The Nobel laureate who founded a pioneering microfinance institution, the Grameen Bank, has quit as its head after a long dispute with Bangladesh’s government.
The announcement by Muhammad Yunus that he is standing down as managing director is a watershed in the 28-year history of the bank, which is credited with lifting millions of the world’s poorest people out of poverty. It also ends a protracted legal wrangle with the Bangladeshi government over control of the bank.
Yunus wanted to “ensure my colleagues and our eight million members, and owners of the bank, are not subjected to any difficulty in discharging their responsibilities”. He took the step “without prejudice” to outstanding legal issues.
His deputy, Nurjahan Begum, has been appointed as interim managing director.
Yunus was awarded the Nobel Peace Prize in 2006 jointly with the bank. Literally meaning “village bank”, the institution offers tiny loans to would-be entrepreneurs who would otherwise be refused conventional loans, and his microcredit scheme has been replicated across the world, and has been hailed as being the most effective way of defeating poverty.
The bank has nearly nine million borrowers in Bangladesh; 97% of them are women. Control of the bank would be a considerable political asset, and a significant help in the battle for power in Bangladesh.
However, its reputation came under attack in December by a Norwegian TV documentary which raised allegations of irregularities over the transfer of £40m-million from the bank to another company.
Although Yunus was subsequently cleared of any wrongdoing in an investigation by the Norwegian government, his already fractious relationship with the Bangladeshi government reached breaking point, with claims that he had tarnished his country’s reputation.
‘Political vendetta’
Earlier this year,the Bangladeshi Central Bank made a legal challenge against the 70-year-old, claiming he had violated retirement laws by failing to relinquish control at 60. Despite a series of legal battles that reached the supreme court, Yunus failed to overturn the judges’ decision to oust him as managing director.
His supporters, such as the former Irish president Mary Robinson, and former president of the World Bank James Wolfensohn, claimed that the respected economist had been the target of a political vendetta.
An outspoken government critic, Yunus has had an acrimonious relationship with the prime minister, Sheikh Hasina, who is reportedly angry over his attempt to form a political party in 2007.
In December, a war of words broke out as she accused Yunus of “sucking blood from the poor borrowers” through the bank’s allegedly exorbitant interest rates, calling for the government to launch an inquiry into claims of misappropriation. He was subsequently cleared.
However, microcredit as an economic model has increasingly suffered from a lack of faith, with critics pointing to impossibly high interest rates.
In India, politicians have accused bankers of profiting from the poor, and in some cases have banned further lending or recovery of debts.
In the southern state of Andhra Pradesh, aggressive selling and recovery of outstanding interest payments by scores of unregulated microfinance firms have pushed huge numbers of already desperately poor farmers deeply into debt. – guardian.co.uk