In 1974, famine gripped Bangladesh. Hundreds of thousands died and millions became destitute. "Villagers had to borrow from loan sharks on terrible conditions," says Muhammad Yunus, "and some even became slave labor for the money lenders." For Yunus, who had just returned to Bangladesh as an economics professor after completing his Ph.D. in the U.S., it was wrenching to discover how meaningless his academic achievements were in the midst of all this suffering. Hoping to cure his own sense of helplessness, he wandered the muddy lanes of a village next to his university, searching for ways to help. Little did he know that this nervous exploration would plant the seeds of an economic miracle still blooming decades later.
Yunus compiled a list of the village's 42 most impoverished and went about repaying each of their debts for a paltry total of $27. While banks would never lend money to these often illiterate and undocumented peasants, Yunus simply asked that they work hard and repay him "when they could." He recalls: "It was a big shock that just a little money could make people so happy. With the money they could become free."
This is the operating ethos of the Grameen Bank, which Yunus founded in 1983 and which has since extended microloans to 6.6 million people in Bangladesh, most of them women. "Conventional banks look for the rich," says Yunus. "We look for the absolutely poor." As Yunus sees it, credit is a human right, enabling a person "to unwrap that gift of one's self and find out who he is." Yet the concept he pioneered has proved to be much more than kind-hearted charity: 99% of Grameen's borrowers repay their debts — despite the fact that they borrow without providing collateral — and the bank makes a modest profit.
Inspired by his success, many others have embraced Yunus' concept. From the U.S. to Uganda, over 100 million people are now enrolled in various microcredit schemes. Prominent global figures otherwise at each other's throats, such as Paul Wolfowitz, head of the World Bank, and Hugo Chévez, the leftist President of Venezuela, have all praised Yunus' achievement. And, on Oct. 13, Yunus received the most extraordinary endorsement yet, becoming the first businessman ever to win the Nobel Prize for Peace. As the news broke, his entire country celebrated. Prime Minister Khaleda Zia heralded him as "the pride of Bangladesh," while thousands flocked to Grameen's headquarters in the suburbs of Dhaka to congratulate their hero.
For Yunus — whose father struggled to support 10 children as the owner of a tiny ornaments shop in the city of Chittagong — the Nobel is an almost unimaginable accomplishment. But his ambitions are far bolder than this. Yunus insists it's possible to eradicate global poverty within two generations, with microcredit uplifting countless millions. "At the rate we're heading, we'll halve total poverty by 2015," he says. "We'll create a poverty museum in 2030."