*The Nobel Peace Prize for 2006
*
http://nobelpeaceprize.org/eng_lect_2006b.html

*The Nobel Lecture given by The Nobel Peace Prize Laureate 2006, Muhammad
Yunus (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 honoured to receive this most prestigious of
awards. We are thrilled and overwhelmed by this honour. 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. By giving 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 for them.

*Poverty is a Threat to Peace*
Ladies and Gentlemen:
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 peace.

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 USA alone.

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 Rights*
Peace should be understood in a human way 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
rights.

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.

*Grameen Bank*
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 slave labor.

I decided to make a list of the victims of this money-lending "business" in
the village next door to our campus. 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 Village bank.

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 $
6.0billion. 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 poverty line.

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.

*Second Generation*
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 year.

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 annually.

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 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 mechanism.

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 a) maximization of profit and b) doing
good to people and the world.

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, non-dividend company.

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 raise capital.

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 poverty.

*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
themselves.

*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 poverty-free world.

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 our mindset.

*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 poverty.

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.

Ladies and Gentlemen,

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.


**
*(c) The Nobel Foundation, Stockholm, 2006.

General permission is granted for the publication
in newspapers in any language. Publication in
periodicals or books, or in digital or electronic forms,
otherwise than in summary, requires the consent of
the Foundation. On all publications in full or
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notice must be applied.

***

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