An Economist article from a few months ago noted that if Bangladesh can sustain its annual growth rates of over six percent, it could “contemplate reaching middle-income levels in barely a decade.” That would be quite a feat for a country that was once synonymous with wrenching poverty. But as the Economist warned, the government must stay focused on meeting the country’s economic challenges. Sadly, political infighting instead seems to be winning the day. The leaders of the two main parties–Prime Minister Sheikh Hasina of the governing Awami Party and Khaleda Zia of the Bangladesh Nationalist Party (BNP) appear to be more interested in destroying each other than in leading. Their personal animosity is legendary but in the run-up to next year’s election, Bangladesh’s politics are poised to get even dirtier.
Nobel Laureate Muhammad Yunus and his world-famous Grameen Bank appear to be the latest collateral damage. The government has been harassing Yunus for several years, going back to 2007 when he briefly toyed with putting himself forward as a potential third party leader to move beyond the dysfunction of the Awami-BNP rivalry. That third party never went anywhere, but Yunus has been paying the price ever since. Sheikh Hasina and other government leaders have asserted that the Grameen Bank is mismanaged and have made allegations about Yunus’ own integrity.
In 2011, Yunus was removed from his position as managing director of Grameen Bank on the grounds that he was past the official retirement age. Yunus then began warning that the government was planning a complete takeover of the Bank, and it seems his predictions have come to pass. Two weeks ago, the government approved an ordinance whereby it essentially gets to choose the Bank’s managing director.
So far, the ordinance—a measure that microfinance expert David Roodman characterizes as “depriving [the board] of what in an independent organization is a board’s most important function: hiring and firing the CEO”—has sparked outrage in Bangladesh and abroad. Former U.S. Ambassador to Bangladesh William Milam condemned the new ordinance, writing, “[The government] ginned up a controversy that micro lenders were ‘loan sharks,’ when the opposite is true: These banks give borrowers an alternative to usurious moneylenders.” Yunus himself released a somber statement condemning the government’s actions. As he said, “This amendment marks the beginning of the end of Grameen Bank’s amazing history…There is no precedent in history, where an institution has gained from such a move by the government.”
Some fear that the new process for appointing a managing director will undermine women’s influence within the board. Nine out of twelve people on the board of directors are women who have borrowed from Grameen themselves. They are elected by the Bank’s eight million members and bring to the table their experiences with poverty, explains David Bornstein, the author of a book about the Bank. Bornstein worries that the government will try to undermine this aspect of the board as well, writing, “Last year, a government panel concluded that the village women on the board were ill-equipped to oversee a major financial institution, signaling that the government has plans to remove them.” Others, like Ambassador Milam, worry that the government will now have free reign to plunder Grameen’s assets, and use the Bank to lure its millions of members as voters in next year’s election.
For sure, microfinance as an industry has had its fair share of problems. But trailblazing Grameen—and its millions of poor women owners –deserve better than a politically motivated government takeover.