The environmentally-optimized, carbon neutral factory will be located in the Bangladeshi capital of Dhaka and produce clothing for export, employing between 500 to 700 workers, the company said in a statement released Wednesday.

The for-profit venture between the Otto Group, a mail-order empire that does business in 20 countries with over 10 billion euros in annual sales last year, and the Grameen Bank, a microfinance lender, is intended to "give poor people in Bangladesh the opportunity to free themselves from poverty," said the statement.

"Poor people aren't asking for charity because charity isn't a solution for poverty," said Yunus at a press event in Otto's home base of Hamburg on Wednesday. "They want to work in order to earn their livelihood."

The Otto Group is providing an interest-free loan of approximately two million euros to finance the factory's construction and expects the loan to be repaid from the venture's profits over a 10 to 15 year period.

For the profit of the workers

Although the factory will operate on a for-profit basis, the first for-profit undertaking in Grameen's history, the profits will flow to a foundation whose mission will be to improve the living conditions of factory employees and their families and communities.

Otto Group chairman Michael Otto said the project should serve as a "model for textile production in Bangladesh and similar factories in the rest of the world."

Yunus, an economist by training, began experimenting with small loans to help the very poorest members of society in the mid-1970s after his country had been devastated by natural disasters and a war of independence from Pakistan.

He discovered very quickly that very small sums of money could have a transformative effect on the lives of the poor and that they lacked almost any access to affordable credit.

That insight led to the formation of a lending program which eventually became the Grameen Bank, which has lent over $8.4 billion (5.6 billion euros) since its inception - with nearly 98 percent of the loans repaid, according to the bank.

About 97 percent of the borrowers are women, and part of the bank's mission is to help empower women in Bangladesh's traditionally male-dominated society.

The bank's success has led to imitators in over 40 countries worldwide, and in 2006 Yunus was awarded the Nobel Peace Prize for "efforts to create social and economic development from below."

bn/dpa/epd
Editor: Matt Hermann