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And The Winner is......

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  • And The Winner is......

    Blessed are economists
    (Filed: 14/10/2006)




    Muhammad Yunus is no diplomat or politician; he is simply an economist. Yet as the Nobel Peace Prize committee recognised yesterday, he has done more to help the world than virtually anyone alive today.

    Mr Yunus's insight was simple, and is worth quoting: "Charity is not the answer to poverty. It only helps poverty to continue." He realised that, even if the vast amount of Western aid reached its intended targets, it would merely create dependency and suppress initiative. His solution was to start at the bottom – to offer small loans, at commercial rates of interest, to those in his native Bangladesh with no collateral and no credit rating. It was, in essence, a gamble on the goodwill and industry of humanity.

    That faith, we are pleased to report, has been amply vindicated. Mr Yunus's creation, the Grameen Bank, has handed out more than $5.7 billion since 1983, with repayment rates consistently in the 90 to 100 per cent range. It has helped more than six million people, 97 per cent of them women, become part of the global economy; it has inspired similar groups, in more than 40 countries, to offer loans to more than 90 million people. By trusting the people of the developing world, rather than dictating to them, Mr Yunus created the most effective way to reduce poverty.

    So why does he deserve a Peace Prize? Because, like Norman Borlaug, the American agronomist who won the 1970 prize for improving agricultural yields in the developing world and saving a billion lives, he proved that prosperity and peace are bound together. It is no coincidence that Africa, the world's poorest continent, is also its most violent. This has too often been ignored by the Nobel committee, which prefers to dabble in politics. Last year it honoured Mohamed ElBaradei, head of the world's nuclear watchdog, as a reproof to George W. Bush; previous Nobels have gone to right-on campaigners, or politicians such as Yasser Arafat or Kim Dae Jung, whose peace deals unravelled while the ink on the citation was still wet. The work of Mr Yunus, by contrast, will magnify the happiness of mankind

    http://www.telegraph.co.uk/opinion/m...ixopinion.html
    _____________________


  • #2
    awesome awesome kudos to him :)
    indeed a greatest achievement one can achieve in his lifetime.

    Comment


    • #3
      A great achievement!

      One is proud that he achieved what he has because of sheer will power and sense of service for the poor.


      "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

      I don't have to attend every argument I'm invited to.

      HAKUNA MATATA

      Comment


      • #4
        His achievement.

        POOR SHALL INHERIT THE EARTH

        - The Grameen Bank focuses on credit as a human right
        Anup Sinha
        The author is professor of economics, Indian Institute of Management, Calcutta

        Living god of small things

        Novel ideas are hard to come by. What is much rarer, however, is to have the idea tested out and put into practice by the innovator. It requires a vision backed by a strong urge to succeed. Professor Muhammad Yunus and the history of the Grameen Bank in Bangladesh is an example of such an instance. What began as an academic research project with a practical testing ground in the poverty-stricken villages around Chittagong in Bangladesh grew into a successful story of social entrepreneurship which changed the way economists and policy-makers thought about the eradication of poverty.

        The success of the Grameen Bank had ripple effects in numerous developing countries, including India, and has brought micro-credit to the forefront of discussion in development finance. The Grameen Bank has grown over the years with around 7 million borrowers in over 70,000 villages. Almost all the borrowers (around 97 per cent) are women. The bank has over 2,000 branches and many related enterprises in the Grameen family. Recently, Grameen II was launched to increase the inclusion of marginalized people and improve the credit delivery system, having learnt lessons from the experience of twenty five years of micro-credit in Bangladesh. Greater flexibility in delivery modes is the key area of innovation in the second version.

        The core purpose of the micro-credit system innovated by Professor Yunus was to reach credit to the poorest of the poor in the villages of Bangladesh. The philosophy behind it was that there was an enormous amount of unutilized talent amongst poor people that needed a little bit of financial resources and a lot of trust. The formal credit sector was inaccessible since collaterals could not be offered by the very poor. The informal sector’s cost of credit (the village money-lender) would be exorbitant. The vision of Professor Yunus was based on the firm belief that self-employment was more likely to provide sustainable livelihoods for poor people than merely subsisting on low employment and lower wages.

        The Grameen Bank has reached credit to the poorest of the poor without requiring collaterals to be offered for the loans. The recovery of loans is based on the collective action by a group of borrowers. The basis of the contract is trust and hence not legally enforceable. Contrary to the conventional wisdom of the big urban bankers, borrowers did not renege on their contract to repay. Indeed, the Grameen Bank’s phenomenal recovery rate revealed that individual incentives could be of lower consequence than the discipline imposed by a peer group.

        Professor Yunus has always emphasized the distinction between the Grameen Bank’s concept of micro-credit and other prevailing forms of small-quantum credit obtainable in rural areas, including that from the informal money-lender and other traditional informal groups, or groups sharing a common economic activity as livelihood. According to him, the Grameen Bank model focuses on credit as a human right, and is targeted to help poor families help themselves, especially women. Each borrower would have to belong to a group. There are obligatory as well as voluntary savings programmes that borrowers must participate in.

        The business model of the Grameen Bank challenged the “not creditworthy” label that the formal sector put on the rural poor. The loans are given by non-profit organizations or organizations owned primarily by the borrowers. When outside organizations give credit, the market interest rate is used as a benchmark to find the cost of loans without compromising on the sustainable livelihood aspect of the economic outcome from the loan. Clearly, such projects would require related social capital in terms of leadership, education, understanding the nature of risks in economic activities and the appreciation of local problems and local opportunities. Local resources and innovative uses of local knowledge enrich the opportunity set that opens up for the borrowers.

        The interesting aspect of the Grameen Bank’s approach to outcomes is not limited to the repayment of loans and the generation of positive savings. Success ultimately depends on whether members of a group of borrowers are moving out of poverty or not. This implies that members have some tangible improvement in their capabilities. The set of ten specified indicators include a minimum wealth, a house to live in, access to primary school, clean drinking water, a sanitary toilet, access to health facilities, and a capability to repay a loan through a minimum weekly instalment of 200 takas or more.

        There are a number of interesting issues that emerge from the experience of Grameen Bank, the pioneer, and the subsequent impact the experiment had in creating micro-credit organizations and institutions in many poor countries of the world. Perhaps the most important is the success of group incentives in financial institutions and not the traditional economists’ understanding of individual incentives.The second implication is that opportunistic behaviour and defaults have less to do with deprivation than with greed. The third issue of great significance is the gender composition of the borrowers. Being a woman is important in having greater local knowledge, persistence, discipline and lower discounting of future income. Finally, and arguably the most significant, is that decentralized group decisions can create sustainable outcomes in social enterprises. The success of collective action is less difficult to attain than described in textbooks of economic theory.

        The story of micro-credit has been one of success in most countries, certainly in Bangladesh where output created by the micro-credit sector accounts for more than 1 per cent of Bangladesh’s national income. It is interesting to note that in 2002, the part of national income accruing to the poorest 20 per cent of the population was 9 per cent in Bangladesh. In India it was 8.9 per cent and only 4.7 per cent in China with its brand of market socialism.

        The issue of long-term success would be largely determined in Bangladesh and elsewhere by the number of people and groups who can move beyond the “micro” self-employment status. How many can move to becoming entrepreneurs of small and medium enterprises growing beyond self-employment to larger scales of production and the employment of hired labour?

        One way of looking at the question is to think of micro-credit as facilitating a nascent grassroots capitalism that will discover the gold at the “bottom of the pyramid”. In that case, success will take a while to be fully evaluated as there is the distinct possibility of people remaining stuck at self-employment, albeit above the poverty line. An alternative way of looking at the whole experiment is to see it as the creation of human capabilities and the possibility of sustainable livelihoods where poor people find employment with dignity. For them, the long run is of less consequence than the here and now of everyday struggles. To many of them, Muhammad Yunus is the living god of small things.
        http://www.telegraphindia.com/106101...ry_6869110.asp


        "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

        I don't have to attend every argument I'm invited to.

        HAKUNA MATATA

        Comment


        • #5
          Let me get a wee bit parochial since this does not happen daily.

          A NOBLE PRIZE

          Bengalis all over the world have every good reason to rejoice over the award of the Nobel Peace Prize for 2006 to Mr Muhammad Yunus and the Grameen Bank. There is actually something much more profound that is implied in this recognition of the work of a visionary individual and the unique institution that he built. It is actually a triumph of the poor of Bangladesh who have learnt to live with dignity with the help of the system of micro-credit that Mr Yunus and his bank pioneered. The dream to eradicate poverty and the humiliation that poverty entails has been at the heart of many intellectual endeavours, and projects of social engineering. Most, if not all, of these have taken the State as the starting point. The State was used as the agency of distribution of resources and even of the availability of credit. Mr Yunus, when he saw the condition of the poor in Bangladesh, decided that he would proceed from the other end. He decided to begin work at the bottom of the ladder rather than at the top. He began small, but with a large vision. He thus transformed large parts of rural Bangladesh where many of the world’s poorest live.

          The Nobel Peace Prize committee has rightly linked the eradication of poverty to the prospects of lasting peace. Neither freedom nor peace can be secured in conditions where poverty and its immediate outcome, social discontent, are pervasive. Mr Yunus’s initiative is thus connected not only to development but also to democracy and human rights. Mr Yunus is a pioneer who had the foresight to see that embedded within every human being there is an entrepreneur. His bank provides resources, in the form of micro-credit, for that entrepreneurship to flourish. He thus enables human beings to become self-sufficient and self-sustaining. It is not at all surprising that the biggest beneficiaries of micro-credit are women who are the most marginalized among the poor. Mr Yunus is one of the rare individuals who transformed a dream into a practical reality. It is difficult to believe today that he began what has become an institution with a paltry sum of money. Now the Grameen bank has 6.61 million borrowers (97 per cent of whom are women), and 2,226 branches with services that cover more than 70,000 villages.

          The Nobel Peace Prize committee has bestowed honour on a person seen as a messiah by the poor of Bangladesh. International recognition comes rarely to a country that has been relegated to the position of a basket case — with spiralling debt and poverty, and an elite without a sense of social responsibility. The Bengali diaspora will be thrilled that Mr Yunus has now joined Rabindranath Tagore and Mr Amartya Sen. Tagore, in his prose writings, spoke eloquently about the dignity of man and of the need to be self-sufficient. Mr Sen, in his writings, has emphasized human rights and the importance of choice. Mr Yunus chose, and he chose to work for human dignity and human rights.
          http://www.telegraphindia.com/106101...ry_6867669.asp


          "Some have learnt many Tricks of sly Evasion, Instead of Truth they use Equivocation, And eke it out with mental Reservation, Which is to good Men an Abomination."

          I don't have to attend every argument I'm invited to.

          HAKUNA MATATA

          Comment


          • #6
            Cool :)
            In the realm of spirit, seek clarity; in the material world, seek utility.

            Leibniz

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            • #7
              Date:16/10/2006 URL: http://www.thehindu.com/2006/10/16/s...1601411000.htm

              Opinion - Editorials

              Poverty and peace



              The significance of the Nobel Peace Prize for 2006 is that it acknowledges a vital link. By awarding the prize in equal part to the Bangladeshi economist, Muhammad Yunus, and the Grameen Bank, which he founded in 1976, "for their efforts to create economic and social development from below," the Norwegian Nobel Committee has recognised that lasting peace is not possible without dealing with poverty. Professor Yunus's pioneering concept of microcredit, translated into action by the Grameen Bank, has given millions of poor people access to loans without collateral. The Bank has over six million members, 96 per cent of them women. It covers three quarters of Bangladesh's villages. It lends to nearly a million micro-enterprises. It recovers more than $5 billion every year. It has spawned innovative businesses, for example "telephone ladies" — the 100,000 village women who use their mobile phones to provide phone services in villages. Grameen has built houses and extended educational loans, particularly for girls. It will soon launch a business of providing nutritious food at affordable prices. Thirty years ago, microcredit was a concept unknown and unacceptable to the world's financial establishment. Today, it is operative in more than 100 countries. According to the 2005 State of the Microcredit Summit Campaign Report, 92 million families worldwide accessed microcredit by the end of 2004. Of these, 73 per cent were extremely poor at the time of their first loan.

              These figures do not tell the full story. Critics of microcredit point out that commercial banks have exploited the concept by substituting these smaller and safer loans for rural credit, which is essential for farmers and rural enterprises but is also more risky. Another criticism is that the concept individualises the solution to poverty, thereby negating the possibility of social mobilisation and the need to change social structures. However, what the Bangladesh experience suggests is that programmes that empower women at the bottom combining with higher allocations for the social sector can make a real difference to the quality of life of the poor even under conditions of mass deprivation. This is reflected in the steady progress Bangladesh has made in the last two decades on the human development front where it has outpaced India. According to the United Nations Development Programme's Human Development Report 2005, Bangladesh ("moderate growth, rapid human development") is ahead of India in health, education, and gender equality. Professor Yunus and his Grameen Bank must be given some of the credit for this and therefore richly deserve the Peace Nobel
              _____________________

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              • #8
                cheers to banglas... and yeah, they probably have outpaced us, more then half of our population is still living in rural areas...
                Cow is the only animal that not only inhales oxygen, but also exhales it.
                -Rekha Arya, Former Minister of Animal Husbandry

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