Yunus is sucker in every sense of it.
On Wed, Oct 10, 2012 at 2:20 AM, Farida Majid <farida_majid@hotmail.com> wrote:
Patrick Bond wrote in May, 2011:
<< The roles of Robinson, her Grameen Friends Advisory Committee colleague James Wolfensohn (World Bank president from 1995 to 2005), B-M, the US State Department and the Bangladeshi government are emblematic of the messiness of state, capital and civil society working at cross-purposes. Grameen is a textbook case of imploding power relations and ideology, ranging from Dhaka to Oslo to Washington. >>
The unseemly termination of Muhammad Yunus's career at Grameen only highlights the deep problems faced by microcredit internationally.In Bangladesh, banking has turned rancid, and the rot is spreading so fast and far that the entire global microfinance industry is now under threat. The issues range far beyond poisonous local politics, the factor most often stressed by those close to Grameen Bank's crisis.
Art: Marcin Bondarowicz
True, at first glance we see an oppressive state's persecution of Muhammad Yunus, a courageous academic-turned-entrepreneur and 2006 Nobel Peace Prize laureate, a man passionate about uplifting poor women's socio-economic status across the world through unsecured credit and group borrowing. On 5 April, the Bangladeshi Supreme Court confirmed an earlier judgment that, notwithstanding the huge aid inflows he catalysed for one of Asia's poorest countries, Yunus (age 70) must be ousted from leadership of Grameen – on the quite absurd grounds that he is ten years too old.Sheikh Hasina's government has also damaged Yunus' reputation, informally charging him with 'massive financial improprieties' and 'embezzlement'. This was according to her son, Sajeeb Wazed, put it after a documentary on Norwegian state television last December showed how, in 1997, USD 30 million in Norwegian aid to Grameen had to be returned after being moved from the (non-profit) bank to a private firm controlled by Yunus, Grameen Kalyan. Wazed also alleges usury: 'Grameen Bank charges up to 30 percent in interest rate on loans and up to an additional 10 percent in "forced savings" to the poorest sections of society. Their collection methods are draconian and collection officers who fail to collect payment have the uncollected amounts deducted from their pay.' Years back, Hasina had firmly endorsed Grameen's work. But in the meantime, Yunus attacked the existing political class (including Hasina) in a short-lived 2007 attempt to start his own party. Hasina has since labelled Yunus a 'bloodsucker of the poor'.But at second glance one notes that, disturbingly, the public-relations firm Burson-Marsteller (B-M) is at the head of the new 'Friends of Grameen' group, in charge of Yunus's public image. B-M is the go-to PR company for such dubious characters as the Three Mile Island nuclear operator after its meltdown, the US tobacco industry (B-M organised the 'National Smoker's Alliance'), Union Carbide against Bhopal residents, and a raft of dictatorial regimes. In February, the former president of Ireland, Mary Robinson, became the main public face of Friends of Grameen, claiming, 'Continued attacks against Grameen Bank and Professor Yunus have been carried out for political reasons.'The roles of Robinson, her Grameen Friends Advisory Committee colleague James Wolfensohn (World Bank president from 1995 to 2005), B-M, the US State Department and the Bangladeshi government are emblematic of the messiness of state, capital and civil society working at cross-purposes. Grameen is a textbook case of imploding power relations and ideology, ranging from Dhaka to Oslo to Washington.US Secretary of State Hillary Clinton has demanded that Hasina halt the attack on Grameen. Clinton's best-known anti-poverty initiative in Bangladesh, initiated during the 1990s when she was US First Lady and nicknamed Hillary Village, is now under fire for microfinance failure and high default and poverty rates. In March her deputy, Robert Blake, went to Dhaka to threaten that US-Bangladeshi bilateral relations would be 'impacted' by any action against Yunus. Wolfensohn also visited Hasina in March; after his demands to roll back the attacks on Yunus were apparently rejected, both the World Bank and the International Monetary Fund suddenly cut USD 500 million in loans that the Dhaka government had been expecting.This situation is of global importance because it reflects microfinance's limits as a poverty-fighting strategy, alongside the increasingly desperate desire to rescue neoliberal conceptions of market salvation. It comes on the heels of incredibly high interest rates being charged by lenders in areas throughout Southasia. As The Guardian newspaper reported in early March, 30 million Indian households have borrowed more than USD 3 billion in microcredit since the mid-1990s. 'In recent months', the report stated, 'the industry has been thrown into crisis as it has become clear that a significant number of borrowers – between a tenth and a third, depending on the estimate – cannot afford to repay their loans.' There are also rural Indian parallels to the 2007-09 'sub-primate mortgage bond' crisis in the US, which hit low-income urban African-Americans especially hard. 'The past five years have seen the aggressive selling of loans to often illiterate villagers, followed by equally aggressive debt collection,' states The Guardian.For Clinton, Wolfensohn and Robinson, this might seem an urgent time to defend Grameen. But looking more closely, it might just be better to move on, towards post-microfinance strategies that genuinely reduce poverty and empower women. These strategies typically are strongest if grounded in collective action, usually associated with social movements and organised (and also informal) labour. In the last decade, one of the best examples is access to HIV/AIDS medicines, won in India, Thailand, Brazil and especially South Africa, against the US government's attempts to prevent Nelson Mandela's government from providing generic medicines using US-copyrighted drugs.In the latter situation, the secret to the victory was not entrepreneurialism but instead popular mass activism and democratic organisation. This also included vigorous critiques of the post-Mandela South African government, of intellectual property rights and medical monopolies, of the World Trade Organisation (WTO) and of corporate profiteering by international pharmaceutical companies. The victories were most impressive: Mandela's successor Thabo Mbeki was fired by his own party in part because of his peculiar AIDS policy, while the WTO introduced a 2001 exemption to allow local production of the medicines – funding for which comes in part from the US government. AIDS medicines that once cost more than USD 10,000 per year today are free, suggesting that defeating the poverty-related denial of health care can be achieved faster through social movements than atomistic market participation.Right to debtThere is certainly a role for small-scale credit programmes within a balanced development strategy, though by definition being poor entails having very little surplus money to repay loans. Even so, interest rates should be affordable (perhaps requiring state subsidies) and in tune with the prevailing opportunities for microenterprise returns. And the overall context should not be about the replacement of social policy with entrepreneurial rhetoric.But given the usury accusations and India's suicide wave, the microfinance industry's reputation today is so tainted that, in a recent interview, Yunus himself publicly backtracked when asked about India's problems: 'Unfortunately, not everyone who uses the word "microcredit" is dedicated to serving the needs of the poor. This is not the microcredit I had in mind.'As Cambridge University economist Ha-Joon Chang argues, poor users of microfinance 'will never get out of poverty because you have to pay between 30, 40, 50 – sometimes 100 percent interest rates. What business makes that kind of profit?' But Grameen Foundation chief executive Alex Counts defends the 100 percent interest rate used by his Nigerian affiliate, LAPO. 'Well, as it happens, many Nigerian banks that operate in the rural areas charge twice as much as LAPO,' he says. 'What microfinance is trying to do, with very little subsidy from the philanthropic sector, is trying to provide a service – on a commercial basis or a business basis to give them a better deal.'Yet profit-seeking through microfinance represents, even Yunus concedes, 'a terrible wrong turn'. Still, Yunus has defended his own role to the last, claiming that Grameen interest rates – over 30 percent when fees are included, according to Bangladeshi economist Q K Ahmad – are reasonable. 'Access to affordable credit is a human right,' Yunus continues to insist, though it is just this sort of hype that pushes poor people into debt traps. For Yunus and his supporters, it is increasingly difficult to counter growing evidence that not only for-profit lenders but also non-profit NGOs pushing high-interest microfinance as a 'silver bullet' fix to poverty issues often do more harm than good.Finally, the argument that microfinance empowers poor women, specifically, is also facing a tough rebuttal by a Bangladeshi, University of Oregon anthropologist Lamia Karim. In a recent interview with my colleague, Khadija Sharife, she pointed out that 'Bangladeshi women give the loans to their husbands. Women are the conduits for the circulation of capital in rural society. This has resulted in increased domination and violence for individual women both at the household and community levels.' As a result, she argues, women have become 'custodians of honour and shame in rural society. By instrumentalising these codes, NGOs shame rural women to recover their defaulted sums of money.'As Karim observes, even the main Bangladeshi microcredit NGOs operate like 'loan sharks'. 'The idea that the poor are bankable and they pay back their loans at 98 percent is like music to the ears of donors and large corporations,' she says. 'Grameen Bank exemplifies neoliberal ideas of development: individual entrepreneurship and competition.' Karim suggests that a simple experiment: replacing the word credit with debt in discussions about microfinance. '"Debt as a human right?"' she asks. 'How does that sound?'~ Patrick Bond is a senior professor at the University of KwaZulu-Natal Centre for Civil Society in Durban. More at ccs.ukzn.ac.za.
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