Mohammad Yunus, Founder of the Grameen Bank in Bangladesh, has been awarded this year’s Nobel Peace Prize.  Grameen owes its astounding success to the efforts of poor Bangladeshi women, and the prize speaks eloquently to the power of investing in them.  Click here for Edge’s special tribute to Yunus, the Grameen Bank and all the women who proved conventional banking wisdom wrong.

"When she finally receives the twenty-five dollars, she is trembling. The money burns her fingers. Tears roll down her face. She has never seen so much money in her life. She never imagined it in her hands. She carries the bills as she would a delicate bird or a rabbit, until someone advises her to put the money away in a safe place lest it be stolen."

Professor Yunus’ idea was ingeniously simple and bold: if you extend credit to poor women, they will help themselves. The professor of economics began micro-credit as an experimental research project to try to make a dent on the poverty he saw around him in Bangladesh, which was then recovering from a devastating famine. At a time when poor women were mostly viewed as passive beneficiaries of aid handouts, he viewed them as worthwhile and important investments, and as partners in helping to end poverty.

The success of the Grameen Bank is a shining example of this. From the beginning, it specifically targeted those unable to obtain credit from traditional banks: 95 percent of its 5 million clients are women who own less than half an acre of land and have very little income. The unique community-based lending method is particularly suited to women. Loans are administered to groups of five people, with only two receiving their loan at first.  When the first two make a few regular payments, loans are gradually extended to the rest of the group. By building both individual self-reliance and creating a community of women supporting each other, Grameen Bank is able to realize a loan repayment rate of over 97 percent.

In response, Grameen Bank members began to adopt sixteen social principles that they collectively helped enforce locally.  These included educating their children, improving health and sanitation in their communities, growing as many vegetables and seedlings as possible, planning the size of their families and always supporting each other. This approach has helped the Grameen Bank build a relationship of trust with rural women and empower them.  And it’s a model that has been replicated and adapted all over the world, including the United States.