PARIS -- Bangladeshi economist Muhammad Yunus and the Grameen Bank he created received the Nobel Peace Prize yesterday for leveraging small loans into major social change for impoverished families.
The Grameen Bank's pioneering use of microcredit has been duplicated across the globe since Yunus, known as ``banker to the poor," started the project in his home village three decades ago. Loans as low as $9 have helped beggars start small businesses and poor women buy cell phones and basket-weaving materials.
``Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty," the Norwegian Nobel Committee said in its citation released yesterday in Oslo. ``Microcredit is one such means."
The committee praised Yunus, 66, as ``a leader who has managed to translate visions into practical action for the benefit of millions of people, not only in Bangladesh but across cultures and civilizations."
In a telephone interview, Yunus said he was overcome by the excitement of garnering the prize after several years of being nominated.
``I was trying to find people to tell and the phone kept buzzing, so I could hardly tell anybody," said Yunus, speaking from his home in Dhaka, the capital of Bangladesh. ``Then people started coming and bringing flowers. It's fantastic."
Still exuberant after hours of telephone calls and hundreds of visitors pouring into his house, Yunus said: ``This prize is so overwhelming, it will affect our work tremendously. It will bring the issues I'm raising to the attention of people who can make a difference in the world.
``From this day on, microcredit will become part of the financial center, it can't be kept as some kind of subsector," he said. ``As a bank you have to reach the poor people. That's a big change, and banking will not be the same."
Yunus said he believes the Nobel committee endorsed his view that bridging the gap between rich and poor countries in an age of increasing globalization is critical to reducing conflict around the world.
``You cannot go on having absurd amounts of wealth when other people have problems of survival," he said. ``If you can bring an end to poverty, at least from an economic point of view, you can have a more livable situation between very rich people and very poor people, very rich countries and very poor countries. That's our basic ingredient for peace."
Bangladesh's first Nobel Prize exhilarated a poor nation more accustomed to news of natural disasters, disease, and political upheaval.
A massive public assembly was planned for today in Dhaka to honor Yunus and the Grameen Bank, according to bank officials who said their offices were besieged yesterday by customers, citizens, and politicians offering congratulations.
Yunus and the bank were surprise recipients among the 191 nominees for the most prestigious of the Nobel awards. Speculation in recent days had focused on diplomats and officials who brokered last year's Aceh peace accord, which ended 29 years of fighting in the Indonesian province, and on global celebrities that included Bono, the U2 lead singer and antipoverty campaigner.
The $1.4 million prize will be split between the Grameen Bank and Yunus, the bank's managing director. Yunus said he would use his share to set up a company to make low-cost, nutritious food for the poor and to establish an eye hospital for poor Bangladeshis.
Yunus and the Grameen Bank are hardly household names outside Bangladesh, but Yunus has been one of the world's most prominent and renowned leaders of poverty alleviation. The Grameen Bank model has been duplicated in more than 100 countries, from Uganda to Malaysia to Chicago's South Side.
The Bill and Melinda Gates Foundation recognized the bank's efforts in August, providing a $1.5 million grant to expand its work worldwide through the Grameen Foundation.
A gentle, soft-spoken man who has been feted by kings and presidents for his groundbreaking and tireless efforts to improve the lives of poor families, Yunus has remained most at ease in the steamy Bangladeshi villages where the bank's clients, mostly women, line up to repay their loans.
Yunus launched the idea of the Grameen Bank after he returned to Bangladesh from the United States to take a teaching job in the economics department at Chittagong University.
Alarmed at the poverty created by ongoing famine, he and his students started an experimental project giving women $27 loans to buy straw to make stools.
The bank they created -- Grameen means village in the Bengali language -- not only defied conventional lending rules by making loans to the poorest , but challenged cultural taboos by giving most of the loans to women in a Muslim-dominated society.
The bank issues most of its loans to women because Yunus said they spent their money more carefully and paid back the loans in high er percentages than men.
Today, the bank has 6.61 million borrowers and 2,226 branches. The bank reports it has lent $5.72 billion over the past 30 years and that it has a repayment rate of more than 98 percent.
``Yunus's long-term vision is to eliminate poverty in the world," the Nobel Prize committee said. ``That vision cannot be realized by means of microcredit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, microcredit must play a major part."