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The Microcredit Attack Documentary
December 5, 2010
Update: I have blogged the English version of the documentary too.
I first heard from Danish documentarian Tom Heinemann last January. He was probably drawn to me because I had tweaked Kiva for de facto slight of hand. He told me he was making a film about microfinance—the one that premiered last Tuesday evening on Norwegian television. (An English version is coming early in 2011.) I could tell that while we shared a desire to pierce the publicity veils around microfinance, his drive was more purely critical. Basically, it seemed to me that he wanted to get the goods on microfinance. While feeling that the truth about microfinance is nuanced, I was curious to see what he would come up with.
Over the year, he checked in with me, as I’m sure he did with others in the film, to share his discoveries. He also asked good questions, such as what the interest rate of the Grameen Bank is, which led me to some blogging.
On a Saturday in August, Tom and his wife came to my house to interview me. I appear in the Norwegian final cut at 36:40 and 40:25. (Background art credit to my wife Mai.)
Overall, Tom seems to have made pretty much the most negative movie he could. As I show just below, the film sensationalizes matters that have more to do with making Muhammad Yunus look bad than whether microcredit is good for the poor; exaggerates the Grameen Bank’s interest rates despite my explanations in e-mail to Tom and on this blog; and heavily favors negative voices, depriving viewers of the opportunity to glimpse the complexities of the real world and think for themselves. Talking-head defenders of microcredit do get some airtime. However, as far as I can tell the client voices are all negative. Such voices are important and generally underrepresented, but they are not the whole story. It is easy to find people in Bangladesh who would rather have access to microcredit than not—I know because I met some while tagging along with Stuart Rutherford for a day in 2008. As far as I can tell, such microcredit users were not investigated in the course of this investigative journalism on microcredit use. The documentary is therefore designed to give viewers only half the story.
I can see a few potential motives or rationales for the strong negativity:
- Appropriately counterbalancing the microfinance hype. I have to say, at this point, it almost seems like the microfinance hype is hyped. The hype is constantly regretted (and it ain’t dead yet), but the press coverage has turned negative and the public image may follow. At any rate, I’m open to the Hegelian perspective that the jabs between opposite views are inevitable, even healthy: Muhammad Yunus is the thesis; critics like Tom Heinemann, Thomas Dichter, and Milford Bateman are the antithesis; and others, perhaps including me, are the synthesis.
- Telling the truth. In other words, if almost everything about microcredit is bad then that’s the story a responsible reporter must tell. But that’s simply not the case here. Credit is always a source of possibilities, good and bad.
- Beating up on bad or destructive people and organizations. This is the negative advertising theory of policy change. You see the other side as benighted or malign, or at least see yourself as justified in treating them as such. In this case, any attack upon them is in the interests of the poor. The presumption here is, as it were, that God is a Republican. The burden of evidence that one holds a monopoly on the truth ought to be pretty high.
- Maximizing drama. Maybe even-handed analysis makes for good blogging (ahem) but it’s boring on video. Dramatic tension calls for personification and dichotomization of issues. The medium is the message. That’s why this documentary revolves around the character of Yunus.
- Maximizing attention for the attacker. Anyone who publishes content seeks attention, so the issue here would be a matter of degree and balance.
By way of making my case that the documentary maxes out on negativity, I’ll comment on a few parts:
- All along, I’ve felt that the most valuable thing Tom has to offer is his footage of women in Bangladesh talking about their troubles with microcredit. Not knowing a word of Bangla or Norwegian, I can’t tell what they say in the film, but I can read their tears and long faces. Tom told me that some women he met in Bangladesh said they have contemplated suicide; I expect that made it into the film. At one point, he asks a woman, in English, to show him the house she lost to debt. I think it is worthy to bring such sad stories to life through the powerful medium of video. Anyone who promotes or supports microcredit must recognize that it, like all credit, has a dark side. We don’t see it enough.
That said, I am certain that if Tom had wanted video of people talking about how microcredit had helped them manage life a bit better, he could have shot it. For example, he could have asked the authors of Portfolios of the Poor to introduce him to some of their subjects, many of whose stories are told in Appendix 2 of that book. Those stories are neither of ascent out of poverty nor of descent into indigence, but of people getting by by grasping financial tools within reach. The apparently pure negativity of documentary’s client footage is therefore a choice—a choice to give viewers only one side of the story. Whether most viewers will realize that, I don’t know.
- The talking head footage is dominated by critics, and even more by criticism. I think quotes from middle-of-the-roaders like me and Jonathan Morduch accentuate the negative. Tom cleared three with me: the two negative ones used, and this positive one, which didn’t make the final cut: “I do think that we need to give Mohammad Yunus credit for spreading the idea that you can do business with the poor.” (I should explain, as I wrote to Tom, that I misspoke in one that he does use: we have essentially no credible evidence that microcredit reduces poverty; but we do have one study that shows microsavings (thus microfinance) reducing poverty. I feel bad about creating this film editing problem, which has not been solved yet.)
The one ardent defender is Alex Counts, CEO of the Grameen Foundation. To be fair, I should note that Yunus refused to be interviewed. But is it just me, or are the shots of Alex less flattering in angle and frame than of the other talking heads? (I did wince at 42:30, when Alex cited the literature review he commissioned five years ago as showing that microfinance reduces poverty rather than the fine, new update which avoids such claims.)
- A companion article, and I assume the film, claim that the Grameen Bank charges 30%/year interest. I told Tom that’s wrong. The source appears to be page 61 of this report, which Tom sent me, and which contains two errors. First, it assumes that loans repaid in 46 installments are repaid in 46 weeks, which they are not: some weeks no payment is due because of holidays. Extending the repayment period lowers the effective interest rate. Second, and more significantly, the cited figure includes an estimate of client transaction costs, such as the rickshaw ride to the weekly meeting. That’s interesting, but misleading when cited without explanation.
My sharp measurement of a standard Grameen borrowing pattern, inspired by Tom’s queries, yields a rate of about 24%. After I blogged that finding, Tom contacted me to share his puzzlement over Grameen Bank transaction logs he had copied. It turned out that the borrowers were topping up their loans: having repaid at least half the balance, they borrowed it back again. Explaining this to Tom, I realized that the unusual flexibility of Grameen loans raises average balances without raising interest charges. Factoring this in reduces the interest rates to more like 17–20%. And all that is before factoring in Bangladesh’s higher inflation rate, which makes 17–20% feel like 13–16% to a Norwegian or American. That is much less than I would pay for an uncollateralized loan from American Express. All the sturm und drang about usury in India notwithstanding, microcredit is generally cheap in South Asia. I told Tom, but he stuck with 30%.
- A companion article, and perhaps a chunk of the film, sets out to debunk the myth of the “phone ladies,” women who began in the late 1990s to take microloans to buy mobile phones and then sell their use by the minute. “The truth is,” intones the article in Google translation, “that today there is no longer any phone women.” But how is this a failure? The truth is that for the Bangladeshi man who conceived of bringing mobile phones to the masses in the developing world, Iqbal Quadir, credit was just a means to the end of connectivity. When connectivity became so cheap and prevalent as to make phone ladies obsolete, that was success—indeed, given its ripple effects throughout the developing world, one of the most extraordinary development triumphs of our day. As a matter of history, microcredit was a low rung on that ladder to success. Accentuating the negative here looks like mudslinging.
- Likewise, the documentary devotes ~10 of its 60 minutes to documents Tom obtained through a Norwegian Freedom of Information Act request. (I have OCR’d, Google-translated, and archived them here.) Most of the documents relate to a previously hidden dispute between the Grameen Bank and the Norwegian government over the former’s use of the latter’s aid money. For microfinance history geeks like me, this is prime, like Wikileaked State Department cables. But, as I told Tom at the interview, it appears to have no bearing on the important question of how microcredit affects human beings. And even on its own terms, it has been blown way out of proportion.
What is revealed is that in 1996 the Grameen Bank transferred some $100 million in aid receipts from Norway, Sweden, and other donors to a separate, non-profit entity called Grameen Kalyan—without informing those donors. Grameen Kalyan then lent the money back to the Bank at 2% interest. According to the Bank’s just-released account, this interest supplied a Social Advancement Fund which was to provide services such as scholarships to Grameen members and employees. A Norwegian official first detected the transaction in a footnote of the Bank’s 1996 annual report, which was published in mid-1997. The Norwegian government became alarmed that money it had given to a specific institution for a specific purpose (housing loans) had been transferred to another institution for other purposes without the donor’s knowledge. It also pointed out that this gift to Grameen Kalyan reduced the net worth of the Grameen Bank, thus of its shareholder-members. (A good timeline is here.)
The Bank’s explanations for this strange transaction were and are disturbingly dubious. One rationale was and is that the Bank gave the money away and borrowed it back because it was afraid that otherwise it would burn a hole in the Bank’s pocket. This Bank, entrusted with the serious responsibility of using foreign funds to help the poor, would not entrust itself with the basic function of a bank: holding money safely. Or—more likely—the Bank was and is lying. Another reason given was and is that the deal could reduce Grameen’s tax liability. But according to an Norwegian embassy official, Yunus first emphasized this rationale, then deemphasized it months later. (And the Bank disowned the rationale in a letter to Tom this August.) The dissembling raises suspicions: perhaps the move was nefarious, as sensational headlines have insinuated in the last few days. But lacking evidence to the contrary, I am prepared to believe that the real motive was indeed to set up the social fund, and that the Bank got trapped in rationalizing a contract violation. In the end, the disputants compromised: about half the funds (I think) were moved back, after which the Norwegians judged that their interest in the appropriate use of their money was served. On what basis should we second-guess them? [Update: The Norwegian government has, from its point of view, cleared Grameen of all charges.]
The episode does shed light on the parting of ways between the Grameen Bank and donors. Yunus has long taken pride in the Bank’s independence since the mid-1990s. Whether he is making a virtue of out of an unhappy divorce, or whether the deep cause of the newly exposed dispute was Yunus’s growing restiveness under the yoke of the donors, it seems clear that the Bank had developed the confidence to do things its way, on its own. The documents also debunk Milford Bateman’s assertion that “the rejection of subsidies [for the Grameen Bank] was essentially rooted in changing politics: specifically, the rapid ascendance of the neoliberal political project.” There is no sign of Norwegian officials, in their candid moments, planning to neoliberalize the Grameen Bank. Rather, they wanted to subsidize it and have a full say in how their subsidies were used.
Why then make such heavy weather of this dozen-year-old dispute? I suspect the answer lies in the excitement of headlines such as “Grameen founder Muhammad Yunus in Bangladesh aid probe“—as distinct from, say, questions of what helps the poor.
Possibly Related Posts
- Ironies in Yunus Attack on SKS IPO
- Akula v. Yunus: Commercial Microcredit = Just Profit or Unjust Profiteering?
23 Comments on “The Microcredit Attack Documentary”
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December 5th, 2010 at 2:29 pm
‘Microfinance puff’ documentaries and other issues raised.
Tom Heinemann’s documentary is, to my mind, a very useful antidote to the large number of documentaries and PR puff pieces on microfinance produced this last twenty years or so by the microfinance industry. He made no secret about wanting to adopt a critical take on the microfinance industry, as opposed to filming yet another ‘microfinance puff’ documentary which gives only half the story – the ‘good half’. That was why I was happy to get involved in it as a talking head when he called me, and it was why I suggested to him to ask you to get involved in it too if you were willing. From what I understood from Tom, and from some emails I was copied in to, you seemed to understand what it was all about and had no qualms about the basic premise of the documentary. Most of the ‘microfinance puff’ documentaries produced by the microfinance industry and its supporters, on the other hand, are depressingly similar, if not openly fraudulent – they simply tee up a couple of brave and successful stories, and then extrapolate from these stories to convey the impression that all microcredit recipients are equally successful – microfinance is a brilliant innovation because almost every client gets out of poverty! This is all nonsense, of course, as everyone knows. Nonetheless, such ‘microfinance puff’ documentaries are very powerful propaganda, and so it is not surprising that they keep on coming – the latest one is, I understand CGAP part financed, is called ‘The Test of Poverty’, the story of two women who strike it big after getting a microloan.
So hearing your criticism now of Tom’s important effort leaves me confused. I checked and (to the best of my knowledge), I can find no record of you criticising or having had any problems whatsoever with any of these earlier and very seriously unbalanced ‘microfinance puff’ documentaries. Moreover, in this blog you actually reproach Tom for NOT making one of these types of documentaries, as when you suggest it would have been good to use some positive stories, possibly examples from Appendix 2 of ‘Portfolios of the Poor’, and also have fewer critical voices in the film. I am really at a loss as to why you are so troubled by virtually the only documentary that chooses to focus on the consistently ignored downsides to microfinance in order to try to set the record straight. Isn’t this an important public service, given the huge resources pumped into microfinance which might, as the documentary suggests, be undermining the fight against poverty more than it is helping. Can I take it you will now strongly admonish the extremely generously funded bodies like CGAP and the Grameen Foundation and Opportunity et al for NOT filming even just a few of the very many unsuccessful stories?: say, of the women who toil for many years and yet fail at every attempt to get out of poverty and only end up in even deeper poverty and debt, and even an early death (such as the famously iconic Sufiya Begun in Jobra); of the husband who took his life out of shame because he failed in his attempt to set up a microenterprise; and so on. Will we now see you vociferously attack the forthcoming CGAP financed documentary on the same ‘unbalanced’ grounds? which you clearly must do to remain ‘balanced’. All the factors you provide as to the problems with Tom’s documentary apply with much more gusto to the vastly larger number of generously funded ‘microfinance puff’ documentaries. Your attack on ‘the lack of balance’ is itself thus hugely unbalanced.
You also criticise the references in another article to the GrameenPhone experiment. (This was not part of the documentary, but a follow on point on the website). I don’t understand your point here either. If you cast your mind back, the massive financial backing and publicity deployed to set up GrameenPhone was at least partly justified as a way of resolving poverty: specifically, of the women in poverty that would be recruited as ‘telephone ladies’. Remember how the early supporters of this experiment waxed lyrical in Forbes and BusinessWeek adn on CNN about how social businesses were resolving poverty in this manner, with the ‘telephone ladies’ supposedly making more than enough to get thecmselves and their families out of poverty? However, only a little investigation would have showed that this was manifestly never going to be the case after the first year or so. By all accounts, most of the ‘telephone ladies’ have quite predictably slumped back into the deep poverty from whence they came. However, Grameenphone became so hugely profitable it was described as ‘the jewel in the crown of Telenor’s portfolio’. This then is an important outcome to flag up, which Tom again does, because it shows that when you look behind the PR hype and spin, such innovations generally do very little for the poor, yet always manage to make spectacular fortunes for a handful of individuals. This isn’t what ‘social businesses’ are supposed to be about, is it?
Regarding the interest rate attached to Grameen Bank loans, you are perturbed, or offended, that Tom did not eventually use your estimations. One reason, I think, (but ask him) is because there is no agreed interest rate on Grameen Bank, given the hugely complicated formula required to calculate them accurately. Plus you need to factor in the impact on interest rates arising from the various fees added on (officially and unofficially), forced savings, weekly payments, etc, which I understand you choose not to when making your calculations (see previous blogs). Others have factored in these issues and so calculated the loans as coming in at 50% and more (some up to 400% as you noted recently on your blog). Using 30% represented a good middle ground perhaps?
Finally, its a minor point, but you contend that the letters released by Tom debunk my assertion regarding the key Washington DC ideologically-driven desire to rid microfinance of the evil of subsidies. I suppose I should at least be happy that you address my arguments in a polite manner, and refrain from personal smear directed at me as in your supposed ‘review’ of my book: you are still wrong in what you say though. NORAD has always been a somewhat distant institution from the Washington DC institutions, reflecting I’m told Norway’s socialist-leftist past and an uneasy and only partial acceptance by the Norwegian elite of neoliberal views. They thus developed their own, possibly quixotic you may say, views on the issue of subsidies and commercialisation with regard to microfinance. They are something of an outlier, then, and are clearly not representative of the Washington DC core institutions that essentially drive forward global policy with regard to microfinance.
Milford
December 5th, 2010 at 3:00 pm
Thank you Milford. There’s lots to talk about here.
I think your case for the value of the documentary fits with the first rationale/motive I listed, and there’s much to be said for it. As I wrote, I am open to it. It is worthwhile to provide a counterpoint to all the claims that microcredit is a wonder drug. But I don’t really see how it justifies devoting so much time to a dozen-year-old contract dispute of no clear relevance to the important question of how microcredit affects the poor. That time could have been used instead to give viewers a fuller understanding of the impacts of microcredit on the poor. That it was not suggests that balancing the public discourse about the impacts of microcredit on the poor is not the only motive at work.
Milford, you wrote:
Sorry, but that is fundamentally illogical. First, I make clear that the stories in that Appendix are not that happy by the standards of microfinance storytelling. Second, you equate having any happy or ambiguous stories—all I’m asking for—with having only happy ones. In other words: if you’re not for us, you’re against us. I don’t see the world as so black and white.
I did in fact state substantive concerns to Tom in person, by phone, and in e-mail. I did not cc you on most of the e-mail messages, so I don’t know that you were privy to them. Of course, there was much I could not comment on until I saw the final product, not being privy to it beforehand.
I have criticized movies (and studies) on the other side. See my posts Creepy Movies and Microfinance Causes Aging. If a documentary with the stature of Tom’s appears, yet broadcasting the opposite message, I expect I’ll be all over it….unless no one really takes it seriously anyway. As far as I’m aware, no such has appeared since I began this blog.
As for “vociferous attack”: what sentence are you referring to? I list five possible motives and rule out almost none of them. In the same vein, you describe my review of your book as a “personal smear.” Yet almost all the sentences in that post refer to the writing, not the writer. The criticism is intense, so I can understand why it would feel personal. Some exceptions include “Bateman’s passion seems to lead him to select and distort evidence” and “I am allergic to (as I perceive it) sloppy thinking,” both of which explicitly distinguish between the reality of what goes on inside your head, which I can never know with certainty, and my tentative perceptions and hypothesis about that.
Are you suggesting that the spread of mobile phones to billions of poor people has done little for them? It all started with Grameen Phone.
How I feel about Tom’s discarding of my advice on measuring the Grameen Bank’s interest rate is not important, which is why I did not mention it. What is appropriate in this context is a well-grounded argument that his number is incorrect. I am well aware that the mathematics are a complex. If you look at the spreadsheet I posted earlier, you will indeed find a lot of complexity. This file almost certainly represents the most detailed analysis yet of the Grameen interest rate. Meanwhile, I did, as you say, note that one study found that the rate could be more than 400%. What you did not mention is that I also explained its flaw (in e-mail to Tom too, by the way): it assumes savings are never returned. As for fees, I include all for which I have seen documentation, which is to say: none. If you can document loan fees at Grameen as matters of practice or policy, do let me know. In addition, to be conservative, I assume that 2.5% of the loan balance goes into forced, inaccessible savings accounts, even though Asif Dowla reports that this is no longer true as a matter of policy. (I know that things can be different in the field.)
I agree Norway may well have been an outlier from the Washington Consensus in its heyday. But that goes for most or all of Grameen’s other donors—Sweden, the Netherlands, Japan, IFAD (a U.N. agency). Possibly the Ford Foundation too—I’m ignorant of its history.
December 5th, 2010 at 3:43 pm
David, Thanks for an excellent review.
I am wondering why you are reluctant to consider the pressures that Grameen was facing at that time. They were expanding locally and internationally. There were the floods. There was the need to set up Grameen Phone and Telecom ( where the 50 million we know for certain went from Kalyan). If you recall that Hulme paper I once brought to your attention there is a section where Hulme writes ( page 7):
http://papers.ssrn.com/sol3/pa.....id=1300930
\This meant that the entire Bank had to recognise significant losses. These could be absorbed by writing off parts of the Bank’s asset base, but a second prong of strategy helped reduce this ‘hit’ on the Bank. Professor Yunus was partially able to mobilise grants from aid donors to offset these losses. Again, it is unclear precisely how this was done….\
Do you not think this suggests \nefarious\ use of grants? Do you not think the conjuncture is quite telling?
December 5th, 2010 at 9:17 pm
Shafiur, thank you for reminding me of that paper, which you had indeed pointed me to earlier. I agree that the transaction that caused this dispute probably needs to be put in the context of the Bank’s history to be fully understood. I don’t know enough to do that. Hulme’s paper hints at things, but isn’t really able to clarify. A priori it’s hard for me to see why the Bank would transfer donor funds *outward* if it wanted to use them to cover its loan losses. So I still don’t think I have a good reason to doubt the Bank’s intentions.
–David
December 6th, 2010 at 1:38 pm
Thank you, David. As ever, you are the synthesis. While the “muckraking” in the documentary is regrettable, it does afford the opportunity to help us find the mean between the two extremes of virtuous hype and slanderous critique. Thank you for walking us through it.
December 6th, 2010 at 2:36 pm
David,
Thank you so much for your work on this. I have been following the work of Muhammad Yunus over the past four years as I’m making a documentary on his work from microcredit through to social business. And as I spend time editing, it has been always a deep part of my process to try to show both sides, the positive and the negative of what is happening.
I am always amazed that the media tries to make everything black and white, when life is such a full spectrum. Of course microcredit is an important tool, but it is not a panacea – just as nothing really can be a panacea. Life is too complicated.
What I witnessed was the same thing Yunus saw over time, that those who can’t pay back are suffering health issues in their family – which is of course why he went on to start a healthcare company. He is looking at all the ways to address poverty and it is not just financial. He has to look at health, he has to look at malnutrition, he has to look at housing, he has to look at sanitation.
The thing that I see though is that because he was a teacher, he is always looking at the root causes and trying to tackle those. When there was night blindness of the children instead of turning to Vitamin A supplements, he encouraged planting vegetable gardens.
His consistent way of trying to tackle poverty from all angles is what I found impressive and empowering people so they can have the tools necessary to lift themselves out of poverty.
Some will prosper more than others, just as with anything.
Thank you,
Holly Mosher
filmmaker
December 6th, 2010 at 4:59 pm
Dear David,
It was interesting to get your background story to Tom Heinemann’s documentary. However, I do think it is slightly misleading to provide what may come across as (or what at least some commentators appear to believe is) a review, when you have not yet had full access to the documentary.. ‘linguistically’. I am Scandinavian (working on microfinance/social entrepreneurship) and caught the documentary online a couple of days back and I thought it was pretty balanced (though, of course, critical). Yes, there is plenty of criticism of Yunus, but I think that also acts as a counterweight to the heavy idolisation which the documentary highlights early on- with the Year of Microfinance, the Nobel Peace Prize and the long interview(s) with the Nobel committee member (man in grey!). It is not a documentary so much about microcredit in general, as about Grameen Bank (and Yunus) as the symbol for microcredit, and the honesty and sincerity of Yunus/Grameen). As such I thought it did a good job of trying to ask whether what Yunus and Grameen Bank claim to be happening is actually taking place.
As for the aid funding that went.. astray, the documentary is also critical of the Norwegian agency and ministry responsible, so it is not as one-sided as it may have come across. And finally, the interest rates- I agree that this was misrepresented, but whilst development practitioners and academics spend a lot of time debating these, would the average person watching this documentary on mainstream television give it as much weight as the main stories coming out?
I do think a healthy debate about microcredit does need work that balances the ‘microcredit will save the world’ stories, and I think this documentary was beneficial in that respect. I thought it was also rather timely given what is unfolding across AP… Though being neither as senior nor as experienced in MC/MFI debates, I will not go on any further but shall stop right here!
Wintery Regards!
December 6th, 2010 at 6:09 pm
Thank you Lina. I appreciate your insight. I didn’t intend to write a formal review. As usual, I was just thinking aloud.
Here’s a key question, I think: did any of the Bangladeshi borrowers say anything good about microcredit?
December 6th, 2010 at 10:02 pm
David,
Congratulations on a good and timely review of this hatchet job posing as a documentary.
Sorry to have made you wince. I stand by both studies we commissioned, one by Nathanael Goldberg (now with IPA) and the second by Professor Kathleen Odell that you were kind enough to praise earlier this year. (Do you see major flaws with Nathanael’s paper? If so, I would welcome those comments and probably Nathanael would also.)
I find that both literature reviews include many citations that tend to support the idea that microfinance can be an effective tool in addressing poverty. I always urge people to read the reviews (or the original studies if they have the time and expertise to digest them in their original forms) and then come to their own conclusions—a recommendation that I reiterate in this commentary.
Alex Counts
December 7th, 2010 at 1:35 am
Why then make such heavy weather of this dozen-year-old dispute? I suspect the answer lies in …
——————
…Bangladesh (BD) politics.
In 2006 Dr Yunus openly criticized BD politicians as corrupt, and made a long dinner speech \if I was PM of Bangladesh what I would do to eradicate corruption\. Since then, in a pseudo-military coup, 100′s of BD politicians were jailed for corruption in 2007 (including current PM Hasina). At the same time Yunus had launched his OWN politicical party, which lasted only a few weeks!!
Last week BD PM managed to “legally” evict the Leader of Opposition from her 38 year old home, which many labelled as political vendetta. And this week PM’s eyes are on Grameen bank…
Is Tom Heinemann into BD politics?
December 7th, 2010 at 2:48 am
So tell me David n a letter dated 08.01.1998, Grameen Bank states that is working to incorporate the date for the repayment of the loan into the contract with Grameen Kalyan. So first the equity is transferred. Then loaned back. Then interest paid on it and then the principal is paid back? Surely that constitutes a double whammy?
I believe Heinemann understands that poor people need financial services. Who doesn’t? The documentary program only shows that such programs are not a solution to poverty. They are not a panacea as some people want you to believe.
In fact for many people it can push them in to further poverty. Giving someone some money does not automatically mean they become successful entrepreneurs. A lot of this money is not used productively. But most importantly Tom Heinemann’s program shows that poor people also need consumer rights. Rights to avoid becoming over-indebted. Rights of legal redress. Rights against harrassment. And what the financial scandal shows is their rights at the institutional level were also infringed. The microcredit market needs diligent regulation.
December 7th, 2010 at 6:42 am
Alex Counts basically puts forward the widespread view in the microfinance industry that the only legitimate documentary on microfinance is a puff documentary: anything else is out of bounds and needs to be attacked on principle. This is very sad and hardly reflects the spirit of genuine enquiry desperately needed everywhere as governments and donors try to address rising poverty and deprivation with the best possible policies and interventions.
There are very serious problems with the impact evaluations that both Goldberg and Odell review, and I’ve written about them elsewhere. Essentially, almost all of the impact evaluations covered in the reviews were structured so as to ignore two really important downsides to microfinance associated with job/income displacement and client exit.
December 7th, 2010 at 11:19 am
Yes, Shafiur, I mentioned those transaction details in the post. What do they have to do with the lives of the poor? If a full investigation uncovers new evidence that something really inappropriate was done with the money, then I will be more concerned. But for now, not even the complaining party, the Norwegian government, is suggesting any such thing.
I agree that the documentary raises good, important questions about such things as protecting the rights of borrowers. That is why I said the most valuable part of the documentary is the footage of clients.
December 7th, 2010 at 7:40 pm
Thank you for your “measured blog” post. I work for a microfinance nonprofit organization and I don’t like the “hype” surrounding our “product” either. Not that it is not a good product or an effective and efficient one but more so that we cannot deliver results to the hype which our supporters succomb to. We have to educate our donors that the credit has bad sides too and it will not be all roses. I appreciate, and always do, the knowledge behind your post.
December 13th, 2010 at 6:45 pm
Hey David, thank you for useful insights. I am Norwegian myself, and have just seen the documentary. For this reason I can answer your question: Did any of the Bangladeshi borrowers say anything good about microcredit? To my remembrance non of the borrowers in the documentary had a positive idea of Grameen Bank or microfinance. I have visited several microfinance groups in Bangladesh myself. They belonged to a small NGO. I interviewed women about defaults rate, and what happened if someone struggled repay the loan. I have to say that I recognize some of the stories presented in the documentary, for instance that some would be forced to sell their house. That being said, this was mainly stories I heard about other organisations, while most of the women I met was quite satisfied, despite the fact that I was taken to a wide range of different groups. In addition all the articles I read was much less critical than this documentary. Most of the positive that was been said was by Yunus himself or by the Nobel comitte, and it rather gave a feeling of an stark contrast between the representation of microfinance and the “reality”. Thus I do not find it very balanced in contrast with Lina.
December 15th, 2010 at 6:44 pm
As the money from Norad was not loan, it would have sharply increased the asset base of the bank. This would in turn increase the value of the equity of Grameen Bank owners (who I understand are the poor). Transferring this money then to Grameen Kalyan and borrowing it back from them as liability would drastically decrease the shareholder value and could be deemed as a serious form of “asset stripping” under any company law…..
Not sure to what extent Grameen Bank’s claim of it being owned by poor borrowers is real. Only a rubber stamp board would approve such a dramatic debasement of shareholder value.
December 15th, 2010 at 8:52 pm
Yes, a Norwegian official made exactly that point in one of the letters. The full archive is here.
December 25th, 2010 at 8:40 pm
Mystry Behind Hasina’s Anger toward Dr. Yonus
Abid Bahar
Many people internationally wonder why Hasina as the Prime Minister of Bangladesh now and even before has been so vicious against a Bangladeshi who brought international fame for Bangladesh. This is even when Dr. Yonus is not a political rival of Hasina. More so that Dr. Yonus began his career as an academician and has been in the banking business eversince. In contrast Hasina was never an academician nor a religious fundamentalist to condemn interest charged by banks; she was a housewife turned politician and has been working to materialize her father’s deams of “Sonar Bangla.”.
Why is this unwanted anger? Research shows there are several underlying and subliminal factors behind Hasina’s deeply rooted prejudice against this international figure.
Firstly, Dr Yonus’s ideas of Gramin revolution germinated during the time of Bangabandhu’s 1974 famine. Amarta Sen, the Nobel Prize winner from West Bengal called it the “man -made famine.” In contrast the Awami League fondly calls 1972-75 period as the time of Bangabandhu’s “Golden Bengal.” This myth was even written in Bangladesh’s history books manufactured by the Hasina AL.
True, Yonus’s Gramin was a reaction to the human suffering during the 1974 famine the time when over 400,000 lives were perished. At the time, Yonus as a professor in Bangladesh personally witnessed the human suffering which led him to begin an experiment in a village near Chittagong University where he finally came up with the Gramin revolution. Dr. Yonus in his speech often mentions the human suffering of the time. He never intentionally does it to put down Bangabadu’s “Sonar Bangla” myth but often explains how he began his revolution at this time. This no doubt, inadvertantly bleeds the AL heart. Hasina as the Mujib daughter can not stand this revolution that mentions the 1974 famine but glorifies Bangladesh internationally.
Secondly, in anectdotal form Dr Yonus at least once referred that on March 25 Bangabandhu Mujib in stead of waiting for the Pakistani army to take him to custody (some call this a voluntary surrender) a leader like him could have chosen to be with the rebels to lead the nation as a rebel leader. To Dr. Yonus Mujib’s presence as a very powerful leader with the rebels could have been more helpful for the nation at times of its supreme crisis. This is in effect a direct challenge to Mujib as the father of the nation claim. True, Mujib was an absentee leader but was awarded the title “father of the nation” by the AL, even for not leading the war. The controversial fathership is now even codified in the Hasina’s reformed constitution.
Thirdly, in anictdotal form somewhere Dr. Yonus acknowledged that President Zia’s financial grant at the crucial time of Gramin’s initial growth helped it to take off from its infancy to its adolescence. To the AL this is a bad news for the Gramin and surely is a sin committed by Yonus because to the AL hero-worshippers, Zia was a “Pakistani razakar.” To Hasina when Dr. Yonus is not with the AL he must be with the enemy. So Dr. Yonus for his perceived association must be a confirmed “razakar” too. That is why the Zia phobic Hasina found it important that Dr. Yonus must be condemned openly even before he was found guilty. See http://www.muhammadyunus.org/I.....r-12-2010/
Finally, the AL party originally founded by Mawlana Bhasani to fight for democracy but under Mujib’s leadership has eversince turned itself into a hero-worshipping party and not long ago after Mujib’s demise Mujib followers ganged up together on a staged BBC survey to name Mujib as the greatest Bengali of all times. To Hasina, Dr. Yonus’s international fame is a direct challenge to Mujib who should be the greatest man from Bangladesh.
But Dr. Yonus proved himself to be too smart. To the AL ING, no Bengali eversince Mujib became the leader of Bangladesh should have crossed Bangabandhu’s fame. Dr. Yonus crosses Bangabandhu Mujib and even received a Nobel Prize. This is not tolerable, on the other hand to the AL Hasina is the one that deserves a Nobel Prize.
To Dr. Yonus (as a non political person) this is as if when he has been trying to avoid Bangabandhu in every turn, the shadow of him with Hasina behind appears before Dr. Yonus over and over again. Perhaps due to all these reasons why even before Dr. Yonus was proven to be guilty, the Dhaka University branch of maruding Chatro League leaders demanded that Yonus’s Nobel Prize should be rebuked. Perhaps in this whole range of debate the rivalary has to do more with a battle between fiction vs. reality or to be sure between Bangabandhu’s BKSAL fascism of socialist repression for the dream of “Sonar Bangla” vs. Yonus’s Gramin social business in a free market economy.
February 23rd, 2011 at 3:50 pm
“He also asked good questions, such as what the interest rate of the Grameen Bank is, which led me to some blogging.”
A journalist on a deep dive look at a bank, and you are impressed when he asks about the interest rate? Either the journos you encounter are consistently sub-standard, or you are damning him with faint praise. Can’t work out which!
Have you ever sat through an evening of NRK programming? Not up to much…
February 23rd, 2011 at 4:22 pm
Peter, it was a good question because I had no ready answer for it and seemingly I should have. And it wasn’t just me: only in the last few months, after a good deal of work, did MFTransparency come up with a thorough analysis of the question.
February 23rd, 2011 at 4:35 pm
fair enough: I wouldn’t expect you to have the answer off the top of your head but you probably were able to deal with the issues of pricing adequately. And I would expect him to ask it! Just looked at MFT Trans (thanks for tip) and yr original post on the question linked from there. I recall trying to work it out in the 90s for a dissertation. Came up with thirtysomething, if I recall correctly. cheers
March 25th, 2011 at 11:57 am
Doesn’t it strike you as weird that some people go to the extent of amassing chapters of reasons (character assassinations, facts, even to be broadcast on video) to attack others who at least are attempting to / making some sort of positive difference when others are but idling. It would have been more constructive (or helpful) if the question posed was:- MC is functional. It is not perfect and has 1, 2, 3… problems/ deficiencies. There is plenty of room for improvement. What can be done to improve it?…to begin some sort of debate. All they have done is isolated people and brought in confusion.
April 26th, 2011 at 3:04 am
I stumbled on to this blog while trying to write something; it is so exciting, so absorbing that I forgot all else till I came to the end. I was struck by how everyone except you, David, seems to know his mind, and how few people distinguish between Yunus and what he did. I guess it is the inevitable fate of all great people – and there can be great villains as well as heroes – to be remembered as unidimensional cardboard figures. Poor Gandhi is indelibly branded Father of the Nation and remembered for his campaign against the British; his Experiments with Truth are quite forgotten. Being somewhat removed from the battles to our east (I write from Delhi), I shall continue to be fascinated by Muhammad Yunus – as a unique social innovator.