Muhammad Yunus, Banker Of The Poor Has Goodwill, But His Political Nous Is Untested

Muhammad Yunus has the right credentials to be the Chief Advisor to Bangladesh’s military-backed interim government as a Nobel-prize-winning microfinance pioneer who has helped pull millions of his countrymen out of poverty, emancipate the country’s women and improve its social and health status.

Bangladesh’s 1996 Constitution amendment provides for a caretaker government to manage the transition after a government’s term ends and the next assumes office. This period is 90 days. The Chief Advisor, who has the status of Prime Minister, is required to be the immediate past Chief Justice of the Supreme Court, but in the turmoil that followed the end of the Bangladesh Nationalist Party’s term in 2006, the former Bangladesh central bank governor was put in charge of the caretaker government, following military intervention, the declaration of a state of emergency and the suspension of political rights.

If the army backs the demand of student leaders who led the protest, an economist may once again be put in charge of managing the transition. Anticipating the move, India’s former Chief Economic Advisor Kaushik Basu tweeted: “He has three qualities crucial for a leader in a modern democracy: he is not vindictive; he will not cling to power when the time comes to leave office; he is inclusive and secular.”

Reaz Ahmad, executive editor of the Dhaka Tribune, doubts Yunus’ political acumen, though Yunus took a tentative jab at politics by announcing in 2007 that he would form the Nagorik Shakti or Citizens’ Power Party, to rid the country of corruption. But he abandoned the plan shortly. Yunus himself reportedly remarked to a journalist that politics was not "his cup of tea." But given his standing as a Nobel Laureate and banker of the poor, and with the back of the army and protesting student leaders, Ahmad says, he should be able to restore calm and conduct free and fair elections.

Though an economist by training with a Ph.D. in the subject from Vanderbilt University in Tennessee, which he acquired on a Fulbright scholarship, Yunus has not been a wilting academic. When the Pakistan army moved into East Pakistan in March 1971, Yunus declared his support for the independence movement and, with six other countrymen, formed the Bangladesh Citizen’s Committee while studying at the University of Colorado. When a new government was formed after independence in December of that year, he ran an information centre in the US to support it. Soon after, he returned to Bangladesh and joined the Planning Commission.

Dissatisfied with his role, Yunus returned to teaching as head of the department of economics at the university of Chittagong, his birthplace. During the 1974 famine, Yunus found fields in his area fallow; farmers were not cultivating them because of a lack of irrigation. Acting on his principle that economics should find solutions to real problems, he got students to work with farmers by giving them credits. They focused on irrigation and high-yield rice. He even funded a cooperative.

It was while in Chittagong, Yunus says in his autobiography, that he got the idea of lending small loans to rural artisans who could not access credit from conventional banks because they did not own assets that could be considered collateral or bankable security. He saw a woman make three bamboo stools with raw materials costing 22 cents, which she borrowed at usurious rates and sold at a profit of two cents. He began in 1976 by giving an interest-free loan of $27 to 42 such borrowers and getting a government bank reluctantly interested. In 1984, he founded Grameen Bank.

As of June 2024, Grameen Bank, according to its website, has lent $38.65 billion to 10.61 million member-borrowers since inception. It has nearly 23,000 employees and 2,600 branches in 94% of Bangladesh’s villages. The recovery rate is 96%. Currently, it has $1.4 billion in outstanding loans and $1.9 million in members’ deposits. The bank’s services have impacted the lives of 45 million people, including the family members of member-borrowers.

Grameen Bank has not only lifted people out of poverty, but it has also taken women out of the confines of the home and made them aspire beyond household chores. Yunus found that women were good at repaying loans and they spent on the family, unlike men, who tended to indulge themselves. Another innovation was the self-help group, where groups of about six women borrowed money on the basis of joint liability. This put social pressure on all the female borrowers to be diligent in repayment.

For their efforts at grassroots social and economic development, Yunus and Grameen Bank were jointly awarded the Nobel Peace Prize in 2006. But the ousted Prime Minister has, according to news reports, called Yunus a “blood sucker” for charging exorbitant interest rates. He was accused of embezzling $2.3 million of workers' funds from Grameen Telecom, which has a stake in Grameenphone, the country’s largest cellphone service provider. In January, Yunus was sentenced to six months in jail but was granted bail. Last August, 170 world leaders, including former US President Barack Obama and former UN Secretary-General Ban Ki-moon, appealed to the ousted Prime Minister to stop the judicial harassment of Yunus.

Will elections be held in the next few months and will the army go back to the barracks? Ahmad expects it not to linger in politics. He says Bangladesh faces daunting challenges on the economic front. Under Sheikh Hasina, the economy did well. GDP in constant 2015 US dollars rose from 102 billion in 2009 to 460 billion in 2022. Per capita GDP, by the same measure, doubled from $927 to $1,869. But the distribution is very unequal. Inflation and unemployment rates are high. The country of 173 million is overly dependent on garment exports. Merchandise exports have tripled from $17 billion when Hasina took over to nearly $56 billion. But garment exports account for 88% of them.

There was much infrastructure development during Hasina’s time. But cronyism flourished. Contracts and licenses were given to favoured business leaders. Corruption was rampant. In July, the ousted PM said at a press conference that she had fired a member of her personal staff after she discovered he had become a millionaire many times over. Newspapers said he was ‘Kettle” Jehangir or “Pani” Jehangir, a peon who misrepresented himself as Hasina’s personal assistant. He had amassed a wealth of about 400 crore taka or $34 million and was symptomatic of malaise.

At 84, an orderly transition is all one can expect from Yunus. The new generation will have to bring in a new kind of politics, in place of the one marred by bitter rivalry between the two begums (Hasina and Zia), political and religious violence, and episodic military interventions.