Nobel prize for banker to the poor.

Muhammad Yunus and the Grameen Bank have been awarded the Nobel Prize for peace (equal to more than CAD $1.5 million).

Zunus is called the "world's banker to the poor." His Grameen banking system is estimated to have extended credit to more than seven million of the world's poor, most of them in Bangladesh, one of the poorest nations in the world.

Yunus was a professor of economics at Chittagong University in 1974, when he and his students went on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learned that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin.

Yunus made his first loan, the equivalent of US $27, to 42 women in the village. They used the money to make stools and to earn and reinvest in their venture. It enabled them to provide support for their families, raise themselves above subsistence levels and pay for education for their children. The conventional banking system was reluctant to give credit to those who were too poor to provide any form of guarantee or needed only small amounts of money to get themselves started. Otherwise, they had to turn to local money-lenders who charged high interest rates.

The Grameen (village) Bank, was formed in 1983 and is now majority owned by the rural poor it serves, with a 10% stake held by the Bangladeshi government. It was founded on principles of trust and solidarity.

In Bangladesh, Grameen currently has 1,084 branches, with 12,500 staff serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments.

Of the borrowers, 94% are women and over 98% of the loans are paid back, a recovery rate higher than any other banking sys tern. Grameen's methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.

He has tried, in his own words, "to transform the vicious circle of low-income, low saving and low investment into a virtuous circle of low-income, injection of credit, investment, more income, more savings, more investment, more income.

"With this recognition, we expect that the model we have developed will spread across the world."

www.grameen-info.org

Canada's vanishing role

In 2000, the Canadian International Development Agency spent $78 million on a microcredit program. By 2005, the CIDA spent only $23 million.