Bangladesh bankers to the poor win Nobel Peace Prize

(Reuters) - Bangladeshi economist Muhammad Yunus and the Grameen Bank he founded won the 2006 Nobel Peace Prize on Friday for grassroots efforts to lift millions out of poverty that earned him the nickname “banker to the poor”.

Yunus, 66, set up a new kind of bank in 1976 to lend to the neediest, particularly women, in his native Bangladesh, enabling them to start up small businesses without collateral.

In doing so, he pioneered microcredit, a system copied in more than 100 nations from the United States to Uganda.

“It's very happy news for me and also for the nation,” he told reporters at his home in the Bangladeshi capital, Dhaka.

“Now the war against poverty will be further intensified across the world. It will consolidate the struggle against poverty through microcredit in most of the countries,” he said. “There should be no poverty, anywhere.”

In awarding a prize more traditionally given to those who forge treaties and fight for human rights, the secretive five-member Norwegian Nobel Committee said eliminating poverty was a path to peace and democracy.

“Lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Microcredit is one such means. Development from below also serves to advance democracy and human rights,” the committee added.

“Eradication of poverty can give you real peace,” said Yunus. “There is no self-respect and status when you are burdened with poverty.”

The academic and his bank were surprise winners from a field of 191 candidates for the 10 million Swedish crown ($1.36 million) award. Yunus said he was looking forward to attending the formal award ceremony in Oslo on Dec. 10.

Returning from a Fulbright scholarship in the United States, Yunus was shaken by the 1974 Bangladesh famine and headed out into the villages to see what he could do.

He found the region's women in severe debt to extortionate moneylenders. His initial goal was simply to persuade a local bank manager to give villagers regular credit, but the banker said that was impossible without a guarantee.

Yunus set out to prove him wrong and never looked back. Grameen -- the word means “village” or “rural” in the Bangla language -- has lent $5.72 billion since it began. Of this, $5.07 billion has been repaid.

The bank, which has turned a profit in all but three years, lends to 6.6 million people, 96 percent of them women, and has not received donor funds in eight years. It counts beggars among its members, giving them interest-free loans and life insurance.

Today the bank is 94 percent owned by the rural poor it serves and 6 percent by the government.

“In Bangladesh, where nothing works and there's no electricity,” Yunus once said, “microcredit works like clockwork.”

Nobel Committee Chairman Ole Danbolt Mjoes told Reuters: “This idea was generated in a mostly Muslim country and then fantastically spread to the whole world in a positive way.”

Yunus may have been a surprise winner, but his achievements have won wide recognition.

“Everyone is talking about microcredit. It was started by Yunus, one man in Bangladesh,” U.N. Secretary-General Kofi Annan said in a 2002 interview.

Widening notion of peace

First awarded in 1901, the peace prize has evolved to include the defence of human rights and the environment.

The 2004 award went to Kenyan environmentalist Wangari Maathai for a campaign to plant trees in Africa. Last year's choice of the International Atomic Energy Agency (IAEA) and its Egyptian head Mohamed ElBaradei was more in line with dynamite millionaire Alfred Nobel's original intent.

Not all observers have appreciated the apparent shift.

“This should be a prize for peace, or for encouragement to stay the course -- as it was in my case, when it put more wind in my sails,” 1983 Nobel Peace laureate Lech Walesa told Polish television.

“Perhaps the name of the prize should be changed to those who work to eliminate (economic) differences?”

But French President Jacques Chirac said the committee had rewarded “an exceptional work in the service of solidarity, development and peace.”

(Additional reporting by Alister Doyle, Sarah Edmonds, Marianne Fronsdal and Wojciech Moskwa in Oslo, Paul Taylor in Brussels, Nizam Ahmed and Anis Ahmed in Dhaka and Pawel Kozlowski in Warsaw)