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Nobel Acknowledges
Counter Economy

By Mirza A. Beg

14 October, 2006

The coveted Nobel Peace prize for the year 2006 went to Muhammad Yunus of Bangladesh and the Grameen Bank (Villagers Bank, in Bengali language), he started in 1976. Returning with a degree in economics under the Fulbright scholarship from the United States, Muhammad Yunus was appalled by the famine in the wake of cyclone and floods of 1974. It compounded the terrible toll of the war of independence that gave birth to Bangladesh in 1971. As a young economist with a prestigious degree and a teaching position at a college, he thought he could help. He traveled the country side and found people, particularly women severely indebted to money-lenders charging exorbitant interests, designed to keep them perpetually indebted, in effect indentured slavery. The local banks based on “sound capitalistic principles” could not help because the poor, who often go hungry, could not offer collateral (a guaranteed security).

Yunus recalled in 2004 that the idea of loaning very small amounts money to the needy germinated, when he met twenty-one year old Sufia Begam, a mother of three little children. She wove beautiful bamboo stools with young calloused hands. For each stool she borrowed nine cents worth of material on inflated price from a middle-man and got a return of two cents to feed her hungry children. Thus went the perpetual cycle of grinding poverty. Shocked, Yunus with his students surveyed the villagers and found that 43 people, collectively owed an enormous amount of $27 to the middleman, for the benefit of subsistence living and eternal debt.

He paid back their debt of $27, to liberate them from the clutches of the cycle of exploitation, so that they could buy their own materials much cheaper, and pay him back when they could. They paid him back slowly in about a year. These poor women got their dignity back and helped Yunus to give birth to the revolutionary idea, of the Grameen Bank in 1976. Over the years the Garmeen Bank has loaned $5.72 billion to more than 6 million Bangladeshis, more than ninety percent are women. The bank has about one percent default rate, much better than the commercial Banks. It counts even beggars as it members and has had positive balance sheet in all but three years of its existence. It did get donations once the idea gained some publicity, but in the last eight years it has been a self sufficient, viable institution without a need for donors.

The Bank has grown over the years. In 1983 it got incorporated, owned by the rural poor (94%) and the Government of Bangladesh (6%). The Garmeen Bank has gradually expanded to finance even larger community based projects, such as irrigation systems and fisheries, to help grow rice and raise fish, a staple for the poor in Bangladesh. The concept, now known as “Micro-credit” has been duplicated in many other poor countries serving almost 17 million people with limited success.

The citation by the Nobel Committee said, “Yunus and Grameen Bank have shown that even the poorest can work to bring about their own development.”

The Nobel committee can be proud of itself for selecting an idealist with a vision. Yunus proved that an ideal can be transformed into an institution for the benefit of millions of the most deserving human beings. The Nobel peace prize for Yunus does more honor to the distinguished name of the Nobel Peace Prize than the other way around. There are some very glaring omissions from the roster of Nobel recipients. The name Mahatma Gandhi has become synonymous with peace, but for political reasons he never received the coveted honor. For that oversight, actually intended omission, the name Nobel Peace Prize will forever be less luminous than it could have been.

In general the peace prize has been awarded to people who eminently deserved the recognition but in modern times there have been some strange inclusions. The prestige of the Peace Prize has suffered greatly by the inclusion of some very questionable people, such as Le Duc Tho and Henry Kissinger in 1973; Anwar Sadat and Menacham Begin in 1978; and Shimon Perez and Yassir Arafat in 1997. Of these only Le Duc Tho of Vietnam had the decency not to accept the prize.

The Nobel peace Prize has acquired such prestige because of its association with people who have genuinely worked for peace and the uplift of humanity, some times in the most trying circumstances. In recent years some of the outstanding recipients have been Martin Luther King, Aung San Suu Kyi, Nelson Mandela, Mother Teresa and Dalai Lama. This year as well there were some very dubious names on the list, but the Nobel committee should be commended for the excellent choice of Muhammad Yunus, for a life time of consistent hard work for the dignity of labor and justice to the largely neglected, who for no fault of their own were born poor in the teeming hovels and villages of the third world.

Yunus proved that the poor need respect, trust, economic justice, and a helping hand. They do not need pity and charity. It is truly a Peace Price because there can not be peace without justice, particularly economic justice.

Mirza A. Beg can be contacted at [email protected]

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