Microfinance pioneer and Nobel Prize laureate Muhammad Yunus has lost his appeal to Bangladesh’s high court seeking to overturn the government’s attempt to remove him from a leadership role at Grameen Bank, which provides loans and financial services to the poor.
The AP reports that the move by politicians to oust the anti-poverty advocate “has sparked international concern and threatened to dampen ties between Bangladesh and the United States.”
As the BBC reports, it not exactly clear if Yunus will accept the ruling and step down or launch some other legal battle. Here is the New York Times‘ report on this new development in a long-running battle.
According to Al Ajazeera, Yunus has said he will step down.
To Catch A Dollar, film on microfinance in America
I was granted the opportunity, thanks to the good folks at SeaMo, to both join their party Thursday celebrating Seattle’s prominent role in the global microfinance community and to see the debut of a new documentary about this anti-poverty scheme and the Bangladeshi economist who pioneered it.
After joining some of the SeaMo folks for a VIP reception at the Bombay Grill (see posed photo below), I went to the Varsity Theatre on University Ave. to “catch” the film. (The name comes from Yunus’ statement that the poor need “to get a dollar to catch a dollar” — an initial loan that allows them to gain more income).
After seeing the movie trailer, and noting the odd (to me anyway) inclusion of the self-promoting personal finance advisor Suze Orman as a participant for this event, I went in dubious. I figured this would be just a promotional film, showing all those typical “triumph over tragedy” stories with Yunus playing the part normally played by Jimmy Stewart in It’s a Wonderful Life.
I was pleasantly proven wrong. The documentary does avoid much of the controversy surrounding Yunus and microfinance today, but it also provides an excellent view of why Yunus’ approach — and that of his Grameen Bank — may work when other approaches to microfinance fail, or become abusive.
In documenting the work of Grameen America — a project aimed at helping poor women in the U.S. start or grow their own businesses — they demonstrate how succeeding in microfinance likely depends first and foremost on establishing solid, reliable relationships. Among the borrowers, between the borrowers and their loan manager (who meets with them every week) and between the microloan bank and the community at large.
It’s not something you can do robotically, like going to an ATM machine, or demonstrate using economics lingo or in some accounting equation. And it’s not really something I can describe adequately in words. You’ll have to go see the film. You should.
A disclaimer: The goal of the film is clearly to raise support, and funding, for Grameen Bank’s expansion in the U.S. (with last night’s post-film panel discussion, weirdly, also plugging Orman’s new book). I’m agnostic on that. But the documentary, despite its flaws, is well worth seeing to give you a good sense of both Yunus and how microfinance works.
And speaking of relationships, here’s the folks at SeaMo having a good time at the Bombay Grill:
Tom Paulson
Seatte microfinanciers, Seamo gathering at Bombay Grill
Tonight, all around the country — 7:30 p.m. at Seattle’s University District Varsity Theatre — is the debut of a documentary celebrating microfinance, its Nobel Prize-winning creator Muhammad Yunus and a look at how it could work for the American poverty market, if you want to call it that.
Robert Deniro, Matt Damon and other luminaries will be there with Yunus (virtually, on a webcast) for a simulcast discussion accompanying the film’s premiere.
Now, there’s an awful lot going on right now in microfinance, the anti-poverty strategy that – depending upon your point of view – is either one of the best ways to help the poor or one of the most disguised, devious and greedy ways to further exploit them.
I suspect that, like most things, it may be somewhere in between the polar extremes. And, based on what I’ve read about this film, little of this crucial debate will be mentioned in To Catch a Dollar.
The financial and banking industry, and even the insanely perky personal money whiz Suze Orman, has also jumped on the microfinance bandwagon as an investment opportunity. There’s plenty of stories on this, but as an indicator check out the sponsors of the upcoming Microfinance USA conference.
That last trend – which includes players like Citibank and MasterCard — is taken either as a sign that microfinance has finally proved Yunus’ claim that the poor are a good risk or that microfinance has been transmogrified into the latest scheme by Wall Street to make an easy buck.
World Economic Forum
Muhammad Yunus
Yunus has been a pretty outspoken critic of the profit-maximizing and more traditionally commercialized approaches that some fear are overtaking the social mission of microfinance. I’ve noted before that nobody ever seemed to have much problem with the Bangladeshi economist, until he started criticizing those in the financial industry who have taken to microfinance like “loan sharks.”
And the political firestorm around Yunus back home in Bangladesh didn’t really catch fire until an earlier, less-complimentary documentary called The Micro Debt aired. In it, microfinance is portrayed as largely an abuse of the poor — driving them further into debt — and Yunus as basically a financial manipulator who’s guilty of fraudulent business practices.
Most experts have dismissed the film, by Danish film-maker Tom Heinemann and which aired on Norwegian television, as fairly inaccurate and biased.
Perhaps the best, most recent overview and, well, defense of Yunus is by David Bornstein in the New York Times, Microfinance Under Fire.
I bet you had no idea that something as boring sounding as microfinance could get so exciting.
Tonight’s installment in this ongoing struggle for the soul, and the very definition, of microfinance could be called the battle of the two documentaries. It could be, except for the fact that To Catch a Dollar sounds like it will likely avoid all of the more critical and controversial issues.
Muhammad Yunus, the Nobel Peace Prize winning economist who created the anti-poverty loan strategy known as microfinance, has reportedly been ordered by the Bangladesh government to step down from his pioneering institution the Grameen Bank.
I say reportedly because the news, at the moment, is kind of schizoid — because the politics in Bangladesh are, uh, unpredictable and, well, because being told to do something is one thing and doing it is another.
David Roodman, a microfinance expert at the Center for Global Development and one of those with his finger on the pulse, is also questioning whether some of the media reports might be jumping the gun to claim he’s actually been ousted.
The popular anti-poverty scheme of providing small loans and other financial services to poor people, generally known as microfinance, is in crisis.
“In one sense, you could say it’s a coming of age,” says Alex Counts, CEO at the Grameen Foundation, a leading non-profit microfinance organization with offices in Seattle and Washington D.C.. “Controversy often comes along with growing in size and impact.”
You could also say microfinance is actually suffering from several different crises: An external appearance of a crisis based on a damaged public image; a related, but slightly different, internal “identity crisis” and, at least according to one leading observer, a cash crisis in reverse — too much money.
Here are five reasons for the crisis:
Microfinance has grown rapidly, from a simple anti-poverty program into a major player in the financial industry.
Some now view microfinance primarily as an investment opportunity, with reducing poverty as either a secondary goal or not really the goal at all.
Microfinance is a multi-headed creature with no agreed-upon strategy or approach.
There is no consensus on how to measure “social performance” — for donors to tell the difference between a program focused on poverty reduction from one focused on maximizing profit.
The evidence that microfinance does bring people out of poverty is mixed. Some say it has helped millions of poor people, mostly women. Others say it hasn’t and is, in fact, a debt trap for the poor.
All of these points, and most of the arguments, tend to circle back to the pioneer of microfinance, or microcredit, the Nobel Peace Prize-winning Bangladeshi economist Muhammad Yunus.
Tom Paulson
Muhammad Yunus visits with fans Seattle Town Hall May 2010
Yunus used to be golden, uniformly regarded as almost the patron saint of the anti-poverty movement. He still is seen as such by many of his supporters.
But Yunus is also in a bit of trouble these days, fighting off a push by politicians in Bangladesh to force him out of the Grameen Bank (his pioneering microfinance organization). The push comes after a film-maker’s allegations of corruption and the increasingly popular refrain among critics that these microloans hurt rather than help the poor — even driving some debtors to suicide.
Many in the microfinance industry see the power struggle in Bangladesh as more of a political sideshow, unjustified but more importantly unrelated to the real challenges facing the field. Continue reading →
Muhammad Yunus visits with fans Seattle Town Hall May 2010
Muhammad Yunus, the Nobel Peace Prize-winning economist who pioneered the anti-poverty strategy of microfinance, is being pressured by Bangladeshi politicians to “retire” as head of the Grameen Bank — the financial institution he set up some 30 years ago to provide small loans to the poor.
Yunus and his supporters, however, say this is a politically motivated move to reduce the out-spoken economist’s influence and also allow government takeover of Grameen Bank.
Whatever is driving this tussle, I think it’s fair to say the field of microfinance, or microcredit, is at a critical turning point today. Maybe you could even say it’s in a crisis, an identity crisis.
As Yunus sees it, microfinance is now at the center of a battle between those who want to use the practice primarily to help the poor as against those who see it as a means to make money while also perhaps helping the poor.
Put another way, you could say it’s about “doing well by doing good” versus “doing really, really well for yourself by appearing to do good for others.”
Turns out, there’s serious money to be made in microfinance. Yunus has been quite outspoken as a critic of those who seek to profit off microfinance, which some say may have something to do with why he’s now under attack.
Given the uncertain future of microfinance — whether it can (or does) work as a means to lift people out of poverty and if it can do so while also making people money — it seems like the outcome of this political power struggle in Bangladesh could have global ramifications.
I’m sorry to reveal a bias here, but all these attacks and critiques of the Bangladeshi economist and Nobel Peace Prize-winning pioneer of microfinance, Muhammad Yunus, appear to be so obviously opportunistic (if not an outright smear campaign), I can’t figure out why smart people just keep piling on.
The latest example of piling on comes from Matthew Bishop, a top business editor at The Economist and author of the popular book (and blog of the same name) “Philanthrocapitalism.” Continue reading →
The man, and Nobel laureate, who for more than 30 years has been celebrated as one of the world’s leading anti-poverty champions is fending off allegations of improper financial behavior.
Economist Muhammad Yunus won the 2006 Nobel Peace Prize for pioneering, through the Bangladeshi lending organization Grameen Bank, the anti-poverty scheme known as microcredit or microfinance.
As I’ve reported on here over the past few months, the field of microfinance has fallen into a crisis due to allegations of excessive profit-seeking, political manipulation and a general shift from its image as a noble experiment aimed at helping the poor to a scheme aimed at exploiting the poor. Continue reading →
