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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