The Nobel Peace Prize 2006 Winner Dr. Muhammad Yunus delivered a lecture within KSE Public Lectures Project by Kyiv School of Economics

Yesterday the Nobel Peace Prize 2006 Winner, Dr. Muhammad Yunus, delivered a lecture entitled Overcoming Poverty, within KSE Public Lectures Project by Kyiv School of Economics. Dr. Yunus told the story, dating back to the 80s, on the creation of Grameen Bank - the new model bank, which is oriented towards the population of the poor countries and dealing with provision of unsecured loans for people to start their own business.

In the middle 90s the Bank also started giving microloans for education purposes and home construction. Before the creation of Grameen Bank, millions of people from Bangladesh, living below the poverty line, were forced to go through the usurer's offices; that would in fact turn those people into "slaves", since, having received the credit to start production of simple commodities, they did not have rights to set the price for the ready-made goods. On the other hand, the traditional banks refused to work with people, whose scanty incomes did not guarantee the financial soundness of the borrower.

According to Muhammad Yunus, "Creation of Grameen Bank gives a possibility to reconsider the operating principles of the entire banking system. The poverty was not an initial part of the human nature. The poverty is being created artificially by the system and the society. And since the traditional banks are being ruled by the principle "The more you have, the more you are attractive for us", our customers of interest are those having nothing. Moreover, people do not have to go to bank; it is the bank that has to come to them".

The basic working principles of the bank and the targets, set by its founder, allowed for considering the new entrepreneurial model: the social business with the main objective of leading the break-even activities, aimed at achieving social goals rather than profit maximization.

It took many a decade for Muhammad Yunus and his team to prove the competence and effectiveness of the Bank's innovative working principles and to break the obstinacy of state conservative institutions on the way of the Bank's development. The results of successful activities were improvements in employment rate and welfare among the poorest country population, as well as increasing utilization of microlending model outside Bangladesh, starting from South-East Asia and then spreading over the developed western countries. In 1996 Muhammad Yunus had the first meeting with Bill Clinton, by that time being the governor of Arkansas. At this very year the first pilot project of Grameen Bank in the USA was launched.

In 2006 Muhammad Yunus won the Nobel Peace Prize for his contribution to fight with poverty. As of today this is the unique case in the world history when the Nobel Peace Prize has been awarded to a banker.

Giving comment on his visit to Ukraine, Dr. Yunus said: "In many countries it has been stated that the Grameen Bank working principles cannot be applied in local conditions and can only be effective in Bangladesh. But I do affirm that it is not Bangladesh, but the people that matter. For today our bank works effectively in Bangladesh, Malaysia, Philippines, Myanmar, China, India, Kosovo and USA".

It has been a second year that Kyiv School of Economics, within its KSE Public Lectures project, invites the world-known economists, politicians and public characters to Ukraine for discussing the current challenges to be faced by Ukraine and the whole world. Within this period of time the public lectures have been held by Robert Angle, the Economics Nobel Prize Winner of 2003; Dr. Francis Fukuyama, professor of international economics within John Hopkins University; Robert Pindyke, the co-author of Macroeconomics textbook; James Wolfensohn, the 9^th World Bank President; Colin Powell, the 65^th USA Secretary of the State. Besides that, in January, 2007 the round-table discussion entitled "Economic Perspectives of Space Research for Ukraine and the whole world" was held with the participation of Heidemarie Stefanyshyn-Piper (National Aeronautics and Space Administration, NASA, USA), Henry Hertzfeld, Professor of Space Policy within George Washington University, and others.

 
EDITOR'S NOTE:

Muhammad Yunus was born on June, 28, 1940, in the village of Bathua in British India (now being the territory of Bangladesh). Later his family had moved to the city of Chittagong, where he started attending school and then college. In 1957 he entered the University in Dhaka (the Bangladesh capital), graduating from it in 1961. In 1965 he won the Fulbright Scholarship to study in USA. In 1969 he obtained his Doctor's degree in economics in Vanderbilt University. After the Bangladesh Liberation War (1971), Dr. Yunus went back to his native land to join the government planning commission. After witnessing the hunger of the year 1974, he started participating in various poverty fighting programs. In 1976 Muhammad Yunus had organized a commercial structure, later to be transformed into Grameen Bank. In 2006, together with his bank, he won the Nobel Peace Prize.

Grameen Bank was launched as a research project by Muhammad Yunus, granting its first microloan in 1976. On October, 1, 1983, under the authority auspices, the organization started working fully as a bank, receiving its present name. The Bank's peculiarity is that its principal shareholders are the customers themselves; they own 96% of the shares. The rest of shares are being owned by the government of Bangladesh. For the last years the Bank's performance indicators have raised dramatically. As in 2003 the Bank had 3,2 million borrowers, in 2007 (as of October) the number raised up to 7,34 million, with women constituting 97%. Within the given period the number of cities to be served raised from 44 000 up to 80 000; the loan repayment level was increased from 95% to 98,35%.  As of October, 1, 2007, the Bank had 2568 branches, to employ 24,7 thousand employees. For its lifetime, the Grameen Bank granted loans for as much as $6,55 billion.

The innovative idea of Muhammad Yunus became popular and enjoyed success all over the world. By virtue of microloans, millions of people are now able to start their own business, forever leaving their poor past behind. Today it is one of the biggest world finance corporations, uniting nearly 25 institutions: Grameen Trust, Grameen Communications, Grameen Shakti/Energy, Grameen Shikkha/Education, Grameen Telecom, Grameen Knitwear Ltd., etc.
Through the success of corporation and worldwide recognition of microlending, Wharton, one of the leading business schools, has included Muhammad Yunus into the list of "Top-25 Most Influential People in Business Nowadays". The system, founded by Professor Yunus, is now being used in more than 100 countries, including even such a developed state as USA. Development of microlending system has been supported by such world leaders as Bill Clinton, Bill Gates, Ted Turner, Pier Omidiar, the founder of eBay, and others.

In 2006 Muhammad Yunus won the Nobel Peace Prize for his contribution to fight with poverty. "We will not reach peace until people at large do not find the way to get out of the poor. Microlending is one of the ways to do that", says the official press-release of the Nobel Committee. As of today, this is the unique case in the world history when the Nobel Peace Prize has been awarded to a banker for his financial activities.
The lecture by Dr. Muhammad Yunus within Nobel Prize Awarding Ceremony (Oslo, Norway) on December, 10, 2006, can be found here: http://nobelprize.org/nobel_prizes/peace/laureates/2006/yunus-lecture-en.html

The Kyiv School of Economics (KSE), www.kse.org.ua, was founded by the Economics Education and Research Consortium (EERC, www.eerc.kiev.ua) and the Victor Pinchuk Foundation (www.pinchukfund.org). The School's Mission is to improve the economic and business environment as well as the process of public policy forming in Ukraine and neighboring countries. The Kyiv School of Economics offers an internationally recognized two-year, full time English language Master's Program with focus on Financial Economics, Economic Policy and Economics of Firms, Consumers and Market Structure. The program is taught by the leading specialists representing the best world universities, having a strong research background. The School's curriculum has been modelled on the basis of the best economic and financial graduate programs, used in North America and Western Europe. All the students are provided with unrivalled access to the world economic resources.

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