Micro-lending genius Yunus: Why he was done wrong
The Bangladeshi government's treatment of Muhammad Yunus, the Nobel Peace Prize winner who has lifted millions out of poverty with his micro-lending program, is shameful. And it does nothing to help the poor.
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Only 25 percent of Grameen Bank is owned by the Bangladeshi government while the borrowers themselves control 75 percent of the board seats and have supplied 96.5 percent of the paid-up share capital. These facts alone suggest it is the government that has abused its property rights, not Muhammad Yunus.Skip to next paragraph
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More is at stake than the personal conflicts that appear to be at the center of this political fiasco.
Grameen Bank could probably withstand the departure of Muhammad Yunus. The 25,000-employee institution is strong and well managed. Professor Yunus himself had expressed his intent to retire on many occasions, and hand over his responsibility to a competent person who can maintain the confidence of the millions of members who own the bank.
But he has more than the right to say a word in this matter. The notion that he could be simply replaced is irresponsible, since such a sudden break risks undermining confidence among employees, savers, and borrowers alike, perhaps even triggering a run on savings and loan defaults. If the impression is left that political manipulations are taking over, the repercussions would be irreversible and could jeopardize the bank’s future.
Grameen Bank is unmatched in the world of traditional banks. Its workers care tremendously about helping the poor, all spending nearly a year living among the population they are going to serve. With the organization being so intimately associated with the precepts of its founder, the leadership transition has to be handled with great care.
Any responsible observer has to ask, “What is the point of destabilizing the leading institution of the microfinance industry?”
After a golden age of expansion, the field of microfinance has become a mature sector of the global economy. To be sure, it still has to face some very legitimate questions about profitability, interest rates, over-indebtedness, and the ability to generate real economic activity beyond subsistence. Answering these tough questions requires the presence of someone as experienced and authoritative as Muhammad Yunus.
A humble visionary
I personally know Muhammad very well. We first met in 1998, when I came to implement a G7 project that aimed to help Bangladesh prevent its regular flood disasters. We became close friends and created PlaNet Finance together.
What has most impressed me about him is that he has never said he knows the answers. He has always experimented and adapted his organization to the needs and opportunities on the ground. Though he might have sometimes overestimated the direct impact of microfinance, he never closed his eyes to the concerns that were raised on the path he followed, particularly that some in his own organization might start to think more about profitability than poverty. For that reason, he has been one of the primary advocates of intelligent microfinance regulation, which is essential in order to permit this industry to fulfill all its promises.
Political decisions should never be motivated by personal conflicts, especially when dealing with global poverty. The Bangladeshi government’s treatment of Muhammad Yunus is shameful. It does nothing to help so many who are so desperately poor in his own country.