Peace Prize lecture, Yunus says poverty is a threat to
peace, calls for development assistance to create
corporations owned by poor people
What follows is Muhammad
Yunus' Nobel Peace Prize lecture
(Oslo, December 10, 2006) Your Majesties, Your
Royal Highnesses, Honorable Members of the Norwegian Nobel
Committee, Excellencies, Ladies and Gentlemen,
Grameen Bank and I are deeply honored to receive this most
prestigious of awards. We are thrilled and overwhelmed by
this honor. Since the Nobel Peace Prize was announced, I
have received endless messages from around the world, but
what moves me most are the calls I get almost daily, from
the borrowers of Grameen Bank in remote Bangladeshi
villages, who just want to say how proud they are to have
received this recognition.
Nine elected representatives of the 7 million
borrowers-cum-owners of Grameen Bank have accompanied me all
the way to Oslo to receive the prize. I express thanks on
their behalf to the Norwegian Nobel Committee for choosing Grameen Bank for this year's Nobel Peace Prize.
Mohammed Yunus, winner of the Nobel Peace Prize, who,
together with the Grameen Bank, which he founded, have
reduced the poverty of millions through small loans for
activities that earn an income (microenterprise
lending). Photo: Grameen Bank
their institution the most prestigious prize in the world,
you give them unparalleled honour. Thanks to your prize,
nine proud women from the villages of Bangladesh are at the
ceremony today as Nobel laureates, giving an altogether new
meaning to the Nobel Peace Prize.All borrowers of Grameen Bank are celebrating this day as
the greatest day of their lives. They are gathering around
the nearest television set in their villages all over
Bangladesh , along with other villagers, to watch the
proceedings of this ceremony.
This years' prize gives highest honour and dignity to the
hundreds of millions of women all around the world who
struggle every day to make a living and bring hope for a
better life for their children. This is a historic moment
Poverty is a Threat to Peace
By giving us this prize, the Norwegian Nobel Committee has
given important support to the proposition that peace is
inextricably linked to poverty. Poverty is a threat to
World's income distribution gives a very telling story.
Ninety four percent of the world income goes to 40 percent
of the population while sixty percent of people live on only
6 per cent of world income. Half of the world population
lives on two dollars a day. Over one billion people live on
less than a dollar a day. This is no formula for peace.
The new millennium began with a great global dream. World
leaders gathered at the United Nations in 2000 and adopted,
among others, a historic goal to reduce poverty by half by
2015. Never in human history had such a bold goal been
adopted by the entire world in one voice, one that specified
time and size. But then came September 11 and the Iraq war,
and suddenly the world became derailed from the pursuit of
this dream, with the attention of world leaders shifting
from the war on poverty to the war on terrorism. Till now
over $ 530 billion has been spent on the war in Iraq by the
I believe terrorism cannot be won over by military action.
Terrorism must be condemned in the strongest language. We
must stand solidly against it, and find all the means to end
it. We must address the root causes of terrorism to end it
for all time to come. I believe that putting resources into
improving the lives of the poor people is a better strategy
than spending it on guns.
Poverty is Denial of All Human
Peace should be understood in a human way 3/4 in a broad
social, political and economic way. Peace is threatened by
unjust economic, social and political order, absence of
democracy, environmental degradation and absence of human
Poverty is the absence of all human rights. The
frustrations, hostility and anger generated by abject
poverty cannot sustain peace in any society. For building
stable peace we must find ways to provide opportunities for
people to live decent lives.
The creation of opportunities for the majority of people −
the poor − is at the heart of the work that we have
dedicated ourselves to during the past 30 years.
I became involved in the poverty issue not as a policymaker
or a researcher. I became involved because poverty was all
around me, and I could not turn away from it. In 1974, I
found it difficult to teach elegant theories of economics in
the university classroom, in the backdrop of a terrible
famine in Bangladesh . Suddenly, I felt the emptiness of
those theories in the face of crushing hunger and poverty. I
wanted to do something immediate to help people around me,
even if it was just one human being, to get through another
day with a little more ease. That brought me face to face
with poor people's struggle to find the tiniest amounts of
money to support their efforts to eke out a living. I was
shocked to discover a woman in the village, borrowing less
than a dollar from the money-lender, on the condition that
he would have the exclusive right to buy all she produces at
the price he decides. This, to me, was a way of recruiting
I decided to make a list of the victims of this
money-lending "business" in the village next door to our
When my list was done, it had the names of 42 victims who
borrowed a total amount of US $27. I offered US $27 from my
own pocket to get these victims out of the clutches of those
money-lenders. The excitement that was created among the
people by this small action got me further involved in it.
If I could make so many people so happy with such a tiny
amount of money, why not do more of it?
That is what I have been trying to do ever since. The first
thing I did was to try to persuade the bank located in the
campus to lend money to the poor. But that did not work. The
bank said that the poor were not creditworthy. After all my
efforts, over several months, failed I offered to become a
guarantor for the loans to the poor. I was stunned by the
result. The poor paid back their loans, on time, every time!
But still I kept confronting difficulties in expanding the
program through the existing banks. That was when I decided
to create a separate bank for the poor, and in 1983, I
finally succeeded in doing that. I named it Grameen Bank or
Today, Grameen Bank gives loans to nearly 7.0 million poor
people, 97 per cent of whom are women, in 73,000 villages in
Bangladesh. Grameen Bank gives collateral-free income
generating, housing, student and micro-enterprise loans to
the poor families and offers a host of attractive savings,
pension funds and insurance products for its members. Since
it introduced them in 1984, housing loans have been used to
construct 640,000 houses. The legal ownership of these
houses belongs to the women themselves. We focused on women
because we found giving loans to women always brought more
benefits to the family.
In a cumulative way the bank has given out loans totaling
about US $6.0 billion. The repayment rate is 99%. Grameen
Bank routinely makes profit. Financially, it is self-reliant
and has not taken donor money since 1995. Deposits and own
resources of Grameen Bank today amount to 143 per cent of
all outstanding loans. According to Grameen Bank's internal
survey, 58 per cent of our borrowers have crossed the
Grameen Bank was born as a tiny homegrown project run with
the help of several of my students, all local girls and
boys. Three of these students are still with me in Grameen
Bank, after all these years, as its topmost executives. They
are here today to receive this honour you give us.
This idea, which began in Jobra, a small village in
Bangladesh, has spread around the world and there are now
Grameen type programs in almost every country.
It is 30 years now since we began. We keep looking at the
children of our borrowers to see what has been the impact of
our work on their lives. The women who are our borrowers
always gave topmost priority to the children. One of the
Sixteen Decisions developed and followed by them was to send
children to school. Grameen Bank encouraged them, and before
long all the children were going to school. Many of these
children made it to the top of their class. We wanted to
celebrate that, so we introduced scholarships for talented
students. Grameen Bank now gives 30,000 scholarships every
Many of the children went on to higher education to become
doctors, engineers, college teachers and other
professionals. We introduced student loans to make it easy
for Grameen students to complete higher education. Now some
of them have PhD's. There are 13,000 students on student
loans. Over 7,000 students are now added to this number
We are creating a completely new generation that will be
well equipped to take their families way out of the reach of
poverty. We want to make a break in the historical
continuation of poverty.
Beggars Can Turn to Business
In Bangladesh 80 percent of the poor families have already
been reached with microcredit. We are hoping that by 2010,
100 per cent of the poor families will be reached.
Three years ago we started an exclusive programme focusing
on the beggars. None of Grameen Bank's rules apply to them.
Loans are interest-free; they can pay whatever amount they
wish, whenever they wish. We gave them the idea to carry
small merchandise such as snacks, toys or household items,
when they went from house to house for begging. The idea
worked. There are now 85,000 beggars in the program. About
5,000 of them have already stopped begging completely.
Typical loan to a beggar is $12.
We encourage and support every conceivable intervention to
help the poor fight out of poverty. We always advocate
microcredit in addition to all other interventions, arguing
that microcredit makes those interventions work better.
Information Technology for the Poor
Information and communication technology (ICT) is quickly
changing the world, creating distanceless, borderless world
of instantaneous communications. Increasingly, it is
becoming less and less costly. I saw an opportunity for the
poor people to change their lives if this technology could
be brought to them to meet their needs.
As a first step to bring ICT to the poor we created a mobile
phone company, Grameen Phone. We gave loans from Grameen
Bank to the poor women to buy mobile phones to sell phone
services in the villages. We saw the synergy between
microcredit and ICT.
The phone business was a success and became a coveted
enterprise for Grameen borrowers. Telephone-ladies quickly
learned and innovated the ropes of the telephone business,
and it has become the quickest way to get out of poverty and
to earn social respectability. Today there are nearly
300,000 telephone ladies providing telephone service in all
the villages of Bangladesh . Grameen Phone has more than 10
million subscribers, and is the largest mobile phone company
in the country. Although the number of telephone-ladies is
only a small fraction of the total number of subscribers,
they generate 19 per cent of the revenue of the company. Out
of the nine board members who are attending this grand
ceremony today 4 are telephone-ladies.
Grameen Phone is a joint-venture company owned by Telenor of
Norway and Grameen Telecom of Bangladesh. Telenor owns 62
per cent share of the company, Grameen Telecom owns 38 per
cent. Our vision was to ultimately convert this company into
a social business by giving majority ownership to the poor
women of Grameen Bank. We are working towards that goal.
Someday Grameen Phone will become another example of a big
enterprise owned by the poor.
Free Market Economy
Capitalism centers on the free market. It is claimed that
the freer the market, the better is the result of capitalism
in solving the questions of what, how, and for whom. It is
also claimed that the individual search for personal gains
brings collective optimal result.
I am in favor of strengthening the freedom of the market. At
the same time, I am very unhappy about the conceptual
restrictions imposed on the players in the market. This
originates from the assumption that entrepreneurs are
one-dimensional human beings, who are dedicated to one
mission in their business lives 3/4 to maximize profit. This
interpretation of capitalism insulates the entrepreneurs
from all political, emotional, social, spiritual,
environmental dimensions of their lives. This was done
perhaps as a reasonable simplification, but it stripped away
the very essentials of human life.
Human beings are a wonderful creation embodied with
limitless human qualities and capabilities. Our theoretical
constructs should make room for the blossoming of those
qualities, not assume them away.
Many of the world's problems exist because of this
restriction on the players of free-market. The world has not
resolved the problem of crushing poverty that half of its
population suffers. Healthcare remains out of the reach of
the majority of the world population. The country with the
richest and freest market fails to provide healthcare for
one-fifth of its population.
We have remained so impressed by the success of the
free-market that we never dared to express any doubt about
our basic assumption. To make it worse, we worked extra hard
to transform ourselves, as closely as possible, into the
one-dimensional human beings as conceptualized in the
theory, to allow smooth functioning of free market
By defining "entrepreneur" in a broader way we can change
the character of capitalism radically, and solve many of the
unresolved social and economic problems within the scope of
the free market. Let us suppose an entrepreneur, instead of
having a single source of motivation (such as, maximizing
profit), now has two sources of motivation, which are
mutually exclusive, but equally compelling 3/4 a)
maximization of profit and b) doing good to people and the
Each type of motivation will lead to a separate kind of
business. Let us call the first type of business a
profit-maximizing business, and the second type of business
as social business.
Social business will be a new kind of business introduced in
the market place with the objective of making a difference
in the world. Investors in the social business could get
back their investment, but will not take any dividend from
the company. Profit would be ploughed back into the company
to expand its outreach and improve the quality of its
product or service. A social business will be a non-loss,
Once social business is recognized in law, many existing
companies will come forward to create social businesses in
addition to their foundation activities. Many activists from
the non-profit sector will also find this an attractive
option. Unlike the non-profit sector where one needs to
collect donations to keep activities going, a social
business will be self-sustaining and create surplus for
expansion since it is a non-loss enterprise. Social business
will go into a new type of capital market of its own, to
Young people all around the world, particularly in rich
countries, will find the concept of social business very
appealing since it will give them a challenge to make a
difference by using their creative talent. Many young people
today feel frustrated because they cannot see any worthy
challenge, which excites them, within the present capitalist
world. Socialism gave them a dream to fight for. Young
people dream about creating a perfect world of their own.
Almost all social and economic problems of the world will be
addressed through social businesses. The challenge is to
innovate business models and apply them to produce desired
social results cost-effectively and efficiently. Healthcare
for the poor, financial services for the poor, information
technology for the poor, education and training for the
poor, marketing for the poor, renewable energy − these are
all exciting areas for social businesses.
Social business is important because it addresses very vital
concerns of mankind. It can change the lives of the bottom
60 per cent of world population and help them to get out of
Grameen's Social Business
Even profit maximizing companies can be designed as social
businesses by giving full or majority ownership to the poor.
This constitutes a second type of social business. Grameen
Bank falls under this category of social business.
The poor could get the shares of these companies as gifts by
donors, or they could buy the shares with their own money.
The borrowers with their own money buy Grameen Bank shares,
which cannot be transferred to non-borrowers. A committed
professional team does the day-to-day running of the bank.
Bilateral and multi-lateral donors could easily create this
type of social business. When a donor gives a loan or a
grant to build a bridge in the recipient country, it could
create a "bridge company" owned by the local poor. A
committed management company could be given the
responsibility of running the company. Profit of the company
will go to the local poor as dividend, and towards building
more bridges. Many infrastructure projects, like roads,
highways, airports, seaports, utility companies could all be
built in this manner.
Grameen has created two social businesses of the first type.
One is a yogurt factory, to produce fortified yogurt to
bring nutrition to malnourished children, in a joint venture
with Danone. It will continue to expand until all
malnourished children of Bangladesh are reached with this
yogurt. Another is a chain of eye-care hospitals. Each
hospital will undertake 10,000 cataract surgeries per year
at differentiated prices to the rich and the poor.
Social Stock Market
To connect investors with social businesses, we need to
create social stock market where only the shares of social
businesses will be traded. An investor will come to this
stock-exchange with a clear intention of finding a social
business, which has a mission of his liking. Anyone who
wants to make money will go to the existing stock-market.
To enable a social stock-exchange to perform properly, we
will need to create rating agencies, standardization of
terminology, definitions, impact measurement tools,
reporting formats, and new financial publications, such as,
The Social Wall Street Journal. Business schools will offer
courses and business management degrees on social businesses
to train young managers how to manage social business
enterprises in the most efficient manner, and, most of all,
to inspire them to become social business entrepreneurs
Role of Social Businesses in Globalization
I support globalization and believe it can bring more
benefits to the poor than its alternative. But it must be
the right kind of globalization. To me, globalization is
like a hundred-lane highway criss-crossing the world. If it
is a free-for-all highway, its lanes will be taken over by
the giant trucks from powerful economies. Bangladeshi
rickshaw will be thrown off the highway. In order to have a
win-win globalization we must have traffic rules, traffic
police, and traffic authority for this global highway. Rule
of "strongest takes it all" must be replaced by rules that
ensure that the poorest have a place and piece of the
action, without being elbowed out by the strong.
Globalization must not become financial imperialism.
Powerful multi-national social businesses can be created to
retain the benefit of globalization for the poor people and
poor countries. Social businesses will either bring
ownership to the poor people, or keep the profit within the
poor countries, since taking dividends will not be their
objective. Direct foreign investment by foreign social
businesses will be exciting news for recipient countries.
Building strong economies in the poor countries by
protecting their national interest from plundering companies
will be a major area of interest for the social businesses.
We Create What We Want
We get what we want, or what we don't refuse. We accept the
fact that we will always have poor people around us, and
that poverty is part of human destiny. This is precisely why
we continue to have poor people around us. If we firmly
believe that poverty is unacceptable to us, and that it
should not belong to a civilized society, we would have
built appropriate institutions and policies to create a
We wanted to go to the moon, so we went there. We achieve
what we want to achieve. If we are not achieving something,
it is because we have not put our minds to it. We create
what we want.
What we want and how we get to it depends on our mindsets.
It is extremely difficult to change mindsets once they are
formed. We create the world in accordance with our mindset.
We need to invent ways to change our perspective continually
and reconfigure our mindset quickly as new knowledge
emerges. We can reconfigure our world if we can reconfigure
We Can Put Poverty in the Museums
I believe that we can create a poverty-free world because
poverty is not created by poor people. It has been created
and sustained by the economic and social system that we have
designed for ourselves; the institutions and concepts that
make up that system; the policies that we pursue.
Poverty is created because we built our theoretical
framework on assumptions which under-estimates human
capacity, by designing concepts, which are too narrow (such
as concept of business, credit- worthiness,
entrepreneurship, employment) or developing institutions,
which remain half-done (such as financial institutions,
where poor are left out). Poverty is caused by the failure
at the conceptual level, rather than any lack of capability
on the part of people.
I firmly believe that we can create a poverty-free world if
we collectively believe in it. In a poverty-free world, the
only place you would be able to see poverty is in the
poverty museums. When school children take a tour of the
poverty museums, they would be horrified to see the misery
and indignity that some human beings had to go through. They
would blame their forefathers for tolerating this inhuman
condition, which existed for so long, for so many people.
A human being is born into this world fully equipped not
only to take care of him or herself, but also to contribute
to enlarging the well being of the world as a whole. Some
get the chance to explore their potential to some degree,
but many others never get any opportunity, during their
lifetime, to unwrap the wonderful gift they were born with.
They die unexplored and the world remains deprived of their
creativity, and their contribution.
Grameen has given me an unshakeable faith in the creativity
of human beings. This has led me to believe that human
beings are not born to suffer the misery of hunger and
To me poor people are like bonsai trees. When you plant the
best seed of the tallest tree in a flower-pot, you get a
replica of the tallest tree, only inches tall. There is
nothing wrong with the seed you planted, only the soil-base
that is too inadequate. Poor people are bonsai people. There
is nothing wrong in their seeds. Simply, society never gave
them the base to grow on. All it needs to get the poor
people out of poverty for us to create an enabling
environment for them. Once the poor can unleash their energy
and creativity, poverty will disappear very quickly.
Let us join hands to give every human being a fair chance to
unleash their energy and creativity.
Let me conclude by expressing my deep gratitude to the
Norwegian Nobel Committee for recognizing that poor people,
and especially poor women, have both the potential and the
right to live a decent life, and that microcredit helps to
unleash that potential.
I believe this honor that you give us will inspire many more
bold initiatives around the world to make a historical
breakthrough in ending global poverty.
Thank you very much.
© THE NOBEL FOUNDATION 2006. This article first
appeared on the
Nobel Prize website
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