The Grameen Bank - a Nobel Prize
Microfinance has existed in different forms for a long time. Borrowing and lending mechanisms have existed for several millennia in Africa and Asia. However, “Modern” microfinance was launched in the mid-1970s notably with the creation of the Grameen Bank.
The Grameen Bank was founded in Bangladesh in 1978 by Pr. Muhammad Yunus, who was looking for a concrete response to the economic crisis the country was going through. Determined to experiment practical solutions, he observed the production activities of a group of women who made bamboo stools. Without money to buy their raw materials, they borrowed from local merchants but were obliged to sell them their finished products at a price scarcely higher than the price of the raw materials. Pr. Yunus lent them the sum they needed, $27 without interest to help them get out of the endless indebtedness cycle. This is where the idea of the Grameen Bank (the “village bank”) originated, by popularizing solidarity lending, a system where each member of a group or a community agrees to guarantee the loans of the others, so they can generate profit and reimburse them.
In 2006, Pr. Yunus and the Grameen Bank were awarded the Nobel Peace Prize.