Development Finance and Economic Security

Muhammad Yunus and the Grameen Bank Win the Nobel Peace Prize for 2006

NEW YORK, 17 October 2006 -- Two former Ford Foundation grantees, Muhammad Yunus and the Grameen Bank, have been awarded the Nobel Peace Prize for 2006.

As pioneers of the micro-credit field, Yunus and the Grameen Bank have helped steer billions of dollars in small loans to millions of the world's poorest people.

In announcing the prize, the Norwegian Nobel Committee declared that "lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means."

Grants from the Ford Foundation in Bangladesh supported the early micro-credit demonstration projects that eventually grew into the Grameen Bank.

In 1977, with partial grant support from the foundation, Muhammad Yunus began an experiment to provide small unsecured loans to the landless for such projects as rice husking, livestock rearing, carpentry, and petty trade. A key feature of the experiment was the "borrowing group," in which members assume collective responsibility for repaying loans.

The experiment was picked up by the central banking authority of Bangladesh and replicated through cooperating commercial bank branches. By 1981, 25 cooperating commercial bank branches were participating and about $2 million in loans had been disbursed to 15,000 people.

Ford continued funding the rapidly-expanding Grameen Bank throughout the 1980s and early 1990s, helping it establish a permanent foothold among the poorest communities of Bangladesh.

Today the Grameen Bank operates 2,226 branches and has some 6.61 million borrowers, 97% of whom are women. It has disbursed over $5 billion in small loans. The bank currently has outstanding loans of over $450 million.

Ford Foundation grants have also helped spark the expansion of microfinance to many other areas of the world. In Mexico, for example, the foundation is working with the Mexican Association of Social Sector Credit Unions to help address the shortage of financial services among the country's rural poor and to improve the economic vitality of rural, especially indigenous, communities.

In India, the foundation has provided long-term institutional support and loans for BASIX, a financial and technical services company that provides a range of financial services, including savings, crop, life and health insurance and loans to low-income farmers and entrepreneurs in rural areas. BASIX in considered the first large for-profit financial institution in India to address the needs of the rural poor.

Learn more about the Ford Foundation's work in development finance around the world

The Ford Foundation is an independent, nonprofit grant-making organization. For more than half a century it has been a resource for innovative people and institutions worldwide, guided by its goals of strengthening democratic values, reducing poverty and injustice, promoting international cooperation and advancing human achievement. With headquarters in New York, the foundation has offices in Africa, the Middle East, Asia, Latin America, and Russia.