My oh my! What a gaseous outburst! Ejazur, your brain at the knees is far more developed than mine. I am a Neandarthal when it comes to knee-jerk reaction to perfectly well-written articles I posted that were packed with relevant facts and informed opinions from reliable authorities. {I think one article was originally posted by bd_mailer].
I wanted people to take a closer look at the Grameenism syndrome and the 'hoopla' about microcredit. We need to seriously check the myth of "poverty-reduction" claims made by Younus. The articles provided enough facts and pertinent information, but you chose to stick to the myth.
Of course I want change in the Structure of the Govt. --that is where the machinery of the endemic corruption is operative. My campaign for democratic local governance remains uncompromising no matter which Party is in the Administration. Even in the early days of Grameen when I admired the idea, I wrote in an article (1993), "A bank, no matter how innovative. is not a substitute for good governance."
But I do resent you attacking me by quoting a fragment of my sentence. My whole sentence read:
Why is suddenly all this venom against PM Hasina for accusing Grameen for being a cruel and unforgiving moneylender, something that is the buzz in all corners of the world?
You took this disngenuous path to convey the idea that unless one follows the Alochona practice of condemning Hasina and BAAAAAAAAAAAL on every post one deserves condemnation. You really think Hasina or any other Prime Minister should not show any concern whether Younus evaded payng tax to the Bangladesh Govt. Why should a statement from Norad reflect what tax he paid or did not pay to the Bangladesh Govt.?
Please read Jaffor's piece posted on News From Bangladesh:
The predicament of Grameen Bank does not bode well for Dr. Yunus
Wednesday December 08 2010 21:02:30 PM BDT
By A.H. Jaffor Ullah, USA
I first met Dr. Muhammad Yunus in April 1971 in Dayton, Ohio when he was a struggling pedagogue in a small college in eastern Indiana and I was a lowly graduate student in Cincinnati, Ohio. The military crackdown of Yahya regime on the wee hours of March 26, 1971 had greatly disturbed a few of us in America; therefore, a hastily arranged meeting was called by Prof. Aminul Islam of Wright State University in Dayton. There were only 6-7 participants in that meeting and Dr. Yunus was one of them. My take on Dr. Yunus was that he was very over ambitious. He told us that he would like to be the ambassador of Bangladesh in Sweden when Pakistanis will be booted out by our freedom fighters. Hearing this quip I laughed because Dr. Yunus was hardly in his early thirties at the time. They don't appoint a young man as an ambassador lest the position loses its gravitas.
Dr. Yunus returned to Bangladesh in the seventies to take up an academic position in Chittagong and there he started his great experiment with micro credit and what a remarkable journey he charted for himself and for Bangladesh.
In the early1980s CBS 60 Minutes – a news magazine – did a segment on Dr. Yunus and the newly founded Grameen Bank, which catapulted him to western world in a big way. He gave a glowing report on the success of his bank to change the lives of many women in Chittagong, a port town in southeastern Bangladesh. There was no independent audit or verification to the Bank's financial statement or Dr. Yunus's exaggerated claim that micro-lending could be a panacea for hapless women in rural areas of Bangladesh.
Dr. Yunus is always very crafty with his words when he talks about the success of his micro-lending practice in rural Bangladesh. He tied the operation of Grameen Bank with poverty alleviation especially for womenfolk. This was the selling point. The gullible western press fell for the bait and they glorified both Dr. Yunus and Grameen Bank while giving glowing encomiums to his brainchild – the bank for the poor. Nowhere was mentioned the exorbitant finance charge that pale the interest rate levied by Kabuliwalas (the Kabuli men from Afghanistan were roving moneylenders of Bengal during British Raj) or the Mahajons (traditional Hindu moneylender).
By 1990s Dr. Yunus had morphed into a towering figure allover the world. When he talked everyone listened. The western press had various monikers for him. They lovingly called him "the banker for poor folks." While the adulation and encomiums poured in, many economists in Bangladesh were puzzled about Grameen Bank. Is it a commercial financial institution? You bet. But many people erroneously thought it was an NGO solely devoted to poverty alleviation and in particular for womenfolk. I never thought Dr. Yunus clarified this issue for once and all. This dual identity of Grameen Bank had served Dr. Yunus rather well. For, he never allowed any outside auditors to examine the Bank's book. Why so? Because Grameen Bank was not exactly a commercial bank. That is the impression one gets when Dr. Yunus glowingly talked about the noble goals of the bank for poor. Also, he helped created Grameen Foundation allover the globe. The foundation did the fund raising in the West but we never fully understood whether Grameen Bank had benefited from the donations collected by the foundation.
Lately, I have learned that Grameen Bank and its employees had never paid a dime to Bangladesh treasury as income tax. Dr. Yunus became a smart businessman while trying to be a social engineer as he always maintained that he started Grameen Bank to uplift the financial lot of indigent womenfolk in Bangladesh. He used this mantra over and over again to Grameen Bank become the nation's number one cellphone company. Bangladesh's Prime Minister, Sheikh Hasina, has quipped in December 2010 that while she was the PM during 1996 through 2001 Dr. Yunus convinced her that his company should get the license to operate a mobile phone business because this would empower womenfolk of Bangladesh. A very convincing argument one might say. Dr. Yunus precisely knew that he could sell almost anything to the nation (read government) provided he invokes the mantra of poverty alleviation. Who could in the right frame of mind argue with Dr. Yunus about his various enterprises that were involved in uplifting the lot of indigent womenfolk?
During 1996 the world experienced a severe downturn in global economy that affected the Asian countries too alongside with the western nation. The Grameen Bank was in liquidity crisis then. Luckily, help was underway from Scandinavian nations. About 100 million dollar grant was given to Grameen Bank – a very successful commercial bank as touted by Dr. Yunus throughout 1990s. This did not chime in with what Dr. Yunus had always said about the success of Grameen Bank. Now bizarre revelation had filled the media. This is true that when the grant money was given to Grameen Bank (read Dr. Yunus) by the donor nation, the money did not go to Grameen Bank but it was deposited to another entity by the name Grameen Kalyan created single-handedly by Dr. Yunus. This is a serious breach of terms and conditions imposed by Swedish authorities who made the grant. Dr. Yunus may say that all the grant money was deposited to Grameen Kalyan and this may be true but this is a fact that the contract was breached. How come an erudite economist did not see it? Dr. Yunus's detractors have said this was done to avoid taxes due to Bangladesh Treasury.
The Bangladesh Bank is now actively examining all the documents pertaining to this grant given by Swedish authorities in 1996. Dr. Yunus thinks no irregularity will be unearthed and that will vindicate his name. There is an intense media interest in this developing story and trust me there will be fallout from this investigation which is being done by Bangladesh Bank.
I read in the media that when Swedish authority found it out about the irregularity done by Grameen Bank right after the grant money was handed out to Dr. Yunus, they questioned Dr. Yunus. In return Dr. Yunus wrote a letter to Norwegian authorities begging them not to disclose the irregularity to anyone in Bangladesh. The inquiry was hushed up. However, in this day of WikiLeaks the news of Dr. Yunus's crafty move resurfaced again. Had this story surfaced in 1996, this would have squished any hope for getting the Noble Peace Prize in October 2006.
Dr. Yunus and his Bank are under microscope now and this does not bode well for him and Grameen Bank. The news of tyranny done by Grameen Bank's agent allover Bangladesh to the Bank's clients who could not come up with interest payment is everywhere in the Internet and print media. The fact that Grameen Bank could not even make a dent in poverty alleviation will be established for once and all. Someone had euphemistically said that Grameen Bank is a "Death Trap" for indigents who borrowed some paltry sum from them.
The axiom that says you cannot fool all the people all the time will be established again now that a full-scale probing is underway by Bangladesh Bank.
-------------------------
Dr. A.H. Jaffor Ullah, a researcher and columnist, writes from New Orleans, USA
E Mail : jhankar@bellsouth.net
Dr. Yunus returned to Bangladesh in the seventies to take up an academic position in Chittagong and there he started his great experiment with micro credit and what a remarkable journey he charted for himself and for Bangladesh.
In the early1980s CBS 60 Minutes – a news magazine – did a segment on Dr. Yunus and the newly founded Grameen Bank, which catapulted him to western world in a big way. He gave a glowing report on the success of his bank to change the lives of many women in Chittagong, a port town in southeastern Bangladesh. There was no independent audit or verification to the Bank's financial statement or Dr. Yunus's exaggerated claim that micro-lending could be a panacea for hapless women in rural areas of Bangladesh.
Dr. Yunus is always very crafty with his words when he talks about the success of his micro-lending practice in rural Bangladesh. He tied the operation of Grameen Bank with poverty alleviation especially for womenfolk. This was the selling point. The gullible western press fell for the bait and they glorified both Dr. Yunus and Grameen Bank while giving glowing encomiums to his brainchild – the bank for the poor. Nowhere was mentioned the exorbitant finance charge that pale the interest rate levied by Kabuliwalas (the Kabuli men from Afghanistan were roving moneylenders of Bengal during British Raj) or the Mahajons (traditional Hindu moneylender).
By 1990s Dr. Yunus had morphed into a towering figure allover the world. When he talked everyone listened. The western press had various monikers for him. They lovingly called him "the banker for poor folks." While the adulation and encomiums poured in, many economists in Bangladesh were puzzled about Grameen Bank. Is it a commercial financial institution? You bet. But many people erroneously thought it was an NGO solely devoted to poverty alleviation and in particular for womenfolk. I never thought Dr. Yunus clarified this issue for once and all. This dual identity of Grameen Bank had served Dr. Yunus rather well. For, he never allowed any outside auditors to examine the Bank's book. Why so? Because Grameen Bank was not exactly a commercial bank. That is the impression one gets when Dr. Yunus glowingly talked about the noble goals of the bank for poor. Also, he helped created Grameen Foundation allover the globe. The foundation did the fund raising in the West but we never fully understood whether Grameen Bank had benefited from the donations collected by the foundation.
Lately, I have learned that Grameen Bank and its employees had never paid a dime to Bangladesh treasury as income tax. Dr. Yunus became a smart businessman while trying to be a social engineer as he always maintained that he started Grameen Bank to uplift the financial lot of indigent womenfolk in Bangladesh. He used this mantra over and over again to Grameen Bank become the nation's number one cellphone company. Bangladesh's Prime Minister, Sheikh Hasina, has quipped in December 2010 that while she was the PM during 1996 through 2001 Dr. Yunus convinced her that his company should get the license to operate a mobile phone business because this would empower womenfolk of Bangladesh. A very convincing argument one might say. Dr. Yunus precisely knew that he could sell almost anything to the nation (read government) provided he invokes the mantra of poverty alleviation. Who could in the right frame of mind argue with Dr. Yunus about his various enterprises that were involved in uplifting the lot of indigent womenfolk?
During 1996 the world experienced a severe downturn in global economy that affected the Asian countries too alongside with the western nation. The Grameen Bank was in liquidity crisis then. Luckily, help was underway from Scandinavian nations. About 100 million dollar grant was given to Grameen Bank – a very successful commercial bank as touted by Dr. Yunus throughout 1990s. This did not chime in with what Dr. Yunus had always said about the success of Grameen Bank. Now bizarre revelation had filled the media. This is true that when the grant money was given to Grameen Bank (read Dr. Yunus) by the donor nation, the money did not go to Grameen Bank but it was deposited to another entity by the name Grameen Kalyan created single-handedly by Dr. Yunus. This is a serious breach of terms and conditions imposed by Swedish authorities who made the grant. Dr. Yunus may say that all the grant money was deposited to Grameen Kalyan and this may be true but this is a fact that the contract was breached. How come an erudite economist did not see it? Dr. Yunus's detractors have said this was done to avoid taxes due to Bangladesh Treasury.
The Bangladesh Bank is now actively examining all the documents pertaining to this grant given by Swedish authorities in 1996. Dr. Yunus thinks no irregularity will be unearthed and that will vindicate his name. There is an intense media interest in this developing story and trust me there will be fallout from this investigation which is being done by Bangladesh Bank.
I read in the media that when Swedish authority found it out about the irregularity done by Grameen Bank right after the grant money was handed out to Dr. Yunus, they questioned Dr. Yunus. In return Dr. Yunus wrote a letter to Norwegian authorities begging them not to disclose the irregularity to anyone in Bangladesh. The inquiry was hushed up. However, in this day of WikiLeaks the news of Dr. Yunus's crafty move resurfaced again. Had this story surfaced in 1996, this would have squished any hope for getting the Noble Peace Prize in October 2006.
Dr. Yunus and his Bank are under microscope now and this does not bode well for him and Grameen Bank. The news of tyranny done by Grameen Bank's agent allover Bangladesh to the Bank's clients who could not come up with interest payment is everywhere in the Internet and print media. The fact that Grameen Bank could not even make a dent in poverty alleviation will be established for once and all. Someone had euphemistically said that Grameen Bank is a "Death Trap" for indigents who borrowed some paltry sum from them.
The axiom that says you cannot fool all the people all the time will be established again now that a full-scale probing is underway by Bangladesh Bank.
-------------------------
Dr. A.H. Jaffor Ullah, a researcher and columnist, writes from New Orleans, USA
E Mail : jhankar@bellsouth.net
To: alochona@yahoogroups.com
From: Ezajur@yahoo.com
Date: Thu, 9 Dec 2010 10:16:41 +0000
Subject: [ALOCHONA] Re: The Yunus Saga
Farida
I don't think any such discussion has arrived at any definitive conclusion. Grameen has distributed more than 6 billion dollars to over 6 million borrowers. Are you saying that no less than 6 million people have been driven further into poverty because of Grameen Bank? Are you standing with Hashishana and saying that there is not one example of success amongst these millions of borrowers?
Look. Some borrowers are indeed driven to destitution and some commit suicide. Investigations are needed in these cases. And suicides should be draw the continuous attention of every agency in the land. But of course this is Bangladesh – what's another suicide? It is not as if would ever take the AL to account for the persecution of a young girl by any of its cadres.
I say neo this and geo that is a crock of hoopla. The fact is NGOs and microcredit have flourished in Bangladesh like nowhere else and this is because of the failure of every government since our birth to radically, and properly, tackle the needs of huge sections of our people. It is the failure of our governments that has turned our nation into the destination of choice for any NGO. We are NGO dependent not because of some international conspiracy but because of our own historically and culturally embedded penchant for stupidity.
Why all this sudden venom against Hasina over this issue?
Good grief! Of all the issues in all the land, over which to show your hand, you choose this episode?! It drives me nuts why people aren't open about which party they support. Obviously it's to avoid awkward questions. But then, when they do voice their support their logic is so
poor, so compromised, so self serving that its just as well they talk about everything except their own party and their own nethri.
Let us be clear. There is nothing sudden about this venom against Hasina. It was there from the beginning, it is always palpable and it is grounded in logic, good taste and the trauma that comes from knowing that our nation deserves far better.
Hasina is a bitter, jealous and petty old bat. The values which you hold dearest are sound and I dare not challenge them blindly. But these same values are embodied in the personages of the Finance Minister and the Education Minister and their like. Your values are ill served by the personages of the Home Minister, the Foreign Minister and the Prime Minister. For that matter even the Agriculture Minister. When you get the courage to confess publicly to this you will finally serve both the nation and the Awami League to the best of your abilities and render the opposition meaningless. .
You don't mind Hasina slapping down her Foreign Minister in public for suggesting that maybe nothing illegal was done. You don't mind Hasina smirking, goading and insulting Dr Yunus on the national stage. You don't mind her tone, choice of words, manner and attitude, though she has
offended many people, including many of your own friends who support AL. You don't mind that she displays jealousy and pettiness towards Dr Yunus. You don't mind that Hasina doesn't require an investigation into the tax affairs of any of her supporters. You don't mind that she said on the national stage that Dr Yunus is just another example of a Bangladeshi trickster. You don't mind that Grameen has flourished under each of her governments. You don't mind that she speaks about millions of suffering borrowers but has done bugger all about it in each of her two terms. You don't mind that Hasina has done more than anyone to ensure this regrettable incident reaches the international stage even before a single minute of investigation has commenced. You don't mind that Hasina demonstrated visible pleasure and vindictiveness at Dr Yunus' embarassment. You don't mind that Hasina was outraged that Dr Yunus, as is his right, dared to enter politics.
Have you noticed the lack of commentary and observation, across all sectors, which praises the leadership and personality of Hasina? The eunuchs who grovellingly sprinkle 'Manonio Prodahan Monthri' on their drivel don't count.
In fact you don't mind anything as long as your own pet concerns are served. Now that the Norwegians have themselves, within days of the story breaking, put this matter to rest, you won't flinch an inch. Bongobondhu's daughter was of course right and you will go onto maintain radio silence on her follies and the crimes of her minions. Oh yeah! And it won't even cross your mind to criticise her for not taking any action over Grameen over the next 3 years.
Your claim that the world is abuzz with concerns about the veracity of Dr Yunus and microcredit is easily matched with the claim that the world is abuzz with new accolades for Dr Yunus, new adventures in microcredit abroad and new efforts to improve the effectiveness of microcredit.
Many are the learned, articulate and well fashioned Bangladeshis who engage the complex issues of this wide world, with great minds and great people, espousing the loftiest ideals and the deepest logic. But when it comes to the land they love best, when it comes to the people they love best, they deposit all their intelligence at the border, and descend into babbling hypocrites. It is often not ill intentioned. It's something to do with a complex weave of helplessness and hopelessness.
Let's hear it again. I have all the time in the world to try and hold your newly exposed fair hand. Let's hear it - 'The Transaction'. Say it again 'The Transaction'. Oooh! Sounds like a Tom Cruise thriller. Oooh! We're so scared of this big bad transaction! Any other transactions you might have concerns about during the term of this government. No? Oh you are so sweet.
I'm a clown, I'm an idiot, I'm illiterate, I'm a pink bottomed monkey.
But baby, even then, I'm far, far, far superior to the Prime Minister of your choice.
Ezajur Rahman
Kuwait
--- In alochona@yahoogroups.com, Farida Majid <farida_majid@...> wrote:
>
>
> Not too long ago we had a discussion on microcredit and how it is really an extension of neoliberal capitalism in the guise of NGO that does more harm to the poor by sucking their money and globalising it.
>
> Why is suddenly all this venom against PM Hasina for accusing Grameen for being a cruel and unforgiving moneylender, something that is the buzz in all corners of the world? Any sitting Govt. should express concern over tax evasion when such a large sum is transfered from a Bank and into a Trust/Kalyan in a questionable transaction.
>
> Please have another look at the article from Himal Magazine as you sing the praise of "Noble" Younus:
> -------------------------------------------------------
>
> As you read this imp. article on Grameenism keep in mind the The [George] Soros Syndrome.
>
> Excerpt from "The Soros Syndrome" by Alexander Cockburn:
>
> In other words, foundations, nonprofits, NGOs—call them what you will—can on occasion perform nobly, but overall their increasing power moves in step with the temper of our times: privatization of political action, directly overseen and manipulated by the rich and their executives. The tradition of voluntarism is extinguished by the professional, very well-paid do-good bureaucracy.
>
> I'm still not sure why Ralph Nader, in his vast 2008 novel Only the Super-Rich Can Save Us, embraced the proposition embodied in the title (unless the whole exercise was an extended foray into irony). As an international class, the superrich are emphatically not interested in saving us, beyond advocating reforms required to stave off serious social unrest.
>
> For many decades the superrich in this country thought that the major threat to social stability lay in overpopulation and the unhealthy gene pool of the poor. Their endowments and NGOs addressed themselves diligently to these questions, by means of enforced sterilization, exclusion of Slavs and Jews from America's shores and other expedients, advanced by the leading liberals of the day.
>
> More recently, "globalization" and "sustainability" have become necessary mantras, and foolish is the grant applicant who does not flourish both words. NGOs endowed by the rich are instinctively hostile to radical social change, at least in any terms that a left-winger of the 1950s or '60s would understand. The US environmental movement is now strategically supervised and thus neutered as a radical force by the Pew Charitable Trusts, the lead dispenser of patronage and money.
>
> Refect upon "patroange" and its desirability when you stave off attempts to make any structural change to the govt.
>
> Farida
>
>
>
>
>
> Date: Tue, 26 Oct 2010 02:08:08 -0700
> Subject: MUST READ: The dangers of Grameenism & microcredit
>
>
>
>
>
>
>
>
>
>
>
>
>
> http://www.himalmag.com/The-danger-of-Grameenism_nw4752.html
>
>
>
> The danger of Grameenism
> October 2010By: Patrick Bond
> HIMAL MAGAZINE
>
> Far from being a panacea for fighting rural poverty, microcredit can impose additional burdens on the rural poor, without markedly improving their socio-economic condition. (Also below, Khorshed Alam on why microcredit initiatives inspired by Mohammad Yunus's vision and implemented by Grameen Bank and other NGOs have not gone nearly as well in Bangladesh as has been publicised worldwide.)
>
>
>
>
> For years, the example of microcredit in Bangladesh has been touted as a model of how the rural poor can lift themselves out of poverty. This widely held perception was boosted in 2006, when Mohammad Yunus and Grameen Bank, the microfinance institution he set up, jointly received the Nobel Peace Prize. In Southasia in particular, and the world in general, microcredit has become a gospel of sorts, with Yunus as its prophet.
>
> Consider this outlandish claim, made by Yunus as he got started in the late 1970s: `Poverty will be eradicated in a generation. Our children will have to go to a `poverty museum' to see what all the fuss was about.' According to Milford Bateman, a senior research fellow at the Overseas Development Institute (ODI) in London who is one of the world's experts on Grameen and microcredit, the reason this rhetoric resonated with international donors during the era of neoliberal globalisation, was that `they love the non-state, self-help, fiscally-responsible and individual entrepreneurship angles.'
>
> Grameen's origins are sourced to a discussion Yunus had with Sufiya Begum, a young mother who, he recalled, `was making a stool made of bamboo. She gets five taka from a business person to buy the bamboo and sells to him for five and a half taka, earning half a taka as her income for the day. She will never own five taka herself and her life will always be steeped into poverty. How about giving her a credit for five taka that she uses to buy the bamboo, sell her product in free market, earn a better profit and slowly pay back the loan?' Describing Begum and the first 42 borrowers in Jobra village in Bangladesh, Yunus waxed eloquent: `Even those who seemingly have no conceptual thought, no ability to think of yesterday or tomorrow, are in fact quite intelligent and expert at the art of survival. Credit is the key that unlocks their humanity.'
>
> But what is the current situation in Jobra? Says Bateman, `It's still trapped in deep poverty, and now debt. And what is the response from Grameen Bank? All research in the village is now banned!' As for Begum, says Bateman, `she actually died in abject poverty in 1998 after all her many tiny income-generating projects came to nothing.' The reason, Bateman argues, is simple: `It turns out that as more and more `poverty-push' micro-enterprises were crowded into the same local economic space, the returns on each micro-enterprise began to fall dramatically. Starting a new trading business or a basket-making operation or driving a rickshaw required few skills and only a tiny amount of capital, but such a project generated very little income indeed because everyone else was pretty much already doing exactly the same things in order to survive.'
>
> Contrary to the carefully cultivated media image, Yunus is not contributing to peace or social justice. In fact, he is an extreme neoliberal ideologue. To quote his philosophy, as expressed in his 1998 autobiography, Banker to the Poor,
>
> I believe that `government', as we know it today, should pull out of most things except for law enforcement and justice, national defense and foreign policy, and let the private sector, a `Grameenized private sector', a social-consciousness-driven private sector, take over their other functions.
> At the time as he wrote those words, governments across the world, especially in the United States, were pulling back from regulating financial markets. In 1999, for example, Larry Summers (then US Treasury secretary and now President Barack Obama's overall economics tsar) set the stage for the crash of financial-market instruments known as derivatives, by refusing to regulate them as he had been advised.
>
> The resulting financial crisis, peaking in 2008, should have changed Yunus's tune. After all, the catalysing event in 2007 was the rising default rate on a rash of `subprime mortgage' loans given to low-income US borrowers. These are the equivalent of Grameen's loans to very poor Bangladeshis, except that Yunus did not go so far as the US lenders in allowing them to be securitised with overvalued real estate.
>
> Yunus has long argued that `credit is a fundamental human right', not just a privilege for those with access to bank accounts and formal employment. But reflect on this matter and you quickly realise how inappropriate it is to compare bank debt – a liability that can be crushing to so many who do not survive the rigours of neoliberal markets - with crucial political and civil liberties, health care, water, nutrition, education, environment, housing and the other rights guaranteed in the constitutions of countries around the world.
>
> Microcredit mantras
> By early 2009, as the financial crisis tightened its grip on the world, Yunus had apparently backed away from his long-held posture. At that time, he told India's MicroFinance Focus magazine the very opposite of what he had been saying: `If somebody wants to do microcredit – fine. I wouldn't say this is something everybody should have' (emphasis added). Indeed, the predatory way that credit was introduced to vulnerable US communities in recent years means that Yunus must now distinguish his Grameen Bank's strategy of `real' microcredit from microcredit `which has a different motivation'. As Yunus told MicroFinance Focus, `Whenever something gets popular, there are people who take advantage of that and misuse it.'
>
> To be sure, Yunus also unveiled a more radical edge in that interview, interpreting the crisis in the following terms. `The root causes are the wrong structure, the capitalism structure that we have,' he said. `We have to redesign the structure we are operating in. Wrong, unsustainable lifestyle.' Fair enough. But in the next breath, Yunus was back to neoliberalism, arguing that state microfinance regulation `should be promotional, a cheerleader.'
>
> For Yunus, regulators are apparently anathema, especially if they clamp down on what are, quite frankly, high-risk banking practices, such as hiding bad debts. As the Wall Street Journal conceded in late 2001, a fifth of the Grameen Bank's loans were more than a year past their due date: `Grameen would be showing steep losses if the bank followed the accounting practices recommended by institutions that help finance microlenders through low-interest loans and private investments.' A typical financial sleight-of-hand resorted to by Grameen is to reschedule short-term loans that are unpaid after as long as two years; thus, instead of writing them off, it lets borrowers accumulate interest through new loans simply to keep alive the fiction of repayments on the old loans. Not even extreme pressure techniques – such as removing tin roofs from delinquent women's houses, according to the Journal report – improved repayment rates in the most crucial areas, where Grameen had earlier won its global reputation among neoliberals who consider credit and entrepreneurship as central prerequisites for development.
>
> By the early 2000s, even the huckster-rich microfinance industry had felt betrayed by Yunus' tricks. `Grameen Bank had been at best lax, and more likely at worst, deceptive in reporting its financial performance,' wrote leading microfinance promoter J D Von Pischke of the World Bank in reaction to the Journal's revelations. `Most of us in the trade probably had long suspected that something was fishy.' Agreed Ross Croulet of the African Development Bank, `I myself have been suspicious for a long time about the true situation of Grameen so often disguised by Dr Yunus's global stellar status.'
> Several years earlier, Yunus was weaned off the bulk of his international donor support, reportedly USD 5 million a year, which until then had reduced the interest rate he needed to charge borrowers and still make a profit. Grameen had allegedly become `sustainable' and self-financing, with costs to be fully borne by borrowers.
>
> To his credit, Yunus had also battled backward patriarchal and religious attitudes in Bangladesh, and his hard work extended credit to millions of people. Today there are around 20,000 Grameen staffers servicing 6.6 million borrowers in 45,000 Bangladeshi villages, lending an average of USD 160 per borrower (about USD 100 million/month in new credits), without collateral, an impressive accomplishment by any standards. The secret to such high turnover was that poor women were typically arranged in groups of five: two got the first tranche of credit, leaving the other three as `chasers' to pressure repayment, so that they could in turn get the next loans.
>
> At a time of new competitors, adverse weather conditions (especially the 1998 floods) and a backlash by borrowers who used the collective power of non-payment, Grameen imposed dramatic increases in the price of repaying loans. That Grameen was gaining leverage over women – instead of giving them economic liberation – is a familiar accusation. In 1995, New Internationalist magazine probed Yunus about the 16 `resolutions' he required his borrowers to accept, including `smaller families'. When New Internationalist suggested this `smacked of population control', Yunus replied, `No, it is very easy to convince people to have fewer children. Now that the women are earners, having more children means losing money.' The long history of forced sterilisation in the Third World is often justified in such narrow economic terms.
>
> In the same spirit of commodifying everything, Yunus set up a relationship with the biotechnology giant Monsanto to promote biotech and agrochemical products in 1998, which, New Internationalist reported, `was cancelled due to public pressure.' As Sarah Blackstock reported in the same magazine the following year: `Away from their homes, husbands and the NGOs that disburse credit to them, the women feel safe to say the unmentionable in Bangladesh – microcredit isn't all it's cracked up to be … What has really sold microcredit is Yunus's seductive oratorical skill.' But that skill, Blackstock explains, allows Yunus and leading imitators
>
>
>
> to ascribe poverty to a lack of inspiration and depoliticise it by refusing to look at its causes. Microcredit propagators are always the first to advocate that poor people need to be able to help themselves. The kind of microcredit they promote isn't really about gaining control, but ensuring the key beneficiaries of global capitalism aren't forced to take any responsibility for poverty.
>
>
> The big lie
>
>
> Microfinance gimmickry has done huge damage in countries across the globe. In South Africa in 1998, for instance, when the emerging-markets crisis raised interest rates across the developing world, an increase of seven percent, imposed over two weeks as the local currency crashed, drove many South African borrowers and their microlenders into bankruptcy. Ugandan political economist Dani Nabudere has also rebutted `the argument which holds that the rural poor need credit which will enable them to improve their productivity and modernise production.' For Nabudere, this `has to be repudiated for what it is – a big lie.'
>
> Inside even the most neoliberal financing agency (and Grameen sponsor), the World Bank, these lessons were by obvious by the early 1990s. Sababathy Thillairajah, an economist, had reviewed the Bank's African peasant credit programmes in 1993, and advised colleagues: `Leave the people alone. When someone comes and asks you for money, the best favour you can give them is to say `no'… We are all learning at the Bank. Earlier we thought that by bringing in money, financial infrastructure and institutions would be built up – which did not occur quickly.'
>
> But not long afterwards, Yunus stepped in to help the World Bank with ideological support. When I met Yunus in Johannesburg, not long before South Africa's April 1994 liberation, he vowed he wouldn't take Bank funds. Yet in August 1995, Yunus endorsed the Bank's USD 200 million global line of credit aimed at microfinance for poor women. However, according to ODI's Bateman, the World Bank `insisted on a few changes: the mantra of `full cost recovery', the hard-line belief that the poor must pay the full costs of any program ostensibly designed to help them, and the key methodology is to impose high interest rates and to reward employees as Wall Street-style motivation.'
>
> Bateman also remarks on the damage caused to Bangladesh itself by subscribing to the microcredit gospel: `Bangladesh was left behind by neighbouring Asian countries, who all choose to deploy a radically different `development-driven' local financial model: Taiwan, South Korea, Thailand, China, Vietnam.' And the countries that were more reliant on neoliberal microfinance soon hit, Bateman insists, `saturation, with the result of over-indebtedness, `microcredit bubbles', and small business collapse.' Just as dangerous, Yunus's model actually `destroys social capital and solidarity,' says Bateman. It is used up `when repayment is prioritised over development. No technical support is provided, threats are used, assets are seized. And governments use microfinance to cut public spending on the poor and women, who are left to access expensive services from the private sector.' The Yunus phenomenon is, in short, a more pernicious contribution to capitalism than ordinary loan-sharking, because it has been bestowed with such legitimacy.
>
> Bateman records extremely high microfinance interest rates `everywhere'. In Bangladesh, for instance, these are around 30 to 40 percent; in Mexico, they go up as high as 80 percent. No wonder that in the most recent formal academic review of microfinance, by economist Dean Karlan of Yale University, `There might be little pockets here and there of people who are made better off, but the average effect is weak, if not nonexistent.'
>
> As the Wall Street Journal put it in 2001, `To many, Grameen proves that capitalism can work for the poor as well as the rich.' And yet the record should prove otherwise, just as the subprime financial meltdown has shown the mirage of finance during periods of capitalist crisis.
>
>
>
>
>
>
>
> Reputation and reality
>
>
>
>
> The latest figures suggest that nearly 70 million people (out of 150 million total) in Bangladesh are still living below the poverty line; of those, about 30 million are considered to live in chronic poverty. Grameen Bank now has around seven million borrowers in Bangladesh, 97 percent of whom are women. Yet after decades of poverty-alleviation programmes what effect has Grameen had in its home country? The microcredit initiatives inspired by Mohammad Yunus's vision and implemented by Grameen Bank and other NGOs have not gone nearly as well in Bangladesh as has been publicised worldwide.
>
> To start with, the terms of microcredit in Bangladesh are inflexible and generally far too restrictive – by way of weekly repayment and savings commitments – to allow the borrowers to utilise the newfound credit freely. After all, with a first repayment scheduled for a week after the credit is given, what are the options but petty trading? The effective interest rate stands at 30 to 40 percent, while some suggest it goes upwards of 60 percent in certain situations. Defaulters, therefore, are on the rise, with many being compelled to take out new loans from other sources at even higher interest rates.
>
> Worryingly, in the families of some 82 percent of female borrowers, exchange of dowry has increased since their enrolment with Grameen Bank – it seems that micro-borrowing is seen as enabling the families to pay more dowry than otherwise.
>
> Only five to 10 percent of Grameen borrowers have showed improvement of their quality of life with the help of microcredit, and those who have done will tend to have other sources of income as well. Fully half of the borrowers who could not improve were able to retain their positions by taking out loans from multiple sources; about 45 percent could not do so at all, and their position deteriorated. Many are thus forced to flee the village and try to find work in an urban area or abroad. It has now become clear that most Grameen borrowers spend their newfound credit for their daily livelihood expenditure, rather than on income-generating initiatives.
>
> The main difference between microcredit lenders and feudal moneylenders was that the latter needed collateral. It is true that microcredit has created money flows in rural areas, but also that it created a process through which small-scale landowners can quickly become landless – if one cannot pay back the money at high interest rates, many are forced to sell their land. In cases of failure of timely repayment, instances of seizure by Grameen of tin roofs, pots and pans, and other household goods do take place – amounting to implicit collateral.
>
> This does not mean that credit is not useful to the poor and powerless. The problem lies in the approach taken. Poverty is conceptualised extremely narrowly, only in terms of cash income; when in fact it has to do with all aspects of life, involving both basic material needs such as food, clothing and housing; and basic human needs such as human dignity and rights, education, health and equity. It is true that the rural economy today has received some momentum from microcredit. But the questions remain: Why has this link failed to make any significant impact on poverty? Why, despite the purported `success' of microcredit, do people in distress keep migrating to urban centres? Why does a famine-like situation persists in large parts of Bangladesh, particularly in the north? Moreover, why does the number of people under the poverty line keep rising – alongside the rising microcredit?
>
> In fact, poverty has its roots and causes, and expanding the credit net without addressing these will never improve any poverty situation. Experience shows that if countries such as Bangladesh rely heavily on microcredit for alleviating poverty, poverty will remain – to keep the microcredit venture alive. Grameen Bank's `wonderful story' of prosperity, solidarity and empowerment has only one problem: it never happened.
>
>
> ~ Khorshed Alam
>
> ~ Patrick Bond is a senior professor at the University of KwaZulu-Natal School of Development Studies Centre for Civil Society in Durban, South Africa. Khorshed Alam is executive director of the Alternative Movement for Resources and Freedom Society, based in Dhaka.
>
>
>
> To: alochona@yahoogroups.com
> From: Ezajur@...
> Date: Wed, 8 Dec 2010 05:16:54 +0000
> Subject: [ALOCHONA] The Yunus Saga
>
>
>
>
>
>
>
> `The Yunus saga'
> Courtesy New Age 8/12/10
>
> I AGREE with everything Md Mujibul Alam Khan has to say on the `Yunus saga' published in New Age on Monday. However, the Norwegians made it clear that they were not alleging corruption against Yunus. Corruption is alleged against him only by Sheikh Hasina and the Awami League. As it seems, Sheikh Hasina and her leaders can barely contain their glee at this setback for Yunus.
> Both of Hasina's governments should be held accountable for the errors made by the Grameen Bank. Although the prime minister accuses the Grameen Bank and Yunus of being cruel and fraudulent moneylenders who are responsible for ruining many people's lives, she hasn't done anything about it all these years.
> Hasina's concern for the image of Bangladesh abroad is laughable, seeing she did as much to hurt it as anyone else over the years. She never initiated an investigation into the corruption and incompetence within her own party and her government.
> Yunus would bring more honour, good sense and vision to the office than either Sheikh Hasina or Khaleda Zia if he entered politics.
> Ezajur Rahman
> Kuwait
>
__._,_.___
[Disclaimer: ALOCHONA Management is not liable for information contained in this message. The author takes full responsibility.]
To unsubscribe/subscribe, send request to alochona-owner@egroups.com
Your email settings: Individual Email|Traditional
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch to Fully Featured
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch to Fully Featured
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
__,_._,___