Microcredit financing and the Nobel Peace Prize

This year's Nobel Peace prize has been awarded to Muhammad Yunus, who set up a bank in Bangladesh in the 70's to help the poor using microcredit financing. Seems like such a great idea. I know this is my upteenth post about the Nobel Prize....but I find this sort of stuff very inpirational. It's great to know that someone from our part of the world has won such a prestigious award. What is even nicer is that this award has gone to such a humble man. He is planning on using the prize money to help out the poor and to give it back to the community.

The 65-year-old economist said he would use part of his share of the 10 million kronor ($1.4 million) award money to create a company that would make low-cost, high-nutrition food for the poor. The rest of his share would go toward setting up an eye hospital for the poor in Bangladesh, he told reporters.

I did't know what Microcredit Financing was till I read up about it. Apparently 99% of the loans are paid back according to Yunus. This is such an inspriational story. From CNN.

Yunus told The Associated Press in a 2004 interview that his "eureka moment" came while chatting to a shy woman weaving bamboo stools with calloused fingers.

Sufia Begum was a 21-year-old villager and a mother of three when the economics professor met her in 1974 and asked her how much she earned. She replied that she borrowed 5 taka (about $0.09) from a middleman for the bamboo for each stool.

All but $0.02 cents of that went back to the lender.

"I thought to myself, my God, for five takas she has become a slave," Yunus said in the interview.

"I couldn't understand how she could be so poor when she was making such beautiful things," he said.

The following day, he and his students did a survey in the woman's village, Jobra, and discovered that 43 of the villagers owed a total of 856 taka (about $27).

"I couldn't take it anymore. I put the $27 out there and told them they could liberate themselves," he said, and pay him back whenever they could. The idea was to buy their own materials and cut out the middleman.

They all paid him back, day by day, over a year, and his momentary generosity grew into a full-fledged concept that came to fruition in 1976 when he began to set up experimental microfinance projects in rural parts of Bangladesh. Grameen Bank was formally founded in 1983.

In the year's since, the bank says it has loaned 290.03 billion taka ($5.72 billion) to more than 6 million Bangladeshis.