Leading the way out of poverty
When Bangladeshi banker, economist and entrepreneur Muhammad Yunus was awarded the Nobel Prize this year some eyebrows were raised as to why he had been given the prize for peace rather than for economics. After all, his pioneering work is in grass-roots economics and finance - providing funds to pull the poor out of poverty.
Leave aside that the awards are made by two institutions in two countries: in Sweden for economics and in Norway for peace. The economics honour has usually been awarded to eminent professors for seminal theory, whereas Dr Yunus is a highly practical man.
But the real answer is that his work addresses a problem that is immensely and intensely political, and goes to the heart of possibly the world's biggest scandal. Namely, while a few hundred million people live surrounded by immense riches, more than 3 billion live in poverty and 2 billion in the deepest, hand-to-mouth penury.
What Dr Yunus has done is to offer a challenge to leaders of countries rich and poor - to aid-givers, economists, bankers, highly paid officials of the World Bank, the International Monetary Fund and anyone who is involved in world problems. He has done more than challenge them: he has shown them a way.
The seeds were sown in the dire circumstances of the 1974 famine in Bangladesh, then probably the poorest country in the world. Dr Yunus, who was teaching economics at Chittagong University, stepped out of the university into the grim real world and saw that the elegant theories he was teaching were not working.
So he lent a little over the equivalent of HK$100, from his own pocket, to a group of 42 village women making bamboo furniture. They later repaid him. Without his money, the women would have had to borrow from money lenders, paying at least 10 per cent in interest a month.
Dr Yunus asked conventional bankers why they didn't lend to such people, and was told they were not creditworthy and lacked collateral. In fact, the bankers really couldn't be bothered to lend sums below US$1,000, and preferably US$10,000, because it was not worth the effort.
Dr Yunus founded the Grameen Bank 30 years ago (gram means 'village' in Bengali and Hindi). Since then, it has lent more than US$5 billion to almost 7 million clients, 97 per cent of them women. The average loan today is about HK$1,000.
The Nobel citation for Dr Yunus and his bank, which were co-winners, states: 'Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means. Development from below also serves to advance democracy and human rights.'
What Dr Yunus has shown is that just because people are poor does not mean they are stupid, or lack ideas and initiative. Bangladesh was the original 'basket-case' economy, with a large population packed into a small area and virtually no natural resources except fertile soil. Further, it was off the main global trade and communications routes.
If the poor can lift their heads there, then there's hope for deprived people anywhere in the world.
Dr Yunus says he wants to see poverty only in museums. In 30 years, he has helped lift 7 million out of penury - in a Bangladesh population that has grown from 90 million to 160 million. The nation's politicians, pandered to and pampered and corrupted by other governments and the World Bank, are still living in the past, squabbling over which of the descendants of its slain leaders has the better right to govern.
The Nobel peace award to Dr Yunus should be a reproach to his own government and to the global economic, financial and political systems. They protect entrenched interests rather than setting free the energies of the poor.
Kevin Rafferty worked at the World Bank and has travelled widely in Bangladesh for the past 35 years
