In the mid-1990s, I was introduced to Muhammad Yunus, whose micro-credit movement in Bangladesh was just beginning to attract attention. The concept was brilliantly simple: small loans, mainly to women, enable people to create money streams of their own—like, purchasing a sewing machine, for example. Virtually all of the loans were repaid. Hillary Clinton, as first lady, among other international figures, endorsed the Yunus concept, and his Grameen Bank became recognized as a founding pillar of a truly innovative way to support some of the world's poorest people.
MORE ON MICROFINANCE:
Kentaro Toyama: Lies, Hype, and Profit: The Truth About Microfinance
Clive Crook: Innovative Finance Development
PublicAffairs published Yunus's Banker to the Poor: Micro-Lending and the Battle against World Poverty in 1999. The book sold steadily but modestly. While I was personally impressed with Yunus and tried to learn as much as possible about Grameen and the concept of micro-credit, I kept wondering whether or when some reporter or critic would do a major take-down of the principle, the bank or the man. But it never happened. In fact, micro-lending spread to countries around the world, both as nonprofit and for-profit enterprises. To date, about 175 million families have received micro-loans.
I particularly remember the launch of Grameen Phone around 2000, in which village women, known as "phone ladies," would purchase equipment with a loan and serve as the local operator in the early stages of cellular technology. "Who were these people calling?" I asked, vastly underestimating the power of communication. (At that stage, it was mainly relatives working abroad.) Mobile phones are now so widely available in Bangladesh and most of the rest of the developing world that these early initiatives, conceived barely more than a decade ago, now seem distant and quaint. Grameen moved into other businesses and even established a foothold in the United States as a micro-lender.
In 2006, Yunus and Grameen were awarded the Nobel Prize for Peace, which elevated him into the stratosphere of celebrity, with a Presidential Medal of Freedom, a cascade of honorary degrees, and admiring profiles in publications everywhere. Banker to the Poor became a global bestseller.
Then, in 2007, Bangladesh, once described by Henry Kissinger as a "basket case" for its severe economic and social problems, went through a period of political turmoil, with military intervention required to stem the upheaval. Yunus, responding to the pleas of leading Bangladeshis, briefly considered a political role for himself and his movement. But Yunus was not made for politics. He is a superb economist, and a genuinely original and visionary humanitarian, but the fierceness and authoritarian discipline (let alone the tendency to corruption and the acquisition of personal wealth) expected of politicians were not in his character. The more I saw of Yunus as we continued to work with him, the more I realized that his personal integrity and genuine commitment to values could turn into a vulnerability when less scrupulous imitators and the rough-and-tumble politicians of Bangladesh began, one way or another, to try to undermine Yunus and his work.
Now, that has happened. Some for-profit banks in India and Latin America have been abusing the system, raising interest rates and generally degrading the concept of enabling very poor people, particularly women, to participate in modern commerce. Yunus' main adversary in Bangladesh, Sheikh Hasina Wazed, leader of the Awami League and now the country's prime minister, has ordered an investigation of Yunus and has moved to assert control over Grameen. Nicholas Kristof summarized the situation well in a column as did Alex Counts, CEO of the Grameen Foundation, in this blog. Yunus himself wrote a spirited defense of micro-lending as an op-ed piece in the New York Times. He continues to work on his major new focus of recent years; the establishment of what he calls "social businesses" that provide essential products such as yogurt and clean water, supported by large international companies ready to accept modest returns to accrue social benefit.
Like micro-lending, social business seems almost too virtuous to be true. But, as Yunus describes in his latest book, Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs, the concept has started to take hold. After so many years of watching Yunus, I no longer underestimate his determination. But he and his enterprises are under attack now for the first time in a sustained way. There is no indication that Yunus has done anything wrong. How well he will do in countering the political assailants at home and the generalized attacks on micro-lending elsewhere remains unclear.
Yunus is now 70. His energy is unflagging as his commitment to end poverty; so three cheers for Muhammad Yunus. He will need much more than our good will to maintain his good name and good work, but rallying support for this remarkable man is the least we can do.
We want to hear what you think about this article. Submit a letter to the editor or write to email@example.com.