Where is the data? Analyzing customer footprints for better product design

Jacobo Menajovsky, Senior Data Analyst – Grameen Foundation

Cross-posted from the Institute For Money, Technology & Financial Inclusion

These are my daughter’s old shoes.

We just took them out of the closet to pass them on to her younger brother who’s recently started walking, but when I took a closer look at them, I wondered if their best days weren’t behind them. Call me crazy, but I immediately started decoding all the signs and indicators of their usage. Yes, to me, data is everywhere.

We are constantly gathering, interpreting and acting on data. Think about it. Every time you walk into a new situation, your “decision support system” starts to process past data to help you adjust to the new experience. Your brain is actually modeling those signs and symbols (data), building connections and classifying them into categories.

What if you wanted to understand how these shoes were used? Do you think you could reconstruct the past simply by looking at them? There are lots of signs and indicators: a broken ankle wrap, a heavily-rubbed toe cap, and many holes.

Read the full post at IMTFI…

The Time to Defend Grameen Bank is Now

Todd Bernhardt is Director of Marketing and Communications at Grameen Foundation.

As you might have read in the news this week, the Bangladeshi government seems to be moving into the end game in its longtime effort to take over Grameen Bank, a move that has been widely criticized within Bangladesh and around the world.  To briefly summarize, the cabinet – presided over by Prime Minister Sheik Hasina – voted on Thursday to amend the Grameen Bank Ordinance of 1983, effectively removing the Board of Directors’ right to choose the Bank’s Managing Director, and vesting that power instead in the Board’s government-appointed (and aligned) chairman.

As troubling as that disenfranchisement of the Bank’s 8.3 million borrower-owners is (more than 8 million of these owners are poor women), equally troubling is a directive from the cabinet to the Finance Ministry to examine and report on the salaries and benefits that Grameen Bank founder Professor Muhammad Yunus received after he turned 60, which is the official age of retirement from the Bank. It also asked the Ministry to examine whether he earned foreign currency that was tax-exempt during his time as Managing Director.

(Prof. Yunus, who is 72 and going stronger than ever, was exempted from the retirement age by the Grameen Bank Board, whose decision was reviewed and accepted by the government for more than a decade before it suddenly decided that he was too old for the job; the post of Deputy Managing Director was also exempted. For more information on the government’s 21-month campaign against Prof. Yunus and the Bank, see this Fact Sheet developed by the Friends of Grameen organization. Grameen Foundation President and CEO Alex Counts also recently blogged about this issue.)

The women on Grameen Bank’s Board of Directors, who represent the Bank’s 8.3 million borrower-owners and are shown here with Prof. Yunus at the Nobel Peace Prize ceremony, are in danger of losing their ability to choose the Bank’s Managing Director.

Let’s look at the second part of the cabinet’s actions first.  The idea that Prof. Yunus would benefit financially from any of his activities advocating for the poor is patently absurd.  Throughout his career, he has had multiple opportunities to join corporate boards as a paid advisor or even to lead for-profit organizations, for great personal gain – yet he has declined.  He has consistently donated whatever money he has earned as a public speaker to social businesses dedicated to serving the poor or to other charitable causes – including Grameen Foundation, which began with $6,000 that he earned from one such speaking engagement.  He lives in a small apartment on the Grameen Bank campus.  All of his activities – either as leader of Grameen Bank or as leader of the Yunus Centre, which focuses on fostering social businesses – have been other-focused, rather than focused on personal gain.

As for the government’s moves to give the Bank’s chairman almost unlimited power to choose a new Managing Director and to sideline the poor women who own this successful, innovative, Nobel Prize-winning microfinance institution – well, to many, it smacks of pure desperation, and an attempt to shift public attention away from a number of public policy failures.  The government of Sheikh Hasina is facing a host of challenges and embarrassments at home, including the recent cancellation by the World Bank of a loan to fund the $1.2 billion Padma Bridge project – a huge infrastructure initiative that was going to be a hallmark of her administration – because of corruption within the government and contractors involved.  She herself has become more autocratic and combative, as noted by The Economist in several articles, and as demonstrated by a recent appearance on the BBC’s “Hard Talk” interview show, where – among other things – she argued with the presenter about accusing Prof. Yunus of “sucking blood from the poor in the name of poverty alleviation” (a well-documented quote from her referring to him) and misrepresented Grameen Bank’s interest rates, saying that it charges between 30 and 45%, when her own administration has confirmed studies showing that the Bank’s highest charge is roughly 20%, seven points below the maximum rate set by the government.

Professor Yunus, who was a surprised and disappointed as the rest of us by the cabinet decisions and directives, released the following statement on Friday:

I was very apprehensive about it for some time. Now my fear is becoming a reality. I am disappointed that we were not successful in stopping this process. It  makes me immensely sad to see the poor women being deprived of their rightful ownership and their rights as owners to exercise their power over the bank. I am so shocked by the turn of events that I am left without words. I request my fellow citizens who are as shocked as I am, to try to  persuade our government to realise that this is a very wrong step they are taking; they should refrain from proceeding with this. The decision of the government would destroy this well known bank for the poor, the bank that has made the country proud.  I urge our fellow countrymen to come forward and save this successful national enterprise owned by the poor women. I am also urging the poor owners of Grameen Bank to appeal to the government and the citizens  to come forward to help them safeguard  their rightful ownership of the Bank.

What can non-Bangladeshis do about these injustices?  You can take action by speaking up – Grameen Foundation has a petition that we plan to give soon to U.S. Secretary of State Hillary Clinton, asking her to reiterate the U.S. government’s strong support for the continued independence of Grameen Bank and the rights of the poor women who own it.  Microcredit Summit has its own petition on Change.org, also in support of the continued independence of the Bank, that it plans to give to Sheikh Hasina.  Please sign both petitions, and urge your friends, family and those on your social networks to do the same.

We would also ask that you contact your legislative representatives, and the media, no matter where you live, and let them know how important it is to you that the world’s flagship microfinance institution remain independent and able to continue its effective, innovative role in the ongoing battle against poverty. Time is short. The Bangladeshi government’s commission reviewing the Bank and the other Grameen social businesses is moving ahead quickly, and new actions against the Bank may be announced soon, so it’s essential that you act now to defend the rights of – and opportunities for – the world’s poorest.

In the meantime, we will keep you informed about developments as they occur.  Of course, with your support, we will continue our work around the world to provide the poor with access to appropriate financial services like microsavings and loans, as well as access to life-changing, real-time information about their health, crops, animals and finances. Working together, in the spirit of innovators like Grameen Bank, we can begin to realize Prof. Yunus’s vision of putting poverty where it belongs – in a museum.

Grameen-Jameel Is Strengthening Microfinance in the Middle East

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

Last week I had the pleasure of visiting the historic city of Istanbul for the first time, on the occasion of the first Grameen-Jameel (GJ) partners meeting, followed by a two-day meeting of GJ’s Board of Directors, on which I serve.  GJ is a joint venture launched five years ago between Grameen Foundation and the Jeddah-based Abdul Latif Jameel Group to advance microfinance and poverty reduction in the Middle East and North Africa (MENA), and now Turkey as well.  (Peter Bladin and Jim Greenberg are the other two Grameen Foundation representatives on the GJ Board, while Fady Jameel is one of the two Jameel Group appointees, in addition to chairman Zaher Al Munajjed.)

The partners meeting was elevated by the presence of not just representatives of 13 of the 15 GJ’s partner microfinance institutions (MFIs), but by Grameen Bank founder and Nobel Laureate Professor Muhammad Yunus.  (The only MFIs that did not join were one from Egypt and one from Syria, the latter due to the inability to get a visa, because Turkey has closed its embassy there.)

Prof. Muhammad Yunus speaks to the crowd at the Grameen-Jameel partner meeting, held in Istanbul.

The first day of the meeting consisted of an excellent overview by its General Manager, Julia Assaad, of GJ’s accomplishments.  She announced that GJ had surpassed its goal of reaching 1 million poor families with microfinance through its partner MFIs to date, and had in fact crossed the 1.5-million mark in September.  Representatives of five of the partners – the Turkey Grameen Microcredit Program (TGMP)in Turkey, Enda Inter-Arabe in Tunisia, DBACD in Egypt, Tamweelcom in Jordan and FONDEP in Morocco – spoke about their journey of starting and growing their organizations, and how GJ was able to help them in critical ways.

Prof. Yunus Visits Haiti – an Update from Alex Counts

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

I am about to leave Haiti after four exciting days, and head to Dubai.  I am here in connection with Professor Muhammad Yunus’s first trip to Haiti.  Highlights abound – it is hard to know where to start.

I arrived a day early to do some interviews related to my book on Fonkoze, the country’s leading microfinance institution (MFI). Prof. Yunus’s first stop was a meeting with Haitian President Michel Martelly, who was inaugurated earlier this year.  By coincidence, the long process of forming a government (i.e., naming all the ministers who serve under him) had just been completed, so Prof. Yunus was able to meet all the new cabinet members just before they were to be introduced to the country.  President Martelly expressed sincere interest in helping create a positive environment for social business – Prof. Yunus’s main passion now – as well as microfinance.

From there, Prof. Yunus went to the first part of a two-day conference on social business.  His opening speech – delivered, as always, without notes – covered the theory of social business, as well as practical examples of how it has worked in Bangladesh, especially his joint ventures with the Danone Group and Veolia.  (He mentioned a study of the nutritional impact of Grameen-Danone, which is coming out in a month and shows that the impact of the program – in which poor women sell nutritious, inexpensive yogurt to other poor mothers and their children – was much greater than even he expected!)

Prof. Muhammad Yunus talks to a group of borrowers involved in Fonkoze's “Ti Kredi” program.

He also talked about how he was afraid that the aid coming to Haiti after the earthquake would be wasted unless it was used to build up independence, rather than greater dependence on charity.  Finally, he told some stories about Grameen Bank and its history, and marveled at how microfinance has grown globally to almost every country, mentioning Fonkoze and its status as the leading MFI there (eliciting spontaneous applause) and celebrating Grameen Foundation’s important role in supporting Fonkoze.

The conference continued through midday Friday.  Anne Hastings, the director of Fonkoze Financial Services (Fonkoze’s for-profit arm), and I were on a panel with Prof. Yunus, where – alongside two Haitian economists – we responded to questions posed by the moderator and the audience.  In response to a question about my upcoming book on Fonkoze, I said that it was critical features for microfinance and social business to rigorously track social-impact outcomes.  In that context, I explained how the Progress out of Poverty Index^® was based on Grameen Bank’s 10 Indicators of Poverty and had been incorporated into Fonkoze’s own social-impact monitoring tool.  In response to another question, I said that there were potentially powerful alliances between MFIs and their most successful clients on the one hand, and the social business movement in Haiti on the other.  Anne added some excellent points that built on those made by Prof. Yunus.

On Saturday, we took a field trip together.  The highlight was the first stop – visiting a Fonkoze “Ti Kredi” center of about 50 women who 10 days earlier had just gotten their first loan of $25.  (They are to make their first payments next Wednesday.)  After long-time Fonkoze employee Gautier Dieudonne introduced him, Prof. Yunus spoke to the group about Grameen Bank, Bangladesh, microfinance, mangos and much else, and asked the women a lot of questions. There was much laughter during some of the lighthearted exchanges, while serious topics were also explored, related to how microfinance can go off course at the village level and nationally – and what can be done about it.  He asked how much local moneylenders charge – the answer was 20% per month – and the women praised Fonkoze for offering a much lower rate.

After the center meeting we had a nice afternoon with representatives from Zanmi Lasante/Partners in Health, the organizations founded by Paul Farmer.

I think the most poignant moment came when Prof. Yunus asked whether the women thought they were going to be able to improve their lives with such small loans.  An older woman named Clenie Brisfor stood up and said, “It is not easy, but what else are we going to do?  We can make progress!  Even if we have only 1 gourd [about 5 cents], we can buy a packet of clean water and re-sell it for a small profit, and start the process of changing our lives.  So 1,000 gourdes [$25] is a lot!”

Fonkoze borrower Clenie Brisfor tells Prof. Yunus that, with access to small loans through Fonkoze, "We can make progress!"

I wonder how many Americans understand what $25 – or even 5 cents – can do to change someone’s life, as well as their sense of what is possible? As we’ve seen again and again, access to financial services can provide the poor with an opportunity to empower themselves, live up to their potential and realize the human dignity that we all deserve.

Money & Meaning: Manage What Matters

Steve Wright is Director of Grameen Foundation’s Social Performance Management Center. He is a keynote speaker for the upcoming SOCAP11 conference. This is the 2nd of a series of blog posts focusing on money and meaning (You may also want read Part 1). We’ve excerpted a section of the post below, with a link to the full post afterwards.

Maximize Impact

Markets : Capitalism :: Physics : Ideology

Markets have natural laws, like physics. Capitalism is an ideology. Ideologies can be changed.

All social enterprises want to know if they are producing positive social outcomes. They closely monitor their financial performance to maintain sustainability and closely monitor their social performance to see if they are achieving their mission of doing good. This blog focuses on the questions “Am I any good?” and “What is the good I am producing?”

There is no quantifiable unit of good

I have always found it strange that social performance is predominantly perceived as a measurement problem. The reality is that great social enterprises don’t focus on measuring what matters; their priority ismanaging what matters. Measurement is an artifact of good management. To a large extent the obsession with measurement is a problem unique to socially-funded entities (by that I mean organizations with capital provided at a rate of return between -100% and about 6%.) Because the money is not earning as much as it might otherwise, it needs additional justification to be invested. An investor/funder wants to ensure that their money is well spent, that it earns a valuable return that includes both money and social impact. The social impact or non-monetary component of the return on the investment comes in the form of social metrics or measurement.

However, as Kevin Jones, Co-Founder SoCap Conference, said to me recently, “Understanding the specific impact of a specific dollar invested is a pipe dream.” Even if it were possible to track a specific dollar’s impact, the overhead to do it would be significant and would subtract from the resources needed to achieve the impact. With this as a given, how do we build a marketplace when a marketplace requires comparability to understand relative value?

For a for-profit entity this is easy. An investor gives an entrepreneur a dollar and sometime later gets $1.25 and rejoices at the 25% return on investment (ROI). The math is easy because the input and the output are the same thing: money. In a social enterprise, money is an input but it is not an output. Money is important because it dictates sustainability but profit is not the purpose of the enterprise; social impact is. A massive amount of work has gone in to replicating this math to calculate an SROI (social return on investment). The work of REDF, Jed Emerson, Social Venture Technology Group and others have taught us a tremendous amount about what is possible. A primary lesson from this SROI work is that there is no monetary equivalent to a universalunit of good. Moreover, it is not rational to equate a specific social outcome to the amount of money that was spent to produce that outcome. We cannot use a financial balance sheet to compare the relative goodness of a homeless advocacy group in Brooklyn and a fair trade cooperative in Peru. The Beatles said it best: Money can’t buy you love.

>> Read Steve’s entire post at the SOCAP11 Blog.

An Update on Professor Yunus

Professor Muhammad Yunus recently paid a visit to Grameen Foundation headquarters, meeting with leaders and speaking to staff (as well as to staff from RESULTS) during a visit to Washington, DC. Todd Bernhardt, Grameen Foundation’s Director of Marketing and Communications, was part of an audience who listened to Professor Muhammad Yunus speak, and provides this update on his recent activities.

Prof. Yunus recently visited our DC office.

It’s hard to believe that it was only a bit more than three months ago that microfinance pioneer and Nobel Peace Prize winner Professor Muhammad Yunus stepped down from his post as Managing Director of Grameen Bank, the poverty-fighting organization that he founded in the late ‘70s. During the government’s campaign to remove him from office (read this Fact Sheet to find out more), many Grameen Foundation supporters voiced their concern about Prof. Yunus and the independence of Grameen Bank, and have wondered about his activities since then, asking us to provide an update.  A recent visit by Prof. Yunus to Washington, DC, provided us with an opportunity to catch up with him personally, while demonstrating to everyone who spoke with him that his commitment to fighting poverty through innovative solutions remains as firm as ever.

Grameen Foundation President and CEO Alex Counts welcomes Prof. Yunus (right) while Microcredit Summit Campaign Director and RESULTS founder Sam Daley-Harris listens.

Prof. Yunus stayed in Washington from Aug. 10-13, giving a keynote speech at the annual forum of InterAction (an alliance of U.S.-based international NGOs focusing on the world’s poor and vulnerable populations), making several media appearances (he spoke with NPR’s Kojo Nnamdi  and Andrea Stone at The Huffington Post) and meeting with U.S. Secretary of State Hillary Clinton, as well as officials from the U.S. Agency for International Development.

He also met with a number of leaders in the international-development community – including Grameen Foundation President and CEO Alex Counts and Sam Daley-Harris, Director of the Microcredit Summit Campaign and founder of RESULTS, a anti-poverty lobbying organization – and spent a morning speaking to the staff of those organizations at Grameen Foundation’s DC headquarters.

Focusing on the Social Business
In all of his visits, Prof. Yunus emphasized the need to develop and popularize the social business, which he wrote about in his book Creating a World Without Poverty: Social Business and the Future of Capitalism.  Simply put, social businesses are for-profit entities created primarily to serve a social goal. Such businesses strive to generate modest profits that are used to fund and expand operations, rather than to pay dividends to investors.

Since his departure from Grameen Bank, Prof. Yunus has continued to advocate for its independence from government control and to defend the interests of the Bank’s 8.3 million borrower-owners (97% of whom are poor women). Bank employees have continued to keep operations running smoothly while the Bangladesh government has seemingly turned its attention away from the Bank to unrest in the country caused by, among other things, moves to amend the constitution to remove the non-party caretaker system that oversees the country during general elections.

But many people fear that the government’s apparent lack of interest in taking control of the Bank may prove to be temporary, and that it may move again soon to amend the Bank’s bylaws and change the composition of its Board. With this in mind, Prof. Yunus urged the group assembled at the Grameen Foundation offices to remain vigilant and work with others around the world to ensure that the rights of the 8.3 million owners of the Bank are protected. “We have to stand behind them,” he said. (You can help by signing this petition asking the Bangladeshi government to keep Grameen Bank independent.)

He then reviewed the progress made by Bangladesh over the past 30 years, explaining that it was because of the power of ordinary people working together in civil society that the quality of life had improved for so many. Social business, he said, provides another way for people to work together to achieve social aims, leveraging the power of capitalism and the free market. “Business can be used to solve problems, not just to make money,” he explained. “Money is not the way to happiness. We make ourselves happy by making other people happy.”

Prof. Yunus talks to staff at Grameen Foundation’s DC headquarters about the Asian Social Business Forum recently held in Japan, while Sam Daley-Harris and Alex Counts look on.

Prof. Yunus has been traveling the world explaining the social-business concept, meeting with enthusiastic responses in the developed world (he told the group about a recent and very successful visit to Japan, which is looking at social business as an approach in rebuilding after the tsunami of last March) and in the developing world (he has been invited to visit Haiti in October to show people there how the concept could help them improve civil society).  In addition to describing a successful series of events that were held around the world on Social Business Day, June 28, he said is looking forward even more to a series of meetings in November, including the Social Business Summit in Vienna on Nov. 10-12, and the Global Microcredit Summit in Spain on Nov. 14-17.

It’s Up to Us
In taking questions from the staff at Grameen Foundation offices, Prof. Yunus emphasized the power of the individual, as well as our responsibility to empower them – all for the overall good of society. “Peace can be threatened by poverty,” he explained. Microfinance and social businesses create opportunities that “keep people from being dependent … and helps them channel their energies into positive avenues, away from violence.” Creating such opportunity, he said, also helps to address inequalities on a larger scale – between groups of people and even nations – reducing tensions and resentment.

It’s up to all of us, he concluded, to change how we view, and interact with, the world. In capitalist societies, people grow up “wearing ‘profit-maximizing glasses,’ but if you take off those glasses and put on the social-business glasses, everything looks differently! New possibilities open to you.” He gave the example of Danone, which is involved in a social business in Bangladesh that makes inexpensive, nutritious yogurt available for poor women to sell to other poor people. When Danone was starting this enterprise, and asked its shareholders if they would like to invest part of their dividends in a new business that would help people but not give them additional financial return on their investment, 98% signed up, resulting in millions of euros in investment. “Give people a choice to help others,” Prof. Yunus concluded with a smile, “and they will come through.”

Money & Meaning: Return Value

Steve Wright is Director of Grameen Foundation’s Social Performance Management Center. He is a keynote speaker for the upcoming SOCAP11 conference. This is the first of a series of blog posts focusing on the intersection of money and meaning. We’ve excerpted a section of the post below, with a link to the full post afterwards.

Recently, a lot of great thinking has happened around the idea that business – and by extension the economy – should return value, in addition to generating profit. For example, Mark Kramer and Michael Porter wrote a very interesting piece on creating shared value that was also discussed in this New York Times article, “First make money. Also, do good.” Nestle Corporation is one of a growing number of companies that see shared value as an evolved form of corporate social responsibility. Customer capitalism (which focuses on providing value to the customer before the shareholder) is described in the Harvard Business Review as the third stage in the evolution of capitalism. (Professional management and shareholder capitalism are the first two.) And Umair Haque’s book, the New Capitalist Manifesto, describes “thick or authentic value” as the subtraction of total or real cost from the price a product can demand.

This is a good thing; however, it is still within a largely amoral paradigm, where the mythology centers on the primacy of profit while – potentially, maybe, hopefully – “doing good”. This can also be seen in how we (social enterprises and investors) use the words “sustainable” and “profitable” interchangeably, depending on who we are talking to. “Sustainable” implies a primary focus on doing good, while “profitable” implies a focus on profit.

My intent here is to make arguments that err on the side of doing good, arguing that we should focus on meaning before money.

>> Read Steve’s entire post at the SOCAP11 Blog.

You Can Support Mobile Microfranchising in Indonesia with Your Vote

Susana Escudero is an intern for Grameen Foundation, based in our Washington, DC, office.

Grameen Foundation has been selected as a semi-finalist for the Ashoka Changemakers Powering Economic Opportunity: Create a World that Works competition, for our initiative to provide mobile phone-based services and business opportunities for the poorest in Indonesia. We were selected as one of 15 semi-finalists from 873 innovations in 83 countries around the world!

The 10 projects that receive the most votes from July 20 through August 10 will proceed to the final judging round, where five organizations will be chosen to each receive a $50,000 grant to further their work. Your vote today will help us become one of those finalists, enabling us to help improve the life of Halimah and more women like her in Indonesia.

Halimah, who lives on the island of West Java, owns and operates a small shop with her husband. Though he tries to find day labor whenever possible to help supplement their income, his work is not steady, so their income is not consistent. Like most of us, Halimah’s dream is to provide a better life for her children, aged 9, 13 and 15. Despite all her hard work, for many years her family’s combined income averaged only $1.80/day.

But that was before Grameen Foundation offered her new income-generating opportunities. For the last four years, we have worked with our collaborators – Qualcomm Wireless Reach, PT Ruma, and Bakrie Telecom – to help people like Halimah to lift themselves out of poverty.  Through our Village Phone initiative and AppLab program, we offer poor entrepreneurs profitable mobile phone-related business opportunities that can help improve their lives.

When Halimah was approached by a Ruma field officer about starting a new line of business selling airtime, she was excited about the possibilities and agreed to do it, because of the existing demand and the potential of a steady cash flow for her shop. Today, Halimah is able to provide an additional income of $1.10/day for her family through her mobile phone business.

Ibu Halimah has been able to increase the income from her small store -- and provide a better life for her children -- by selling airtime for mobile phones to others in her village.

AppLab Indonesia provides the working poor with an innovative and sustainable way of meeting growing demand for affordable access to information through a microfranchising model that is easy for them to use and benefit from. To find out more about the initiative, watch a video about the project on the Grameen Foundation website.

You can be part of the team working to help poor women like Halimah – with the click of a mouse! Please visit the Changemakers competition website to learn more about our innovative project and vote for our Mobile Microfranchising in Indonesia initiative, and ask your friends and family to do the same.

You can vote once during the three-week period for each email address you use (so, for example, if you have a personal email address and a work email address, you can vote once from each account). The Changemakers site will ask you to either create a username and password linked to your email address, or log in through your Facebook account. With enough votes – and a $50,000 grant – we can continue expanding our efforts to create opportunities for women like Halimah.

Summary of Recent Issues Surrounding Grameen Bank and Prof. Yunus

A network of people who support Grameen Bank and its founder, microfinance pioneer Professor Muhammad Yunus, has put together a short, factual summary of the recent confrontation between Professor Yunus/Grameen Bank and the Bangladesh government.  It’s meant to be a quick read that will help people separate fact from fiction, with plenty of links to key documents for those who want to dig deeper.  There has been much misinformation circulated in the media and around the web about these issues, so we hope this will prove to be a reference that people can easily share, to enable supporters of microfinance to spread the truth.  This fact sheet will be updated as conditions change; to read, share or download the most recent version of this fact sheet in PDF format, visit the Friends of Grameen website.

The international media recently has been full of stories and speculation about Professor Muhammad Yunus and Grameen Bank, joint recipients of the 2006 Nobel Peace Prize for their work fighting poverty. Because of false accusations against Professor Yunus and the Bank – including emails and other materials widely distributed by Sajeeb Wajed, the son of Bangladeshi Prime Minister Sheikh Hasina Wajed, as well as by other government officials – many of the stories were inaccurate and confused. Though Grameen Bank has responded to these allegations through the media and other means, unfortunately this disinformation campaign has continued, so we feel that it is necessary to create this fact sheet, which contains a quick review of the events as they’ve happened, as well as resources for those who want to know the truth.

In late November 2010, a Norwegian television network aired a documentary called “Caught in Micro Debt” that made a number of false accusations about Professor Yunus and Grameen Bank. For example, it said that funds received from a Norwegian aid agency, NORAD, were improperly transferred between Grameen Bank and Grameen Kalyan, its non-profit sister organization. This matter was clarified and settled between NORAD and Grameen Bank in 1998. After the documentary aired, Norway promptly investigated the transaction again, and again said there was no improper use of funds.

The documentary also claimed that Grameen Bank charged from 30% to 200% interest, but a study of Grameen Bank’s interest rates by leading authority MicroFinance Transparency noted that “Grameen has an extremely simple and transparent pricing system,” while a report by the Review Committee appointed by the government (see below) to examine the Bank noted that it has the lowest interest rates of any microfinance institution in Bangladesh, with 20% being its top rate.

Even though Prof. Yunus has resigned his post as Managing Director of the bank he founded, the Bangladeshi government has continued to pursue efforts to take over Grameen Bank, and even to take control of unrelated social businesses that share the Grameen name.

Even so, the Bangladesh government – led by Prime Minister Sheikh Hasina Wajed, who reportedly has viewed Professor Yunus as a political rival since he looked into setting up a political party in 2007 – led a campaign to force Professor Yunus from his post as managing director of Grameen Bank, with the 77-year-old finance minister, Abul Maal Abdul Muhith, claiming that the 70-year-old Yunus was “too old” for his post. At a press conference following release of the documentary, the prime minister stepped up the rhetoric, accusing Professor Yunus of “sucking blood from the poor in the name of poverty alleviation.” Other officials of her government, including the Foreign Minister, the Agriculture Minister, top Awami League officials and special advisors, made repeated false allegations and personal attacks against Professor Yunus.

Muhith repeatedly asked for Yunus’s resignation, but Professor Yunus declined, reminding Muhith that – according to the Grameen Bank Ordinance of 1983 – only the Grameen Bank Board of Directors had the right to hire or fire the managing director, since the Bank is an independent entity. (The Bank’s board comprises 13 people, three of whom – including the chairman – are appointed by the government, with nine being elected by the Bank’s 8.3 million borrower-owners, and the managing director as the remaining member.)  The government then stepped up the pressure by appointing a disgruntled ex-employee and vocal critic of Professor Yunus, Muzammel Huq, as chairman of the Grameen Bank Board in January.

In early March, the Bangladesh Bank (backed by the Finance Ministry) informed Grameen Bank that Professor Yunus had been acting as managing director without its consent, which it claimed was a violation of its rules.  The letter also cited his age as a factor, and called on the Board to take appropriate action. Grameen Bank immediately responded to these allegations, showing that the Bangladesh Bank had given express approval of his appointment, and that his appointment had been extended formally and indefinitely. Professor Yunus and the nine independent Directors then began a legal process to declare the letters invalid.  After the country’s High Court summarily dismissed the petition, the petitioners turned to the Appellate Division of the Supreme Court, which in early May also dismissed the petition, despite well-reasoned and impassioned arguments from Grameen Bank’s attorneys.

Grameen Bank has fully cooperated with a Review Committee set up by the Bangladesh government to examine the Bank’s operations. The Review Committee’s report, submitted to the Finance Ministry in late April, confirmed that there was no wrongdoing involved in the transfer of Norwegian aid funds, and acknowledged that Grameen Bank’s interest rates are the lowest in the country. The Committee found no evidence of mismanagement or personal corruption among Grameen Bank employees, complimented Bank staff on their cooperation, and acknowledged the tremendous contributions made by the Bank on the country’s socio-economic condition. However, the Committee’s incorrect assumptions that Grameen Bank is a “government bank” and other incorrect findings prompted a detailed refutation by Grameen Bank.

On May 12, Professor Yunus announced he resigned from his post as managing director of the Bank, handing the position to Deputy Managing Director, Nurjahan Begum, while the Board conducts a search for a permanent replacement.  In a letter to his colleagues at the Bank, as well as a letter to the Bank’s borrower-owners, he emphasized the importance of maintaining the Bank’s independence, which the government is threatening to take away.

Professor Yunus has worked tirelessly to create other independent social businesses committed to promoting social good.  It now seems as if the government is now looking to take control of these enterprises, too.

Throughout this period, a network of supporters inside and outside of Bangladesh – millions of everyday people, as well as well-known politicians, diplomats and business leaders – have contributed their time and effort to protect the reputation of Professor Yunus and the independence of Grameen Bank. In addition, 3.7 million of Grameen Bank’s borrower-owners signed a petition asking that Professor Yunus stay involved with the Bank in some capacity.

You can help spread the truth and defend the independence of Grameen Bank by sharing this document with your friends, by voicing your opinion on social media channels (Facebook, Twitter, blogs, etc.), and by keeping informed about the latest Grameen Bank and Yunus Centre news.

It’s vitally important that the following points are reinforced in advocacy efforts:

• Grameen Bank must remain independent and free of government interference.
• Professor Yunus should be made chairman of Grameen Bank’s Board of Directors, to ensure smooth transition of the Bank’s management.
• The government must respect the authority of the Bank’s Board of Directors, and not change its composition or reduce the number of elected directors, which would weaken the voice of its borrower-owners.
• Other Grameen organizations, established as independent social businesses, should remain independent and free of government interference.

Thank you.

Statement of Prof. Yunus Regarding His Removal from Grameen Bank

Statement of Nobel Laureate Professor Muhammad Yunus on the Occasion of Supreme Court Verdict on May 5, 2011 Regarding His Removal from Grameen Bank.  Professor Yunus voiced his concern after revelations surfaced surrounding violence against employee leaders of the Bank.  Those interested may also want to read in the Bank’s point-by-point refutation of the allegations brought up in the government’s Review Committee report, as well as by the nation’s government-aligned media.

You have already heard the verdict from the Supreme Court.

Why did I appear before the Court? Why did I want to contest the order of Bangladesh Bank? Why there is so much concern about this issue at home and abroad? There may be some confusion regarding these questions. Please allow me to share my feelings with you to remove this confusion. I went to the Court for a specific reason. Bangladesh Bank sent a letter to Grameen Bank, removing me from my post as Managing Director of Grameen Bank. The letter also mentioned that I held this position for the last eleven years illegally. Bangladesh Bank did this without giving me a chance to explain my position. I felt that this letter was not legally correct, and through this letter, not only was I been wronged, but so was Grameen Bank. Nine elected members of the Board of Directors of Grameen Bank felt the same way. That is why the nine members of the Board and I filed separate writs in the High Court. We wanted these wrongs to be corrected. Therefore, we had to seek justice through all avenues offered in the Bangladeshi judicial system. This is what we have done.

The fate of 40 million poor people connected to this
In the event that the Honorable Court stated in their final decision that the letter from Bangladesh Bank was issued without lawful authority, I could continue my work with Grameen Bank and make the transition to a capable management as smoothly as possible. But, if the Court verdict went against us, the Board may be forced to take steps to implement the content of the Bangladesh Bank letter. This was the only reason for me to take this matter to the Court. I had no option but to seek justice in this matter.

It is indeed a much wider and much more significant issue to save the future of Grameen Bank and also to protect the hopes and dreams of the over 8 million borrowers. These borrowers are also the owners of 96.5% of the Bank’s shares. The Bank is connected with 40 million microcredit borrowers in Bangladesh, and its impact on all these people cannot be neglected. What happens to Grameen Bank influences the future of the millions of Bangladeshis who benefit from microcredit activities, as well as the future of the institution of microcredit itself. It is actually a great concern for me, and many others, that I properly fulfill my responsibility to safeguard their future before and after leaving the post of Managing Director of Grameen Bank.

Some have said that, instead of going to the court, it would have been more honorable for me to resign from my position as suggested by the Finance Minister. I do not think so. In that case, the end result would have been the same, so far as my exit is concerned. But I would have suffered from carrying the guilt of knowingly accepting an unexpected proposal and putting the borrowers and their families’ futures at risk. I could not do that.

Millions of borrowers like the ones seen meeting above could be adversely affected by a government takeover of Grameen Bank.

Some people felt that I intend to cling to the position of Managing Director of Grameen Bank. But, the nation knows that this position is not my life’s goal. I was, and am, conscious of the fact that my future work will not be based on my holding on to this position, but rather, it would be working with the young generation, from other platforms to address the problem of poverty at home and abroad. I want to do that without jeopardizing the interests of Grameen Bank. This is the thought which prompted me to write the letter to the Honorable Finance Minister one year ago. I suggested two options to him for a transition that could take place without creating any waves within the Bank.  I did not get any response to these proposals.  I was, instead, told to quit. It is, therefore, unfair to me to suggest that I am holding on to the of position of managing director unjustly or to allege  that I am not co-operating in the process of transition.

For the last few months, a section of the media devoted itself fiercely to campaign against me, Grameen Bank, and the concept of microcredit. Everyone has his own explanation why this is happening.

An unfriendly atmosphere is not helpful for a smooth change of leadership
The cause of my concerns, as well as those of the nation and the world, lies here. These concerns are more for Grameen Bank and the future of its millions of borrowers, than for me. For this reason, I have been reminding you repeatedly that undertaking the transition process of Grameen Bank’s management in an unfriendly environment will only cause harm to the future of the Bank. I have always wanted to make sure that the transition takes place in a friendly, mutually supportive environment, so that the achievements of Grameen Bank may continue without interruption. There are many issues related to this. The big questions are: whether Grameen Bank can maintain its independent existence, and whether it can be successful in keeping itself away from political influences. What actually happens to financial institutions in our country if political influences start playing a role in these institutions is common knowledge. This experience will not inspire trust in the borrowers.  We all know how important the role of trust is in the operation of Grameen Bank.