Muhammad Yunus is a Bangladeshi economist who was awarded the Nobel Peace Prize in 2006. He is perhaps best known for founding the Grameen Bank which offers microcredit and micro-financing schemes for people from low income groups looking to fund their daily expenses or business ventures in an attempt to free them from exploitation and bring them out of the poverty cycle.
Yunus was born on 28 June, 1940 in Chittagong, Bangladesh, and was raised in a large family unit. His father provided him with the push he needed to pursue further education. After completing his studies from the Dhaka University, Yunus had the good fortune of being awarded the Fulbright scholarship which allowed him to travel to the United States to pursue a doctorate in economics from the Vanderbilt University. His motivations for helping the poor however were largely instilled by his mother, who always made sure to assist in any form or kind all persons who came at their door asking for help.
After finishing is Ph.D. studies, Yunus was hired as an assistant professor at the Middle Tennessee State University in 1970, teaching economics. He soon returned to Bangladesh where he started working for the Chittagong University, eventually chairing its economics division.
Muhammad Yunus visited a number of villages in the 1970’s where he witnessed the economic deprivation of the locals. He observed that the resident entrepreneurs, especially women, were charged exorbitantly high rates of interest on small scale loans by local moneylenders – these loans were mostly acquired to fund the purchase of materials etc. of their small scale business ventures. After repaying the debt, such women were barely left with any substantial income to help them elevate their economic status. This led Yunus to conclude that even small financial contributions could end up having a multiplier effect on the incomes of the borrowers. He tested his thesis by offering an aggregate loan of $27 to a sample of 42 women in a local village, concluding in favorable results as all of them profited well from the transaction.
Building on the success of his concept, Yunus created the Grameen Bank in 1983 which propagated village trust and unity. The idea of microcredit without collateral at reasonable interest rates was met with skepticism by banks, governments and other financial institutions, but Yunus’ commitment landed his project considerable success. The Grameen bank today has 2564 branches across Bangladesh, catering to over 8.29 million borrowers, 97% of whom are women. It also boasts a remarkable debt recovery rate of 97%, greater than all other banking systems, and its methodology continues to be utilized in projects in 58 countries.
For his social entrepreneurship and poverty alleviation exploits, Muhammad Yunus was honored with the Nobel Peace Prize in 2006. He was also ranked in second position on Foreign Policy’s list of ‘Top 100 Global Thinkers’ in 2008. His other accomplishments include appointment by the UN Secretary General to serve on the International Advisory Group for the Fourth World Conference on Women. His list of honors and awards are endless, but Yunus’s irrevocable zeal towards setting mechanisms which facilitated poor people to come out of their economically deprived states is what will perhaps embody his legacy the most. His advocacy of micro-lending has not only helped alleviate poverty in Bangladesh, but set inspiration for institutions in other countries to follow suit.