Prof. Yunus and Bangladesh

Mar 07 2011

By Muhammad Zafar Iqbal

I like Prof. Yunus a lot, and more than that I respect him. I also know that there are many like me. I remember, on hearing the news of Prof. Yunus’ Nobel Prize I jumped about and screamed like a person gone mad with happiness. There have not been too many such occasions in my life. My happiness was not because someone I knew got the Nobel Prize but because the prestige of Bangladesh went sky high. Only those who have lived abroad can truly gauge how cruelly, indifferently and disrespectfully Bangladesh is sometimes talked about, and it is Prof. Yunus and his work that have helped us enormously to counter that. The Wall Street Journal in a recent piece, pointing out the difference between Pakistan and Bangladesh, wrote, “Pakistan’s hero is a rogue nuclear scientist who unlawfully smuggled nuclear technology, while Bangladesh’s hero is Prof. Yunus, winner of the Nobel Peace Prize for helping the poor with small loans”. Continue reading

Statement from CGAP

CGAP today released the following statement from Tilman Ehrbeck, CGAP CEO, and Vijay Mahajan, Chair of CGAP’s board, on the efforts to remove Nobel Prize winner Muhammad Yunus as Managing Director of Grameen Bank:

“We are deeply concerned by the campaign of the past few months and recent legal actions to remove Muhammad Yunus as managing director of Grameen Bank.

Over the past thirty years together Muhammad Yunus and Grameen Bank have been a powerful force and symbol for the microcredit movement, and for progress for poor people who were previously excluded from formal financial services. Professor Yunus has been a pioneer in the field, and his substantial contributions to advancing the cause of poor unbanked women should be celebrated by Bangladesh, and the international community.

Access to credit can be a valuable tool to allow poor households to invest in small businesses, and see themselves through vulnerable patches. More broadly, access to financial services can provide important benefits simply by enabling poor families to manage their household finances more effectively and smooth their consumption-allowing them to save for emergencies, pay school fees when needed, and cope with illness or other temporary shocks.

The microcredit movement made a critical contribution in proving that it is possible to deliver financial services to poor people at scale, and in a sustainable way.

The current situation is damaging not just to Grameen Bank and poor clients in Bangladesh, but also to the wider microfinance industry.

Nearly three billion people in the world have no access to formal financial services, and it remains our priority to ensure that previously unreached low-income populations gain access to the full range of services that they can use to invest, build assets, smooth consumption, and deal with shocks.

The widespread international support Professor Yunus has received affirms the important role many countries now see for financial inclusion. We also sense an increasing awareness and understanding at a political level in many countries-including the G20-of what financial inclusion can contribute to social and economic development.

We hope that a compromise can be reached that allows Grameen Bank to operate effectively, and for microfinance in Bangladesh to continue to thrive and contribute to the social and economic development of the country.

We remain sharply focused and committed in our efforts to help realize the important goal of universal financial inclusion.”

About CGAP

CGAP (The Consultative Group to Assist the Poor) is the world’s leading resource for the advancement of microfinance. CGAP provides the financial industry, governments and investors with objective information, expert opinion, and innovative solutions to effectively expand access to finance for poor people around the world. More information:


The impact of microfinance

In the 1970s, three out of four Bangladeshis lived in poverty and the country was considered a test case for development. Rapid population growth, frequent natural disasters, and low economic growth throughout the 1980s suggested that a large number of households would remain trapped in chronic poverty.
Defying this outlook, Bangladesh began experiencing more sustained economic growth since the 1990s, which was accompanied by impressive poverty reduction. For example, in 1991-92, about 60% of the population was below the poverty line and around 50% was below the extreme poverty line. By 2005, those figures had gone down to 40% and 25% respectively.

The Bangladesh economy began experiencing structural changes in the 1990s following trade liberalisation and domestic market reforms. In urban areas, private sector growth and employment were spurred by rapid growth in garments exports while rural areas benefited from the deregulation of agriculture markets, boosting agricultural production. At the same time, relatively higher paying rural non-farm opportunities increased and the labour force slowly began to shift away from agriculture.

All in all, declining population growth rates, improved human capital, improved infrastructure, mainly in the form of more extensive road communications networks, and increased foreign remittance have been put forth as factors explaining Bangladesh’s enhanced growth and declining poverty.

But what was the contribution of microfinance to this impressive performance? It is impossible to put an exact number but we can look at some published evidence to get a sense of where micro-credit is making a difference and where it may not be. The World Bank’s 2008 Poverty Assessment has two findings in this context.

First, PKSF programme coverage data suggest that since 2000 microfinance has expanded more in areas that were poorer, presumably because the better-off geographical areas were covered in the previous decade. Secondly, the report shows that the reduction in poverty in rural Bangladesh has been much more in upazilas where microfinance membership increased more rapidly, after accounting for other factors which drive poverty reduction. There are other published papers which go beyond the geographical variation of microfinance coverage and effects.
Two well known studies assess short and medium-term microfinance impacts from the borrowers’ point of view, using repeated household surveys carried out in rural Bangladesh. Using nationally representative data, their findings suggest that poverty reduction among the borrowers due to microfinance is 1.6 percentage points per year. Moreover, microfinance programmes have spillover effects on the non-borrowers — their poverty level goes down by 0.3 percentage point a year.

Even without the income gains, the poor may still benefit from microcredit services if it helps them withstand income and non-income shocks such as an economic disaster resulting from the sudden death of a productive family member, the loss of an economic asset, or natural disasters. Without some form of insurance (either public or private), the poor may not be able to smooth consumption during those disasters, which may lead to sharp cut-backs in essential food and non-food expenditures.

Several studies confirm that micro-credit programmes help households partially insure against shocks so that they effectively play an important “safety net” role. One carefully designed study finds that microcredit borrowers are about 50% less prone to consumption fluctuation than their counterpart non-member poor households in Bangladesh.

Clearly, further innovations are required to strengthen this crucial risk-reduction role, and in general to offer flexible financial services catering to different types of poor households, in particular for the extreme-poor. One example is a micro-finance programme known as PRIME, implemented by PKSF, which offers a flexible repayment schedule and consumption smoothing, as well as production loans. As a result, a recent evaluation shows that PRIME is more effective than regular microfinance in reaching the ultra-poor, as well as the seasonal-poor.

The discussion on the impact of microcredit would be incomplete without referring to the broader package of interventions that are provided with it. MFIs in Bangladesh vary significantly in terms of their noncredit services though they typically include training, related business development services and social messages on education, health and civic rights. One published paper finds that these noncredit interventions raise self-employment profits in rural Bangladesh by 125% while the combined impact of credit and noncredit interventions on self-employment profits is 175%.

The impact evaluation literature on micro-finance in Bangladesh also contains some cautionary notes. For example, it is clear that not all borrowers benefit equally as it depends on their local economic environment, their entrepreneurial ability and the extent their income sources are diversified. A few studies also show that microcredit does little to change gender inequities by limiting female control over loans.

However, on balance there is more evidence suggesting that microcredit does influence gender relations positively. Most published papers show that access to microcredit leads to women taking a greater role in household decision making, having a greater access to financial, economic and social resources and having greater mobility in Bangladesh. .

It is clear that microfinance can protect households from shocks, contribute to changing societal norms about the role of women in society and lead to some households moving out of poverty. Overall, it has played its part in the impressive progress Bangladesh has made in poverty reduction over the past two decades. Clearly, not everyone utilises loans productively, and there is a risk of falling into over-indebtedness. So, the role of microfinance should be strengthened through further innovations which take into account these pitfalls.

Finally, microfinance is not a panacea and will clearly not eliminate all poverty in any country. Thus, the potential of microfinance can be best exploited by recognising the lessons from careful impact evaluation studies, strengthening programmes on the basis of this research and field experience, and by incorporating micro-finance programmess into Bangladesh’s overall poverty-reduction strategy.

The writers are economists based in Washington DC, and both have carried out research on the impact of micro-credit in Bangladesh.


Removal of Prof Yunus dishonours 20m women

March 6, 2011

Says 20 distinguished citizens.

Staff Correspondent
Twenty distinguished female personalities in a statement yesterday said Prof Muhammad Yunus’ removal brings dishonour to the 20 million poor women who were empowered by Grameen Bank.

They demanded an end to this situation through a proper and respectable solution to the matter, says the statement.

“We, the undersigned, have been observing with great concern the harassment of Nobel laureate Dr Muhammad Yunus, who has contributed to the empowerment of the poor, especially poor rural women through alleviation of their poverty,” it reads. Continue reading

Chairman Kerry Concerned About Efforts To Remove Muhammad Yunus From Bank Post

Washington, D.C. -Senate Foreign Relations Committee Chairman John Kerry (D-MA) released the following statement on the possible removal of Nobel-winning microfinance pioneer Muhammad Yunus as Managing Director of the Grameen Bank, which he founded:

“I am deeply concerned by efforts to remove Muhammad Yunus as managing director of the Grameen Bank. The international community will watch this situation closely, and I hope that both sides can reach a compromise that maintains Grameen Bank’s autonomy and effectiveness. Institutions like the Grameen Bank make a significant contribution to Bangladesh’s development and democracy and Professor Yunus’s life-long work to reduce poverty and empower women through microloans has deservedly received world-wide attention and respect.”


Is this the way to treat our Nobel laureate?

By Mahfuz Anam
Friday, March 4, 2011
Can a technicality be the main measure of judging a man of Yunus’ stature?

So after all the talk of “blood sucking” and “siphoning off billions” the real guilt of our one and only Nobel Laureate and globally admired microcredit pioneer and Grameen Bank (GB) founder, is that he is too old to continue as the Managing Director and that his reappointment was not endorsed by the Bangladesh Bank. Did he become too old yesterday or in the recent past? Prof Muhammad Yunus is now more than 70 years old. So what was the Bangladesh Bank, the finance ministry and the several governments that came and went in the meantime, doing for all these years? Why was the so-called irregularity in his reappointment not corrected earlier? Why the process was not challenged either administratively or in the court of law? Why something that was not an issue for ten years, has suddenly become one?

The answer is simple. The government does want him to go and so he must go. The prime minister made her views clear in a recent press conference when she accused him and microcredit of “Sucking the blood” of the poor asserting that “business in the name of the poor will not be allowed”. Suddenly Yunus became a villain and was being denigrated in a section of media with false and highly derogatory propaganda. Absurd cases began to be lodged with even more absurd accusations. Continue reading

Defending Grameen

By Chaklader Mahboob-ul Alam

I still remember the day when I met Professor Muhammad Yunus, founder of the Grameen Bank for the first time. It was, I think, in 1998. He came to give a lecture at the University of Madrid, Spain. The huge conference room of the Medical College, where the event took place under the chairmanship of the queen, was packed to its full capacity.

There were hundreds of students, teachers, journalists and social workers at the meeting. I must confess that I had never seen so much enthusiasm among the students to listen to a banker from a third world country, and they were not disappointed. Continue reading

Leave Professor Yunus alone

Monday, February 28, 2011
By Fakhruddin Ahmed

2011-02-28__point02There was a time, not so long ago, when Bangladesh’s name was synonymous with disasters. The calamities were either natural (cyclones or floods), or manmade (political assassinations or coup de tats).

Former American Secretary of State, Dr. Henry Kissinger, labelled Bangladesh as “an international basket case” in 1974. Although Bangabandhu Sheikh Mujibur Rahman retorted, “Bangladesh is not an empty basket,” the label somehow stuck.

Bangladesh’s image, however, began to slowly improve in the 1980s when two of its illustrious and innovative sons decided to do something about Bangladesh’s abject poverty — Professor Muhammad Yunus through microcredit and Grameen Bank, and Mr. Fazle Hasan Abed through Brac. Continue reading

More eminent citizens stand by Prof Yunus

Sunday, February 27, 2011

Twelve distinguished personalities in a statement here yesterday said some quarters are expressing and publishing opinions and news about Nobel laureate Prof Muhammad Yunus, which do not focus the truth.

They said that it seems the quarter is out to damage the image of Dr Yunus who in his long life has done many welfare activities for poor people in the country.

Everyman may have different opinions on the activities of Prof Yunus, but the opinions given by the quarters are destroying the country’s reputation across the world, they added.

They also said there is no scope to raise any question after the Norwegian government’s opinion on the matter.

The eminent persons are: East Delta University Vice Chancellor (VC) Sikandar Khan, Prof Dr Moinul Islam of Economics department of Chittagong University (CU), Prof Mahfujul Hoque Chowdhury of Political Science of CU, former CU VC Abdul Mannan, writer Fahmida Amin, women leader and writer Begum Mustari Safi, ULAB University Prof Mohit-ul-Alam, journalist Abul Momen, Chittagong Press Club President Abu Sufian, Chittagong District Lawyers’ Association President Salehuddin Haider Siddique, and freedom fighter Farooque-e-Azam Bir Pratik.