Imagine your life without a bank. You are not able to deposit money, cash your checks, buy a house and pay the mortgage, or pay your children's tuition. These are the types of challenges that the poor of the world face every day.
An economics professor in Bangladesh found this state of affairs unacceptable. In his heart, he knew the poor were bankable. The challenge was to convince others. When conventional banks were unconvinced, he realized he needed a bank of his own that would give microcredit to the poor and protect their savings.
In recognition of his three decades of banking to the poor, the Nobel Prize committee rewarded recognized Muhammad Yunus and his Grameen Bank with its peace prize last month.
An economics professor and a bank for the poor may seem a surprising choice for the peace prize. What do banking and finance have to do with peace? After all, neither Mr. Yunus nor his bank has stopped any war; they only provide tiny loans to the poor and keep their savings safe.
But membership in the bank has brought prosperity to the poor, and where prosperity is planted, peace grows. Armed with their entrepreneurial spirit, bank members have acquired assets that help them to fight and win their war against poverty.
In the current atmosphere of saber-rattling, empire-building and unilateralism, this year's Nobel peace laureate reveals the far-reaching impact of America's "soft power." Mr. Yunus studied in the United States and received a doctorate in economics from Vanderbilt University on a Fulbright fellowship. The Ford Foundation gave him funding to start a research program that eventually led to the idea of the bank. After the civil war in 1971 that led to an independent Bangladesh, Mr. Yunus returned home and joined Chittagong University as a professor of economics. It was there, in a village near the campus, that he met his first borrower, a stool maker named Sufia.
This banker and his bank have not, of course, won the ultimate victory against poverty. But together they have made a big dent. Almost 30 million people in Bangladesh are served by this bank. Under a conservative estimate, at least 15 million to 20 million people have won their war against poverty because of the bank, and the rest are making progress. Research by the World Bank suggests that it takes Grameen's borrowers, on average, five years to overcome poverty. The work continues: This week, the Global Microcredit Summit is being held in Halifax, Nova Scotia.
The best way to understand Grameen Bank is to meet one of its borrowers, such as Farida Begum, who used to feed her family date juice in used milk cans for breakfast and lunch because she could not even afford a glass. Using business savvy, tenacity and loans from the bank, she now owns a fleet of 60 rickshaws and a rickshaw repair shop. She has hired a tutor for her children and will make sure they go to college.
As a student and a colleague of Muhammad Yunus', I saw firsthand how his positive approach led to numerous "firsts" besides the bank for the poor. He was, for example, the first one to fund "phone ladies" in villages with no other phone service. The women earn money by selling phone service. Mr. Yunus also started a company that brought solar power to areas without electricity.
This is not the last time the world will hear from Mr. Yunus and his initiatives to help the poor help themselves.
Asif Dowla, a professor of economics at St. Mary's College of Maryland, has worked closely with Muhammad Yunus since the mid-1970s. His book "The Poor Always Pay Back: The Grameen II Story," co-authored with Dipal Barua, will be published this month. His e-mail is firstname.lastname@example.org.