Nobel Peace Prize winner Muhammad Yunus, a Vanderbilt alumnus, celebrated with jubilant supporters in Dhaka, Bangladesh, after recieving the news of his award Oct. 13.
by Jim Patterson
Muhammad Yunus, who earned a Ph.D. in economics at Vanderbilt in 1971, won the Nobel Peace Prize on Oct. 13 for his work combating poverty through a bank that gives small loans to poor people.
Yunus’ concept of micro-credit – small loans given to poor villagers in Bangladesh to help them buy livestock or fund an enterprise – has grown from $27 he loaned out of his own pocket into the Grameen Bank, which has loaned more than $5.7 billion to some 6.61 million borrowers. Despite lack of collateral or signed loan documents, 99 percent of the loans have been paid back. The Grameen Bank provides services to more than 71,000 villages in Bangladesh through 2,226 branches.
“Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty,” the Nobel Committee said in its citation. “Micro-credit is one such means. Development from below also serves to advance democracy and human rights.”
“Very few people have made as profound a difference in the lives of so many as Muhammed Yunus,” said Chancellor Gordon Gee. “The Nobel Prize is a recognition of his enormous contributions to society, and the Vanderbilt community joins in the celebration.”
Yunus, who has visited the Vanderbilt campus regularly since his graduation, was named the university’s first Distinguished Alumnus in 1996. He refers to Vanderbilt as his “second home” to this day.
“His parents were determined that he become a physician,” said James Foster, professor of economics at Vanderbilt. “I think he’s achieved that by becoming a physician to the economy. Vanderbilt’s economics department and all of Vanderbilt are thrilled at this richly deserved recognition.”
The Grameen (which means “rural” in Bengali) Bank began in the village of Jobra in 1976, when Yunus gave $27 to 42 self-employed crafts workers. He reasoned that if financial resources are made available to the poor on terms and conditions that are appropriate and reasonable, “these millions of small people with their millions of small pursuits can add up to create the biggest development wonder.”
In a January 2005 lecture at Vanderbilt’s Wilson Hall, Yunus told a standing-room-only crowd that his return to Bangladesh following graduation was initially overwhelming. Armed with a top-notch education and high hopes, in the face of the poverty of his homeland he felt powerless to help.
“Arrogance makes you think you can solve any problem,” he said, “but you see how incapacitated you are in the face of real problems. I thought I would go into a village and do something to help, even for a day. That was my mission every day. I did a lot of little things.”
Over time Yunus developed the system that would later be coined micro-lending or micro-credit, in which people without means are loaned a small amount of money – in some cases a few cents or a few dollars – to fund an enterprise and get out of the cycle of poverty.
“When I was able to help, it made them so happy,” Yunus said. “They thought it was a miracle. I thought, if you can make so many people happy with so little money, why not do more of it?” Yunus describes this mission in his autobiography The Banker to the Poor: Micro-lending and the Battle Against World Poverty.
“I once asked Yunus what he did for fun,” Vanderbilt’s Foster said. “He told me he spent his spare time thinking of new strategies to help people help themselves. That’s the kind of person he is.”
Click here to listen to a Vanderbilt lecture delivered by Yunus on Jan. 28, 2005.