We can connect your beloved Hasina to any number of issues that ail our country just as well as you can connect genocide of 1971 to Yunus. No problem.
And here you are complaining about the vilification of Hasina over her words about Yunus. Spectacular! Whats it like to be the only one complaining about it? I mean even other AL diehards are pretending/wishing that press conference never happened. Except you.
If four cabinet ministers asked Hasina to exercise restraint before the press conference and to leave them to tackle the issue. If her reply was that Yunus commented against Mujib back in 1974 and that he should be punished for it. If AL stalwarts know that she begrudges Yunus his Nobel Prize because she so wanted for herself and her CHT Treaty. If you cannot deny the jealousy, hatred and vindictiveness of her words on that day. If all this were true, as I hold to be true, you would still be there. Blindly supporting her because perhaps Daddy loved Mujib - rightly - or because Chacha's business depends on AL patronage.
Chatra League can slit the throat of anyone, guilty or innocent, right in front of you.
And still you will not villify Hasina.
Because as an intellectual you think you know something we don't.
You couldn't villify Hasina even if you thought you should.
--- In alochona@yahoogroups.com, Farida Majid <farida_majid@...> wrote:
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> It wasn't too long ago that the Jamaati molllahs were calling Yunus "Sudh-khor kabuliwallah" and labelling his G. Bank un-Islamic.
> Now suddenly Yunus is being hailed as a hero by these supporters of 1971 mass murder of innocent people. And PM Sheikh Hasina is being villified for saying pretty much what all other economists have been pointing out all along. Even BNP Finance Minister was against the microfinance projects of the NGOs.
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> Here is a piece in the New Age X-tra in 2009.
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> Farida Majid
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> From: taj_hashmi@...
> Subject: The Dark Side of Microcredit
> Date: Sat, 29 Aug 2009 19:36:56 -0400
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> August 28-September 3, 2009
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> The dark side of microcredit
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> Mohiuddin Alamgir finds out how the ineffective role played by the Microcredit Regulatory Authority exposes borrowers to various forms of exploitation by the lenders
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> photo by Prito Reza Even a few years back, Razia Begum of Charfashion Thana in Bhola had a hard time managing three meals a day with six children and a husband. But then, eight years back, she received a loan of Tk 3,000 (US $ 60) from the Family Development Association (FDA). With the help of her husband she now weaves household articles with bamboo and cane. Goods and articles she makes are in high demand in her area, because of their good quality. Instead of going to the market to sell her items, her buyers come to her house. A typical microcredit success story which we know all too well.
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> But for every Razia, there is a Sufia Khatun. Sufia of Jobra first received a loan from Grameen Bank, which had initiated an action research project. Last year, her funeral was conducted through generous contributions of fellow villagers as she had nothing left after paying the interest for the loan, when she still breathed.
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> The case is rather severe for the poor households, seeking loans to change their luck, as these micro-credit providing non-government organisations (NGO) charge interest rates which are double or triple the rates of normal private or public banks. Moreover, the involvement of some of these prominent Micro-financing Institutions (MFI) with political parties also make their accountability fade away.
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> The sector is currently dominated by the Grameen Bank, the Bangladesh Rural Advancement Committee (BRAC), the Association for Social Advancement (ASA) and Proshika, which between them lend to almost 87 per cent of all borrowers from non-government microfinance institutions. Aggravating the situation is the ineffective role of the Microcredit Regulatory Authority (MRA) at monitoring the activities of these organisations, according to experts.
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> Although Bangladesh's microcredit programme is the largest in the world and the government has been providing micro-credit, a significant component of its plan for halving the number of people living in poverty in Bangladesh, due to the stated problems, the sector has sometimes aggravated poverty rather than alleviating it, claim certain economists. Due to many limitations, the sector has been to reach millions of people in the rural and suburban areas.
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> According to sources, through the Micro-credit solution, at present, financial service of approximately Tk 160 billion is being rendered to among 30 million people, to help them attain `self-employment' thus accelerating the overall economic development process of the country.
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> From hero to villain
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> Micro-credit, in the beginning, was hailed a `heroic' attempt. `In the initial period, small loans were provided by relatives to fallen family members struggling to survive,' says MM Akash, professor of economics at Dhaka University. `At one point in time, mahajans began providing loans at interest rates of 120 to 150 per cent. While this was rather cruel, people had no choice. So, when the MFIs began providing loans at 50 per cent, the needy and poor still welcomed it as it saved 70 to 90 per cent interest.'
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> Thousands of institutions are operating microcredit programmes across the country today. Around 30 million poor people are directly benefited from microcredit programmes.
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> `Through microcredit, these poor people are engaged in various income generating activities,' says programme coordinator of the Bangladesh Rural Advancement Committee (BRAC), Shamsuzzaman Meah.
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> However, although initiated with the noble motive of poverty alleviation, economists feel that they are not doing enough to adhere to their original purpose. `The MFIs has just taken the place of mahajans,' says Professor Muzaffar Ahmed former chief of the Berlin-based Transparency International, Bangladesh Chapter. `Most of these organisations have been in the country for the past 20 to 30 years. Whether their work has actually alleviated poverty or not, from the country, is clear from statistics which reveal that a significant portion of the population is still under the poverty line.'
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> MM Akash seconds the notion when he says, `the operations of the MFIs are mostly hyped. They have already failed to meet the nation's target of poverty alleviation.'
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> Shamsuzzaman Meah retorts, `about 30 years back, when I began my career with BRAC, I have seen people from remote villages of our country live on one meal per day. Now, the scenario has changed. Through the efficiency of the micro-credit sector, most recipient families get to enjoy three meals a day. We, at least, ensured three meals a day for 30 million households.'
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> While on the issue of poverty alleviation, Lila Rashid, Director (Operations), Microcredit Regularity Authority (MRA) admits, `the poorest people of the remote villages are the main recipients of the loans. We have failed to establish a relation between the poorest people and the national economy properly. If we can do this, it will provide a huge boost to reducing the rate of poverty.'
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> More expensive than private banks
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> Created by the Government of Peoples' Republic of Bangladesh under the Microcredit Regulatory Authority Act (Act no. 32 of 2006), the MRA provides licenses to the organisations to operate microfinance operation in Bangladesh as a microcredit NGO.
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> Eligibility for licenses is based upon rules set by authority either minimum balance of outstanding loan at field level Tk 40 lakhs or minimum 1,000 borrowers.
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> The MRA, with an eight member board headed by the central bank governor assesses source of funds, ownership, internal governance and the financial position of the organisation before a license is granted. Once granted, it is then the MRA's role to monitor the operations of the numerous microcredit institutions.
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> Furthermore, the government of Bangladesh maintains a sizeable micro-credit programme through its Palli Karma Sahayak Foundation (PKSF). The PKSF runs micro-credit operations directly among borrowers and it also finances non-government organisations (NGOs). In both cases, it is considered to be charging interest rates, which are probably capable of being pushed down further.
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> `People have created myth about the microcredit NGOs,' says Anu Muhammad, professor of the economics at Jahangirnagar University. He adds, `the NGO model is absent in the various poverty alleviation theories across the world on both sides of the capitalist and socialist economies.'
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> He continues, `most loan recipients sink into a cycle of debt once they receive a loan from one organisation.' He reflects on statistics which reveal that, on an average, MFIs provide loans to recipients at a rate of 25 to 35 per cent and even higher at times.
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> `Most of the time they end up taking micro-credit loans from one organisation just so that they can pay the interest of some previous organisation,' he adds.
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> `The rich people of our country are the biggest defaulters of loans. They pay interest, at a maximum of 13 per cent. However, the poorer sections have to pay at 30 to 25 per cent for micro-credit. How is this justified?' asks MM Akash.
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> Bangladesh's former finance and planning minister, M Saifur Rahman, during and after his tenures, has objected to the trend a number of times. He cited the situation of most MFIs making extra profit through excessive interest rates.
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> Due to the increasing attention paid to the problem of interest rate disclosure in recent years, there are also allegations that suppliers of microcredit quote their rates to clients using the flat calculation method. This significantly understates the true annual percentage rate, plunging the clients into severe financial crunches once they receive the loan and begin paying the interests.
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> Besides these, as field officers are in a position of power, locally, and are judged on repayment rates as the primary metric of their success, they sometimes use coercive and, even violent, tactics to collect instalments on the microcredit loans. Numerous incidents of such cruelty have already surfaced in major dailies over the past few years.
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> Also, counter to the original intention of the microcredit system to empower women, one of the effects of an infusion of cash into local economies has been to increase dowries, with women forced at times to take microcredit loans as the only means to pay these increased dowries for their daughters.
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> Director of microfinance of BRAC, Shabbir A Chowdhury, acknowledges the allegation of high interest. He says, `the micro-credit loan system is different from normal banking. Through loans from the public or private banks, an individual or organisation can obtain a loan of takas one crore. But if we want to distribute the same amount of money, we have to reach out to a good number of people for these transaction rates. Alongside these, there are rather steep operating costs and other costs. As such, our interest rates are justifiably higher.'
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> Lila elaborates on Shabbir's reason, `the public and private banks have no extra cost at reaching out to the loan recipients. They, therefore, can maintain the interest rate at 13 to 16 per cent. However, the MFIs reach the recipients at their doors and so charge around 25 to 30 per cent.'
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> She assures, `we are thinking about arranging a workshop where we will come to a common policy at fixing the interest rate agreed both by the loan recipient and the lenders.'
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> Politics and microcredit
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> Most economists feel that some of these MFIs are actually `untouchable' due to their involvement with certain major political parties. Most of them cite the example of Proshika.
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> As economists point out that, despite all the irregularities and crises in Proshika, its leader, Quazi Faruque Ahmed was almost always busy in fulfilling his own political ambitions.
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> `During the tenure of the BNP-led alliance, Abdul Jalil, the secretary general of the Awami League, declared that on April 30, 2004, he would reveal his `trump card', which would result in the downfall of the then government. In fact, Proshika's staffs were the "trump card",' says Alauddin, a senior accounts coordinator of Proshika, who was involved in the movement against Quazi Faruque Ahmed recently.
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> Proshika officials also allege that Faruque planned to gather a good number of Proshika people from across the country in the Dhaka city to overthrow the-then government.
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> Then, during the period of the army-backed interim government, Faruque formed a political party named Oikyabaddha Nagorik Andolan. `He forced us to be its members,' says Serajul, a Proshika employee.
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> Anu Muhammad says `the nation has already seen the Proshika incident, the political ambitions of Dr Muhammad Yunus and other incidents over the years. Charitable organisations cannot do all this.' He adds, `NGOs are a big factor in mainstream politics as most of them are expending government money. Even BRAC allegedly has direct attachment with the PRSP (poverty reduction strategy paper) of our country.' On the issue, Lila says, `someone can have their own personal ideology. However, he will not be allowed to abuse their political will into the microcredit sector.'
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> Microcredit and business
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> There are also allegations that most MFIs invest their profit in other businesses. `Grameen Bank authority has invested their profit into GrameenPhone, Grameen Danone. BRAC has invested into the seed business, Araong and others. You can find other examples like that also for other MFIs,' says Anu.
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> `Strong monitoring is required to get rid of the business ventures of the MFIs and ownership of the loan recipients should be made mandatory,' Muzzafar says. Other economists also feel that the MRA should have a more effective role at monitoring the organisations in the micro-financing sector.
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> The need for regulation
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> According to MRA authority 4,236 Microcredit Institutions have applied for licence. Among them, 335 Microcredit Institutions have been licensed till September 2008. Applications of 438 institutions could not be considered. 2,599 small institutions have been advised to fulfil the minimum criteria of obtaining licence (either minimum balance of outstanding loan at field level BD taka four million or minimum borrower 1,000) within 2009.
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> According to studies, the average loan per borrower is Tk 4378 and the typical size of a loan per borrower ranges from Tk 3,000 to Tk 5,000. Thirty two institutions out of 641 have loan per borrower below Tk 1,000 which seems to be too scanty to be invested in any income generating activity. From the analysis it can be observed that 15 major NGO-MFIs cover 77 per cent of total sectoral outstanding loan (principal) and only three very large organisations have 64 per cent of the sectoral outstanding loan (principal).
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> `Such findings prove that the MRA has done little to monitor this sector,' says Professor Muzaffar. Anu adds, `stronger regulation and a monitoring system from the MRA are required as these NGOs are gradually becoming business organisations.'
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> Shabbir A Chowdhury of BRAC thinks that the MRA requires greater and capable manpower. `Monitoring capacity, internal audit, professional approach and service and training of the MRA people is must for the smooth and efficient operation of this important organisation,' he says.
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> After hearing of the allegations and the suggestions, Lila says, `we are still quite new. It is therefore taking us sometime at monitoring the situation. Hopefully we will be able to meet the overall expectation of the general public and our critics after some time. We will ensure that no MFI will be allowed to make business ventures through the profit they make from the poorest Bangladeshis.'
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> Frankenstein
> * Financial service of Tk 160 billion (approx.) is being rendered among 30 million poor and needy
> * Average interest rate of the MFI is around 25 to 35 per cent
> * MFIs have become new mahajans: experts
> * MFIs stand accused of harbouring political ambition and business interest
> * Loan per borrower ranges from Tk 3,000to Tk 5,000
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