunus do to help Sufia and other people in her village?
- Use your own words to tell why a local banker refuses to make loans available to the villagers.
- What is the total amount of loans Yunus’s bank has made available to poor people?
- What do the poor people do with the loans they get from Yunus’s bank?
- What did Bill Gates and his wife do to promote Yunus’s cause?
- Why did Muhammad Yunus win the 2006 Nobel Peace Prize?
- Microcredit is also known as microfinance. Do you know why?
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Last Updated ( Monday, 01 June 2009 )
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