Why Muhammad Yunus Should Be Deemed the Most Influential Person of 2006

At this point in time, no one is ignorant of the huge gap between the world's rich and poor. Industrialized, economically developed countries typically reside in the Northern Hemisphere, while poor, more agriculturally-based countries reside in the Southern Hemisphere, making the gap not only figurative but literal. In addition, the rich countries of the Global North has 85 percent of the world's wealth but only 15 percent of its population. The Global South has 85 percent of the population but only 15 percent of the world's wealth, making the situations for those living in impoverished countries all the more striking.

Muhammad Yunus, founder of the Grameen Bank, was awarded the Nobel Peace Prize earlier this year, along with his organization, for their efforts to alleviate poverty in the developing world. His concept of "micro-credit" has shined the spotlight on what small loans can do for the poorest of the poor in the world.

Yunus founded the Grameen Bank in 1983 in Bangladesh while teaching economics at Chittagong University. In the neighboring village of Jobra, he noticed the plight of the village people, who were unable to lift themselves out of poverty because of the unfair loan terms offered to them. With help from his graduate students, he made a list of 42 individuals who needed small amounts of money. The total amount they needed was $27, and Yunus lent the money out of his own pocket.

After approaching the university's bank as well as other local banks with the idea of lending money to the poor, he was repeatedly turned down. He began taking out loans himself and distributing it to the people. Without fail, all of the villagers paid back the loans, but banks still wouldn't their minds about extending them credit. Yunus couldn't change the banks, so he established his own after negotiation with the Bangladeshi government. Grameen Bank was born.

Villagers join the bank in groups of five or more. Once the first two members successfully pay back their loans, another two can receive a loan, and so on. After one year, villagers are eligible to buy shares in the bank, which has resulted in a 94 percent ownership rate among Grameen Bank's clients. The Bank has been proven extremely successful, with a repayment rate between 96 and 100 percent.

Most of the clients are women, and other benefits have resulted among the successful borrowers, like an increased chance of girls receiving higher education. The Grameen Bank has started successfully in other countries as well, and the $30 micro-loans are demonstrative of just how little money is needed by the poorest countries of the world to help alleviate and one day eliminate their extreme poverty.

"I believe it is the responsibility of any civilized society to ensure human dignity to all members and to offer each individual the best opportunity to reveal his or her creativity," Yunus has said. "Let us remember that poverty is not created by the poor but by the institutions that we, the better off have established. We can solve the problem not by means of the old concepts but by adopting radically new ones."

With the money from the micro-loans, borrowers are able to successfully start their own clothing businesses or other shops. Yunus and the Grameen Bank were awarded the Nobel Peace Prize for "their efforts to create economic and social development from below."

Small comparable programs are have begun in the United States, such as innercity Chicago. However, labor costs are much higher in the United States than in developing countries, making the operation of the organization much more expensive. In developing countries, there is often a large pool of educated unemployed who can serve as managers or accountants.

Programs like the Grameen Bank have been proven to be more successful than some of the other options being discussed to alleviate poverty in the developing world. An idea that extreme poverty could be eliminated by 2025 is dependent on the rich nations of the world doubling the amount of aid they provide to the poor,. which means the amount would need to be $160 billion per year. However, most Americans often assume that the United States provides a lot more aid to the poor than they really do. As a result, I think this international effort is unlikely to occur. Rather, programs like the Grameen Bank would benefit both the borrowers and the lenders. Repayment rates near 100 percent show that the borrowers pay back their loans on schedule, and the interest rate is often slightly higher than the commercial rate, meaning lenders still profit off of these micro-loans, rather than just giving more aid to the poor.

Too often, society attempts to solve the problems of others by giving them money or other things, when the poor don't know how to use what they're given. Micro-loans from an organization like the Grameen Bank would benefit the lender and also educate the borrowers on the importance of credit. And if it will help Americans understand the value of a dollar, that can be considered an added benefit.

It is for these reasons that Muhummad Yunus should be considered the most influential person of 2006. He has shown just how little is needed by the world's poorest individuals, which sheds light on why more projects like the Grameen Bank are not being started by the richest countries in the world. When the poor are able to lift themselves out of poverty, everyone benefits. The economy becomes more successful and the world's undernourished become healthier. Yunus has set the standard for what countries like the United States should be doing to help the disadvantaged in the world.

When accepting his award December 10, he urged world leaders to take note of his work, and encouraged similar intitatives to address the problem he sees as the root of terrorism.