Micro-Credit Pioneer Wins Peace Prize

The $1.4 million prize will be split between the Grameen Bank and Yunus, the bank's managing director. Yunus said he would use his share to set up a company to make low-cost, nutritious food for the poor and to establish an eye hospital for poor Bangladeshis.

Yunus and the Grameen Bank are hardly household names outside of Bangladesh, but Yunus has been one of the world's most prominent and renowned leaders of poverty alleviation. The Grameen Bank model has been duplicated in more than 100 countries, from Uganda to Malaysia to Chicago's South Side.

The Bill and Melinda Gates Foundation recognized the bank's efforts in August, providing a $1.5 million grant to expand its work worldwide through the Grameen Foundation.

A gentle, soft-spoken man who has been feted by kings and presidents for his groundbreaking and tireless efforts to improve the lives of poor families, Yunus nonetheless has remained most at ease in the steamy Bangladeshi villages where the bank's clients -- mostly sari-clad women -- line up at makeshift tables to repay their loans.

Yunus launched the idea of the Grameen Bank after he returned to Bangladesh from the United States to take a teaching job in the economics department at Chittagong University.

Alarmed at the poverty created by ongoing famine, he and his students started an experimental project giving women $27 loans to buy straw to make stools.

The bank they created -- Grameen means "village" in the Bengali language -- not only defied conventional lending rules by making loans to the poorest of the poor, but challenged cultural taboos by giving most of the loans to women in a Muslim-dominated society where rural women at the time were seldom allowed to touch money or work outside of their homes. The bank issues most of its loans to women because Yunus discovered that they spent their money more carefully and paid back the loans in far high percentages than did men.

Today, the bank has 6.61 million borrowers and 2,226 branches. The bank reports that it has lent $5.72 billion over the past 30 years and claims a 98 percent repayment rate.

"Micro-credit has proved to be an important liberating force in societies where women in particular have to struggle against repressive social and economic conditions," the Nobel Prize committee said in its citation Friday.

Three years ago, the bank started a program to give beggars -- or "struggling members" -- lines of credit of about $9 to purchase small items such as bread, candy, pickles and toys. Recipients of the loans then resell the goods "to supplement their begging," according to the bank's description of the program, which is intended not only to empower beggars, but to boost their morale and dignity.

"Yunus's long-term vision is to eliminate poverty in the world," the Nobel Prize committee said. "That vision cannot be realized by means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, micro-credit must play a major part."