The Price of Leadership


Alex Counts is president, CEO and founder of Grameen Foundation, as well as the author of several books, including Small Loans, Big Dreams: How Nobel Prize Winner Muhammad Yunus and Microfinance are Changing the World.

It’s been more than 30 years since Professor Muhammad Yunus first pioneered the concept of microfinance – making small loans and other financial services available to very poor people, who don’t typically have collateral or access to traditional banking services, to fund small businesses – in Bangladesh.  His approach has since spread throughout the developing world, and a number of reports and studies have shown that it is one of the most successful weapons we have in the battle against poverty. (For example, Measuring the Impact of Microfinance: Taking Another Look, a survey Grameen Foundation commissioned of academic studies of microfinance’s effectiveness, presented numerous findings consistent with the idea that microfinance can help the poor improve their lives.)

The allure of microfinance – that it is a way to empower the poor, to give them a hand up rather than a handout – and the successes of the Grameen approach in Bangladesh eventually attracted worldwide attention to Prof. Yunus, culminating in a number of prestigious awards in the last several years, including the Nobel Peace Prize, the Presidential Medal of Freedom, and the Congressional Gold Medal (Prof. Yunus is one of only seven people in history to have won all three awards).

Prof. Yunus Receives the Presidential Medal of Freedom

President Barack Obama presents Professor Muhammad Yunus with the Presidential Medal of Freedom during a special White House ceremony in August 2009.

Unfortunately, the attention that comes with success also brings detractors.  From the beginning, Prof. Yunus and other supporters of the Grameen approach have had to fight powerful vested interests threatened by the empowerment of the poor.  In addition, he – and the other Grameen-related organizations, including Grameen Foundation – have had to work hard to educate people about the approaches to microfinance that put the poor client first, as well as respond to those who have honest disagreements with the Grameen approach.  All along, we have realized that these challenges “go with the territory,” and that the best way of dealing with those who disagree with our approach is to continue our work promoting the right of the poor to have access to financing, information and business opportunities, while simultaneously promoting the value of a double-bottom-line model to the microfinance institutions (MFIs) that serve them.

The latest detractors to surface have been fueled by recent events in Andhra Pradesh, where high-profile IPOs and the alleged questionable business practices of for-profit MFIs have attracted the attention of politicians and the media (see other entries on this blog for our thoughts about that).  A Norwegian documentary that aired a little more than a week ago poured even more fuel on the fire, questioning the effectiveness of microfinance as a tool to alleviate poverty and even bringing into question the ethics behind a transfer of donor funds in 1996 between Grameen Bank and another not-for-profit company formed by Grameen Bank, Grameen Kalyan. (David Roodman, a leading blogger in the field of microfinance, has posted a pointed critique of the documentary that dovetails with our experience – like David, we had a number of exchanges with the filmmaker explaining Grameen Bank’s interest rates and studies that have shown the effectiveness of microfinance, and this information did not make it into the final film.)

Details of the inter-organizational fund transfer can be found in Grameen Bank’s detailed response to the recent press reports, posted on its website, and in a five-page letter from Prof. Yunus to the Norwegian ambassador, sent in January 1998. In a nutshell, after consultations with Grameen Bank’s external accountants, the Bank’s Board of Directors (which included three senior government representatives) reviewed and approved the transfer of funds between the two organizations. When Norway’s aid agency, NORAD – the source of some of the funds – disagreed with the approach, and the Bangladesh Bank expressed its concern about the funds from other donors (which hadn’t objected, as NORAD had), Grameen Bank promptly undid the transfer, noting the transactions in its audited financial statements at the time. Grameen Bank ensured that NORAD understood the reasons behind the transfers, and was involved in the resolution of any misunderstandings.  In fact, a letter at the time from the Norwegian ambassador said, “The Embassy highly appreciates your cooperation in solving this issue, and is pleased to have arrived at a solution which is satisfactory for Grameen Bank as well as the embassy.”

As a result of the documentary, Norwegian Minister of the Environment and International Development Erik Solheim asked for a report from NORAD on Norway’s support for Grameen Bank in the 1980s and 1990s. After reading the report, Mr. Solheim issued a statement saying, “there is no indication that Norwegian funds have been used for unintended purposes, or that Grameen Bank has engaged in corrupt practices or embezzled funds.”

Essentially, this media-manufactured controversy is about a simple transfer between two organizations that was reversed because of an honest disagreement about how best to manage resources meant to serve the poor, and was resolved more than a decade ago to the satisfaction of all parties involved. However, though no responsible reporting on this – including from the maker of the documentary itself – has accused Professor Yunus of personal corruption or wrongdoing, that hasn’t stopped the media from running misleading headlines or various commentators from making continuing and ever-more-personal attacks.  [On Dec. 17, Rehman Sobhan, a former chairman of Grameen Bank’s Board of Directors who says he is “no starry eyed fan who believes that micro-credit is a magic bullet to end poverty,” wrote a balanced overview of the controversy, asking his fellow Bangladeshis to base their opinions on fact rather than rumor and media hype.]  Most recently, the government of Bangladesh has stated its intention to conduct an investigation and Professor Yunus has welcomed that.

We live in a world of 24-hour news cycles enabled by a global network – the Internet – capable of transmitting information (as well as misinformation!) at near light speed with the touch of a button.  The price of leadership is the attention it brings, both deserved and undeserved, and Prof. Yunus is a remarkable leader who has not been afraid to speak his mind and challenge the status quo.  He’s also a man of the highest ethical values, who I know has never profited in any way from his position as managing director of Grameen Bank or his relationship with any of the Grameen family of companies.

Grameen Foundation staff remains in contact with Prof. Yunus and his staff about this situation; as things develop, we will keep you informed.

3 Responses to “The Price of Leadership”

  1. Microfinance flap keeps getting weirder | Humanosphere Says:

    […] Alex Counts, of the Grameen Foundation, responded in detail to the allegations against Yunus, pointing out some distortion of facts in the media and by Indian officials, noting that there may be political or other kinds of motivations behind the accusations: From the beginning, Prof. Yunus and other supporters of the Grameen approach have had to fight powerful vested interests threatened by the empowerment of the poor. […]

  2. MoralHeroes Says:

    glad to hear he was cleared of all the charges. Yunus is such a great man and the world would be a better place with more people acting like him.

    I thought you might be interested to know that Muhammad Yunus is featured as Hero of the Week over at

    Here is a link to his page:

  3. vasudeo joshi Says:

    please4 connect me with your i can serve the poor person to grow his statious by helf of micro finance in our area.Thanks for your kind cooperation in time.

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