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 PROFESSOR MUHAMMAD YUNUS: THE NOBEL LAUREATE    By Dr. Sayed Afzal Peerzade    afzalpir@rediffmail.com

Sooner or later, selfless and sincere work is recognised. A very recent illustration of this fact relates to Professor Muhammad Yunus of Bangladesh, who was recently awarded the Nobel Peace Prize. Professor Yunus, a Fulbright Scholar, taught Economics at Middle Tennessee University before joining the Economics Department of Chittagong University in Bangladesh. He has won several coveted prizes earlier; the Nobel Prize puts a universal seal of public recognition on his outstanding contributions.

This time the Nobel Prize is shared between Muhammad Yunus and the Gramin Bank in Bangladesh, which he founded in the year 1976. Thirty years ago, the concept of micro credit was unknown to the financial establishment. Professional economists also did not attach much importance to the efficacy of micro credit. Today, it enjoys due recognition 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 percent were extremely poor at the time of taking their first loan [The Hindu October 16, 2006]. Since its inception, the Gramin Bank has loaned more than US$ 2 billion to a cross-section of disadvantaged groups, including 50,000 beggars who were encouraged to start small business alongside or instead of begging.

Professor Yunus strove hard to bring the poorest of the poor, especially street vendors, cobblers and small farmers, out of destitution, poverty and deprivation. They were provided an opportunity to lead a decent and honourable life. He and his brainchild, the Gramin Bank, fulfilled the dreams of thousands of extremely poor and destitute people in the country. Ironically, The Economist has commented unfavourably on the conferment of the award Professor Yunus, arguing that it would have been better to withhold the prize. On the other hand, The Economic Times [October 16, 2006] rightly pointed out that "poverty itself is a form of violence, abuse of human rights and a fertile ground for crime and now, more worryingly, terror. By lifting millions out of poverty, Yunus and his Gramin Bank have done far more to promote peace than many others the Nobel Prize Committee has honoured in the past."

The Norwegian Nobel Committee acknowledged the fact that the Nobel Prize is awarded to Professor Yunus and his Gramin Bank for "their efforts to create economic and social development from below." In other words, the Noble Committee has acknowledged a very vital link between world peace and universal poverty. Poverty, in its myriad manifestations, is a threat to peaceful living. The Committee has acknowledged that lasting peace is not possible without dealing with poverty; a condition of life characterized by hunger, disease, malnutrition, subjugation and deprivation. According to the Committee, lasting peace "cannot be achieved unless large population groups find ways in which to break out of poverty." The Committee further observed that "development from below also serves to advance democracy and human rights across cultures and civilisations and Yunus and Gramin Bank have shown that even the poorest of the poor can work to bring about their own development". Professor Yunus's model greatly enhances the possibilities of sustainable social and economic development in resources-scarce countries. The greatest contribution of Professor Yunus is that he gave voice to the voiceless people and created jobs for the jobless. He brought plight of the hitherto marginalised people to the centre stage of policy making and intervention. He rightly argued that unless we focus on the poorest of the poor and on women, development can be neither sustainable nor inclusive.

Professor Yunus's pioneering contribution to micro credit has given millions of poor people a dependable and affordable access to loans without collateral. The micro credit movement began in the village of Jobra in Bangladesh in 1976, with a meagre capital of US$ 27. Today, the network of Gramin Bank covers nearly 75 percent of Bangladesh villages where poverty is both extensive as well as intensive. By lending directly to women, the Gramin Bank has eliminated loan sharks who exploit the poor and push them into a debt-trap.

The Gramin Bank has six million members. Of these, nearly 96 per cent--4.14 million--are women, some of whom were one-time beggars. In other words, the Bank has mainly targeted women as beneficiaries. The Bank has also extended educational loans to girls. Women are given priority in the Bank's other ventures, which cover telecommunications, handlooms and energy production. Women are targeted as direct beneficiaries in view of some of their positive qualities. For example, women in Bangladesh abstain from alcohol. Second, they do not indulge in gambling. Third, they are much more oriented towards family welfare. Finally, they display much more sensitivity towards "fair family name," which is undermined in the case of default. In fact it can be argued that any investment in women tens to be "high yield" and "low risk". It is high yield because they generate direct and indirect long-term benefits. It is low risk because in their case investment is less likely to be misused. Any investment in women is in effect an investment in the future generation. The experiment of Gramin Bank demonstrates that target-oriented women-specific programmes work wonderfully. They improve the quality of life and are effective even under conditions of mass deprivation. The thrust of this model is to transform rural women into a powerful customer base, provide them with micro credit, inculcate savings habits, and set them off on a journey marked by prudence, farsightedness and planning.

The methodology that the Gramin Bank has adopted is very simple and down to earth. To begin with, a small group of five rural women is constituted. A cluster of eight such groups, normally from the same village, form the centre. It is mandatory for them to meet once in a week in order to discuss the operational dimensions of micro finance. All members repay weekly, save regularly and share responsibility. In this methodology, the individualistic approach, so common in large scale borrowings, is substituted by the sharing and collectivisation of benefits as well as responsibilities.

The Gramin Bank lends to nearly 10, 00,000 micro enterprises. Its recovery rate is enviable, which comes to a whopping 98.85 percent, thanks largely to its female customer base. In absolute terms, it recovers more than US$ 5 billion every year. The borrowers of Gramin Bank were more resilient during financial crises than other conventional bank customers. Professor Yunus and his Gramin Bank have exploded the myth that the poor are beyond the pale of the organised financial sector. Since they develop an urge to get come out of the vicious circle of poverty, they are more particular about repayment. This improves their own prospects of future borrowings.

Professor Yunus and Gramin Bank are mainly responsible for the steady progress Bangladesh has made in the last two decades in respect of human development. It s note-worthy that, according to UNDP's Human Development Report 2005, Bangladesh is ahead of India in respect of the parameters of health, education and gender equality. There is a growing realisation in India that the country should also follow the micro credit system as developed by Professor Yunus and Gramin Bank. India undoubtedly has its own system of micro credit, but it has not been a great success. Poor and working women have the capacity and resources to deal effectively with scourge of poverty. Sadly enough, they are not provided adequate opportunities. The successful implementation of micro-credit programmes could have saved the lives of hundreds of farmers who committed suicide in recent years in Maharashtra, Karnataka, Andhra Pradesh and Kerala. In an interview to The Economic Times [October 14, 2006] Professor Yunus stated: "if Bangladesh can do it, why not India...I will definitely go to India to share my experiences in evolving a robust micro-credit system". The Economic Times [October 16, 2006] comments that the Nobel Prize for Muhammad Yunus and his Gramin Bank is a slap in the face of the petty bureaucrats and wimpish politicians who have been trying to choke microfinance institutions in the country.

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