Will Grameen and the entire microcredit industry become targets for revenge?

Will Grameen become a target if the BNP or the AL come to power? A while ago, I saw someone express this very fear on one or another of the blogs I frequent, I forget which. I dismissed it as slightly paranoic. What sounded like paranoia at the time became a bit more real to me as someone whose blog I read and who reads mine put up a post criticising Grameen's business practices.

Now I won't link to this blog. As I said, I do read it now and then, and I'm not looking for a food fight here. I'll reproduce some key aspects of the argument against Grameen and give my humble opinion on it.

The biggest complaint against Grameen seemed to be that it charges high interest rates. Funnily and predictably, a lot of people who used to disbelieve or ignore this accusation when it was made by certain quarters, are now buying this wholesale since it has been repeated by a different quarter.

That however is not a refutation of Grameen's policy to charge high interest rates. The refutation you will find here, here and everywhere on the web.

Here the questioning minds and the party-flock alike might ask: but why not simply give them the money? Charity, you will say. By all means, let us be charitable. Especially in times of floods and monga and to people who are barely alive. However, if charity were a long term solution, there would be no need for progressive taxation either. Something to think about.

Asif Dowla (no relation) in a beautiful article recalls the efforts in the 70s by successive governments (both AL and BNP) to institute credit to the poor. He asserts that these essentially became charities, which is something Grameen consciously strove not to do (pg. 19-20). They did not instil a culture of repayment and he traces their failure to precisely this cause. And mind you by "failure", I refer not to their failures as commercial enterprises (after all, my taxes ensure that no government enterprise ever reaches bankruptcy, simply that their workers remain unpaid!). By "failure", I mean failing to service the neediest of our people. The direct quote from the #1 villain in the scheme, igNobel Yunus himself at the start of page 17 says that most of the loans forgiven by the government in the wake of the '91 floods went to the land-owing, wealthier rural inhabitants, not the landless, poorer ones. Sounds familiar? But then, what does he know about lending to the poor, anyway? He was probably scheming to grab power in 2007, even as he was writing in 1999. You can peruse the entire aricle here, but why bother going through 46 pages? Better to believe your leaders and close your eyes. Life is easier that way. Trust me, I know. Amiyo Bangladeshi.

A third complaint against microcredit is that it does not work. Fair enough. I'm not going to be a polemicist and argue that there is CONCLUSIVE EVIDENCE that it works. But neither has anyone produced a conclusive study to show that it does not work. A simple look at the Wikipedia article on microcredit could tell anyone that not enough research has been done on it. Furthermore, no one I know of has come CLOSE to arguing that it is actually HARMFUL to society. Of course it isn't hard to find people who are skeptical of micro-credit when it is presented as the mother of all solutions for all our problems, as "First-World" donors seem to do now and then. I'm one such skeptic. But it's articles like this that probably form the basis of spinning that healthy skepticism into downright dismissal of microcredit. I don't think someone as knowledgable and respected as Dr. Sobhan would ever make such a broad and blanket dismissal. Even the author of the article does not make that dismissal, but notes accurately: "not as effective". Quite a few people I know have cited this book as a complete refutation.

A fourth complaint is that Grameen has a monopoly on microcredit. This is downright inaccurate. Read the New Age article, and it mentions that BRAC, ASA and Proshika also engage in microlending. And those are the just the largest ones. The only difference is that Fazle Hasan Abed, Shafiqul Haque Choudhury (founder of ASA) or Qazi Faruque Ahmed (President of Proshika, N.B.) did not declare that they wanted to challenge the hegemony of the two political parties and run for office. Thus, the only microcredit operation in Bangladesh is Grameen, because that's the only one we'll choose to focus on for the moment. Reality is what you make of it inside your head. Is this postmodernist audience power at work or a really bad dream? Either way, the charges of usury and monopoly stick.

So what to make of all this? I fear that whoever comes to power will take their revenge on Grameen, or on the microcredit sector as a whole through lower interest-rate caps or "microcredit sector reform". Worse, they will justify it using this sort of rhetoric on the part of ordinary people like us. For the sake of the poorest of my people, I hope they just take it out on Grameen through some sort of special committee chaired by a bunch of partisan sheep, and leave the rest alone.

And if this were to happen, what lessons would the innovators and risk-takers of my generation draw from it? Simply to innovate elsewhere, far away from the green Delta so close to our hearts. Because, perchance you become too big for your boots in trying to help your people, the politicians (a family caste apart) will warn you not to enter their strata and make life difficult for you if you choose not to heed. And they will do this with the support of the very masses you sought to help in the first place.

N.B. Proshika itself has been the target of the BNP government during the past few years, proving once again that if there is a new low to be attained, both our parties will compete hard to attain it. Read about Proshika's troubles here and here.