Muhammad Yunus: The Architect of Microfinance
October 6, 2017
Every year, the first week of October serves as a global celebration of knowledge and understanding as the Nobel prizes are awarded in recognition of academic, cultural, and scientific advances. Past prize winners include Kofi Annan, Nelson Mandela, and most salient to this spotlight, Muhammad Yunus. Yunus was awarded the prize in 2006 for his outstanding work with the Grameen Bank, turning the underutilized concept of micro-finance into a large scale success.
Yunus was born in 1940 in the seaport city of Chittagong, Bangladesh, a British municipality at the time. An active scholar from an early age, Yunus attended Chittagong University, wherein he was given a professorship immediately after graduating. He then received a Fulbright scholarship award from Vanderbilt to pursue a PhD in economics, became a professor of economics at Middle Tennessee State, and later returned to Chittagong. However, following a famine in Bangladesh in 1974, Yunus turned his focus away from academia and invested himself in the fight against poverty.
In 1976, the idea of micro-credit was first planted in Yunus’s head when he lent $27 to a group of 42 bamboo workers, wanting them to avoid having to deal with the local loan sharks. Although he only made two cents on each loan, Yunus realized that micro-finance was a viable business model. Blossoming into 28,000 members by 1983, Yunus’ small loan service transformed into a full-fledged lending organization he called the Grameen Bank. In the next 20 years, Yunus would go on to lend a grand total of $6.38 billion in small loans, transforming the lives of over 7.4 million borrowers.
Yunus’ organization had a unique characteristic from the start: It catered heavily to women, something no other financial institution in the region did. As 94% of the Grameen’s loans went to women, Yunus’ program helped to give them something extremely rare for women in developing countries: Financial freedom. With 70% of the world’s poor being disproportionately women, micro-finance served as a unique way to boost up those who were often left behind.
Eventually, Yunus began to gain global recognition for his incredible work, earning him the aforementioned Nobel Peace Prize, becoming the first Bangladeshi to ever win the award. In addition to gaining prestige in the worldwide community, Yunus was also jointly awarded $1.4 million in prize money, his share of which went to creating low-cost, nutrient-dense food for the poor as well as contributing to establish an eye hospital in Bangladesh. However, the awards for his noble work did not stop there: Yunus is one of only seven people ever to have been awarded the Nobel Peace Prize, Presidential Medal of Freedom, and the Congressional Gold Medal.
Yunus has since stepped down from the Grameen Bank and now concentrates his energy on a variety of areas, ranging from political involvement to business consulting. Domestically, a branch of the Grameen Bank was set up in the US in 2008, and in the nearly ten years it has been running, the program has reached over 100,000 women, providing nearly a billion dollars in small loans. Recently, Yunus has been working with the UN on topics of sustainable development and the Rohingya crisis.
Although Muhammad Yunus started the crusade of micro-finance over forty years ago, organizations like ourselves, WCCN, and Kiva still carry the same torch and fight the same battle. So looking back now, we say thank you to Muhammad Yunus for all the work he has done and all the people he has inspired to do the same. By providing the blueprint on which to build this industry, he has directly and positively affected the lives of millions.