Dhaka Forecloses the Grameen Brand - this maybe the beginning of the end
of Grameen Bank
Bangladesh's government is taking over the pioneering microfinance bank,
just as its founder feared.
This article is found in
http://online.wsj.com/article/SB10000872396390444184704577588700270815144.html#articleTabs=article
By WILLIAM B. MILAM
For the past 18 months in Bangladesh, the specter of a government
takeover has haunted Grameen Bank and its founder, Nobel Prize winner
Muhammed Yunus. Many thought Mr. Yunus was imagining the threat, but
this month the Awami League government of Sheikh Hasina finally showed
its hand. Her cabinet decided to push the microfinance lender's elected
board of trustees aside and give power to the government-appointed
chairman to name a selection committee that will soon find a new
managing director.
The decision marks a new turn in a campaign to vilify Mr. Yunus, which
began last year when the government removed him from his long-time role
as managing director. Then it ginned up a controversy that micro lenders
were "loan sharks," when the opposite is true: These banks give poor
borrowers an alternative to usurious moneylenders.
This time, the cabinet impugned Mr. Yunus's honesty by asking questions
about whether he followed bank rules on tapping the bank's credit
facilities when he was managing director. It also alleges that he
wrongly received tax exemptions on his foreign earnings. Last week, it
opened a tax investigation.
Grameen Bank is important because it established the microfinance
model--banks that provide unsecured loans for poor women for investing
in income earning projects. It has been copied throughout the world and
inspired the phenomenal growth of micro finance. In 2006, both the Bank
and Yunus were awarded the Nobel Peace Prize for, as the Nobel committee
put it, "their efforts to create economic and social development from
below." By giving the poor the ability to help themselves, it undermines
the culture of dependency on the government that ties the poor to
Bangladesh's political parties.
In May 2011, I visited Dhaka and talked at length with Mr. Yunus, whom I
have known since the early 1990s. He had been under attack by the Awami
League government for some time. Even after he was removed from his
position, he sought to ensure that the bank board could still elect his
successor without political interference. It now seems all but certain
that the bank he led to international renown will come under new management.
Enlarge Image
AFP/Getty Images
Muhammed Yunus.
Many Bangladeshis I respect told me then, and still think today, that
the Awami League is out to get Mr. Yunus by any means possible. The
politicians believe, wrongly, that he is a long-term threat to their
interests.
Many suspect that the root of the problem is that, when Bangladesh was
under a military caretaker government in 2007, Mr. Yunus's name was
briefly put forward in 2007 as a possible leader of a "third force" to
replace the two dysfunctional major political parties led by Ms. Hasina
and Khaleda Zia. Their personal animosity has made progress impossible.
He never volunteered this idea, but he didn't reject it at first either.
Nevertheless, this third party never took off.
In addition, most Bangladeshis say that Grameen Bank now provides
low-hanging fruit for what is perceived as a corrupt government.
Officials can loot the bank's substantial assets at will now. They can
also tap its customer base of women borrowers and turn them into a
serious vote bank by promises of loan reductions or write-offs.
World leaders need to take note of these perverse motivations in Dhaka
and condemn them, but they aren't doing so. I came back to Washington
after my 2011 visit feeling great foreboding about Grameen's future. The
South and Central Asian Bureau of the U.S. State Department, however,
did not share my concerns when I met with its officials. Their reaction
was tepid then. Now, more than a year later with news of the cabinet's
decision, I am told they are "working on it."
For all the laurels Mr. Yunus has received from the West, his strategy
to protect the bank he founded didn't work, partly because Western
governments failed him. In the 15 months since the attack on Grameen
began, the U.S. and others have let themselves be distracted by other
business and lulled into complacency by Ms. Hasina's waiting game.
Now it may be too late to save the bank. The U.S. is playing catch-up on
an issue on which it had an early warning. By this time, Prime Minister
Hasina is not inclined to listen to other governments and back off her
determined course. I am sure it will take more than words to deflect it.
The U.S. and European governments will have to threaten to cut off
bilateral assistance programs and other aid through multilateral
institutions like the World Bank.
Getting donors on the same page at such a late date will be a real
uphill battle, and given all the other pressing issues in South Asia is
a long shot. It is thus with a heavy heart that we must prepare for the
disappearance of the pioneer of microfinance and the marginalization of
its visionary founder.
Mr. Milam is a former U.S. ambassador to Bangladesh and a senior scholar
at the Woodrow Wilson International Center for Scholars.
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