Microloans, macro-good.

Byline: The Register-Guard

Muhammad Yunus understands that a true and lasting peace requires more than the absence of war.

Yunus, this year's recipient of the Nobel Peace Prize, knows that peace requires providing people with the means to escape poverty and, through their own hard work and ingenuity, to acquire the sustainable income, food and shelter that enables them to live in harmony with their neighbors.

The Bangladeshi economist, who shared the $1.4 million prize with the Grameen Bank he founded three decades ago, pioneered the concept of microcredit. The concept is to allow impoverished people who can't qualify for traditional loans to borrow small amounts of money without collateral. The bank's shareholders? They're the very same people that the loans support.

Yunus invented microcredit loans after witnessing the poverty that gripped Bangladesh in the wake of a devastating drought and famine in 1974. In his autobiography, "Banker to the Poor," he recalled meeting a a 21-year-old woman named Sufia Begum who was barely able to survive because of a small yet overwhelming debt.

She had to borrow roughly 25 cents a day to buy bamboo to make stools. After repaying that debt, she was left with 2 cents a day to pay for food and shelter. Yunus tried an experiment: He loaned $27 to Begum and 42 of her fellow villagers. All he asked was that they pay him back over the next year as their businesses began to produce stable profits.

That was the origin of Grameen Bank, which today has more than 6.6 million borrowers in 71,371 villages in Bangladesh. The bank has made more than $5.7 billion in loans to help borrowers start businesses by buying, for instance, a cell phone on which villagers can pay to make calls. Borrowers form small groups that supervise loans, with peer pressure substituting for collateral. The bank's repayment rate: an astonishing 98 percent.

Thanks to this quiet humanitarian's model, microcredit has become a global phenomenon. Last year, more than 100 million people received microloans, including some in the United States.

So why give Yunus a prize for peace instead of one for economics? Because he understood with world-changing clarity and transforming compassion that lasting peace cannot be achieved until the poorest of the poor find a way to break out of poverty.