March 15, 2011 12:36:40 am
The pioneer of microcredit,the founder of the bank for the poor,Grameen Bank (GB),and a Nobel Prize winner for his work on poverty alleviation has now been called a blood-sucker and his life-long work described as mere entrapment of the poor towards greater indebtedness. In a virulent attack on the man who captured the imagination of the world with his model of collateral-free banking that gives small loans to the rural poor,making illiterate women recipients of 95 per cent of his loans,Prime Minister Sheikh Hasina last December,accused Prof Mohammad Yunus of deception,of doing business with the lives of the poor,of treating GB as his personal property,and of misleading the government about his activities.
The PMs no-holds-barred attack on Bangladeshs best-known global face was triggered by a Norwegian TV documentary Fanget I Mikrogjeld (Caught in micro-debt) aired in Norway and Denmark on November 30,2010,in which microcredit was heavily criticised as a poverty alleviation model. More significantly,it also highlighted a dispute dating back to the late 90s,between Norad,the Norwegian aid body,and GB about the manner in which a grant of approximately $100 million would be used. The dispute was later settled to the mutual satisfaction of both Norad and GB,and the issue never raised again in the last 12 years.
Within less than a week of this incident the PM called Mohammad Yunus a blood-sucker and the government-backed onslaught was afoot. A government review committee was formed to look into GBs work; a former employee of Yunus,and a known critic,was appointed to the banks chair; and the central bank issued a letter removing Yunus as managing director of GB.
Yunus went to the high court against the removal order which was upheld on the ground that Yunus had crossed the age limit of 60 specified by banking law. The appeal to the appellate division will be heard on the 15th of this month.
Legalities aside,the attack on Yunus and his subsequent removal from the stewardship of the bank he founded has several implications that go far beyond the person. First of all,what is to become of GB? Will its present ownership and governing structure remain,or it will be fully taken over by the government?
GB operates under a special ordinance that gives it the power to run its own affairs,including appointing its own managing director. It is a most unique institution in the sense that is owned by its 8 million borrowers,who are its shareholders and have nine elected members on its 12-member board. The other three,including the chair,are nominated by the government. Originally the governments share was 25 per cent but later,as the banks equity grew and government did not re-invest its share,according to GB,dwindled to less than 5 per cent.
Recently,the government has been claiming that GB is a government body,an organ of the state without explaining how. There is widespread fear that following Yunus removal the government will assume tighter control of GB and try to run it as a government body,thereby destroying the unique features that lie at the heart of its success. With 8.3 million poor borrowers,of whom 8 million are women,and with a monthly loan disbursement of nearly Tk 10 billion,GB is a gigantic institution that directly touches the lives of more than 40 million poor people if we take five members as the average size of each borrowers family.
Then there is the bigger question of what is to become of microcredit itself. If the PMs criticism that micro-lending does not help the poor,but only entraps them within a bigger web of debts,is to be taken seriously,then what is to become of the other microfinance institutions,which together serve an estimated 20 million borrowers affecting the lives of at least 100 million borrowers? Will Sheikh Hasinas government impose stiffer regulatory controls on them?
The question of high interest rates is a favourite subject for all those who want to denigrate Yunus and GB. So will the government impose a lower rate of interest for microcredit in the future? If so,then how many MFIs will still be in the business? And how viable will they be? This discussion on interest rates has been the subject of populist debate,rather then of serious research. Any arbitrary action in this field has the potential of backfiring,causing the sector itself to collapse,adversely affecting the very poor that the prime minister wants to protect.
There is a perception that the removal of Prof Yunus and the attack on his reputation is a prelude to an overall review by this government of the role of non-governmental organisations in general. Bangladeshs political parties,particularly their leaders,have never been fully comfortable with the role of NGOs. Many of them are suspected by the ruling party of the day of harbouring pro-opposition sympathies. In fact one of Yunus perceived crimes is that his political sympathies are not clear,and could even be unfriendly towards the present government. Both our major political parties have publicly expressed their suspicion that many NGOs are politically active and play significant roles during elections. So Yunus removal could trigger a wholesale review of government-NGO relations.
The outcome of the legal process will finally determine Prof Yunus formal relationship with GB. However his place as its founder,as a man who caught the worlds imagination as an poverty-alleviation innovator,as the man who effectively empowered women through access to funds which they had never before had in most rural areas,and as the man who brought the greatest amount of respect and honour to the country of his birth,remains indelibly etched in the hearts and minds of the people of Bangladesh.
The writer is editor and publisher of The Daily Star,Dhaka
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