In what can only be termed a stunning upset, the 2006 Nobel Peace Prize was awarded to Muhammad Yunus, the entrepreneur who invented “microcredit lending,” a system whereby small amounts of capital are made available to poor, often rural individuals who would otherwise not be able to obtain credit or loans through traditional lending institutions or mechanisms. In fact, in most instances the primary consumers of microcredit are women who would otherwise have no means for starting businesses or entering into the economy.
The microcedit system Dr. Yunus devised in his home country of Bangladesh was coined “Grameen” and it did not require collateral, references or any legal instruments from its customers. It simply relied on the notion and power of being shamed in front of family and neighbors if one failed to repay the loan.
The Grameen Bank of Bangladesh’s 6.6 million borrowers so far have paid back 98.5 percent of their loans — compared to the typical repayment rate among traditional banks in Bangladesh of 45 to 50 percent. And according to the NY Times, since its creation in 1983, “Grameen has made a total of $5.72 billion in such small loans, and has turned a profit in all but three years, including $15 million in 2005.”
I’m not sure what the oddsmakers had pegged Mr. Yunus’ chances at, but I suspect he was probably much closer to Oprah, Tony Blair and George Bush (all reportedly at odds of 1001-to-1) than to the favorites going in — various players in the peace negotiations in the Indonesian province of Aceh (one of whom, Indonesian President Susilo Bambang Yudhoyono, was listed at 4-to-1). Bono and Bob Geldof were also in the running (no odds available but reportedly they were each listed as joint tenth favorite to claim the prize.)
(For comparison purposes, consider universally “popular” personalities such as Venezuelan President Hugo Chavez, who was listed as having odds of 251-to-1. Perhaps Blair, Bush and Winfrey should consider changing publicists???).
Despite such stiff “competition,” the Norwegian Nobel Committee selected an entrepreneur whose innovation has been replicated by multilateral finance and development institutions, national development agencies, and independent development NGOs around the world.