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Muhammad Yunus

Muhammad Yunus, 84, was picked by President Mohammed Shahabuddin to lead the new interim government, a key demand of student demonstrators whose uprising drove deposed Prime Minister Sheikh Hasina, 76, to flee to India on 05 August 2024. “I am looking forward to going back home, see what’s happening and how we can organise ourselves to get out of the trouble we are in,” he told reporters before boarding a flight at Paris’s Charles de Gaulle airport for Dubai where he was to connect to Dhaka.

Meanwhile, before the arrival of Yunus, a court in Bangladesh overturned his conviction in a labour case in which he was handed a six-month jail sentence in January. Yunus had called his prosecution political, part of a campaign by Hasina to quash dissent. Yunus, 84, who hailed the weeks-long student-led protests that brought down the Hasina government as a “Second Victory Day”, has been a critic of Hasina’s 15 years of iron-fisted rule.

Yunus became the target of Hasina’s ire after he floated the idea of launching a political party in 2007. Yunus’s initial idea of launching the party came against the backdrop of the failure of the two main parties – Hasina’s Awami League and the opposition Bangladesh Nationalist Party (BNP) – to address rampant corruption and rising income inequality. In 2011, Hasina, who perceived the then-71-year-old respected economist as a political threat, removed Yunus from his position as managing director of Grameen Bank (village bank), calling him a “bloodsucker” of the poor. Her government subsequently launched financial investigations into his non-profit businesses. In 2023, he was convicted for violating labor laws, and he had been subject to an ongoing corruption case that many consider bogus.

The latest protests, which began against government job quotas but morphed into a much larger peoples’ movement, were a sign that the country’s youth, who comprise one-third of the population, sought a new kind of politics with greater democracy and accountability. Yunus “has been under constant persecution by the previous regime and he could have chosen to leave the country but he never considered that possibility”, Ahsan said. “He has been willing to stand by his own institution and his country, so clearly he is a patriot.” The main opposition Bangladesh Nationalist Party (BNP), buoyed by its chief and former Prime Minister Khaleda Zia’s release from house arrest on Tuesday, drew hundreds of people to a rally in Dhaka and demanded elections within three months.

The economist and entrepreneur took over the reins of the country after one the deadliest protests in its history, which saw more than 300 killed and thousands arrested. Big challenges lie ahead as he has to establish law and order, revive the economy, and pave the way for free and fair elections. Ahmed Ahsan, a former World Bank economist and a director of the Policy Research Institute in Bangladesh, says Yunus “is the man of the hour, chosen by the students who spearheaded the entire movement. He commands enormous respect both in the country and in the world.”.

Yunus, the third of nine children, was born in 28 June 1940 in a village near the southern port city of Chittagong in what was British India (then East Pakistan, now Bangladesh). He graduated from the University of Dhaka in 1961. He joined Vanderbilt University in the United States in 1965 on a Fulbright scholarship for his PhD in economics, which he completed in 1969. He went on to become an assistant professor at Middle Tennessee State University in Murfreesboro, Tennessee in the US. During the 1971 liberation war against the Pakistani military, Yunus supported efforts to create an independent Bangladesh. He founded a citizens’ committee in the US city of Nashville and helped run the Bangladesh Information Center in Washington, DC, which lobbied the US Congress to stop military aid to Pakistan.

In 1972, , following studies in Bangladesh and the USA, Yunus returned to an independent Bangladesh, and after a brief spell in the country’s new Planning Commission, joined the economics department of the University of Chittagong. Yunus was appointed professor of economics at the University of Chittagong. When Bangladesh suffered a famine in 1974, he felt that he had to do something more for the poor beyond simply teaching.

In 1976, he visited nearby villages in Chittagong that were affected by famines a few years earlier as part of his field work at the university. He decided to give long-term loans to people who wanted to start their own small enterprises. Yunus lent 42 people in the village $27 and found that each of them paid the money back as scheduled. He found out that small loans or microcredits given to poor villagers made a huge difference. Traditional banks would not lend them money, forcing them to rely on unscrupulous money lenders who charged exorbitant interest rates. This initiative was extended on a larger scale through Grameen Bank. This was the beginning of Grameen Bank which pioneered the provision of microcredit to poor people to allow them to start up new businesses. Yunus became known as the “banker to the poor” as he helped lift millions out of poverty through his Grameen Bank.

From 1993 to 1995, Professor Yunus was a member of the International Advisory Group for the Fourth World Conference on Women, a post to which he was appointed by the UN secretary general. He has served on the Global Commission of Women’s Health, the Advisory Council for Sustainable Economic Development and the UN Expert Group on Women and Finance.

Grameen Bank's objective since its establishment in 1983 has been to grant poor people small loans on easy terms - so-called micro-credit - and Yunus was the bank's founder. According to Yunus, poverty means being deprived of all human value. He regards micro-credit both as a human right and as an effective means of emerging from poverty: “Lend the poor money in amounts which suit them, teach them a few basic financial principles, and they generally manage on their own”, Yunus claims.

By establishing Grameen Bank, Muhammad Yunus sought to realise his vision of self-support for the very poorest people by means of loans on easy terms. The bank has since been a source of inspiration for similar microcredit institutions in over one hundred countries. Banks in the traditional system have been reluctant to lend money to anyone unable to give some form or other of security. Grameen Bank, on the other hand, works on the assumption that even the poorest of the poor can manage their own financial affairs and development given suitable conditions. The instrument is microcredit: small long-term loans on easy terms.

Muhammad Yunus and Grameen Bank were awarded the Nobel Peace Prize for 2006 for their work to “create economic and social development from below”. By that time, the bank had lent more than $7bn to over seven million borrowers, 97 percent of them women, with a repayment rate of nearly 100 percent. “I see poor people are getting out of poverty every day … we can see that we can create a poverty-free world… where the only place we’ll see poverty will be in the museums, poverty museums,” Yunus said at the time. When Grameen Bank was awarded the Peace Prize in 2006, more than seven million borrowers had been granted such loans. The average amount borrowed was 100 dollars. The repayment percentage was very high. Over 95 per cent of the loans went to women or groups of women. Experience showed that that ensured the best security for the bank and the greatest beneficial effect for the borrowers' families.

Professor Yunus is the recipient of numerous international awards for his ideas and endeavors, including the Mohamed Shabdeen Award for Science (1993), Sri Lanka; Humanitarian Award (1993), CARE, USA; World Food Prize (1994), World Food Prize Foundation, USA; lndependence Day Award (1987), Bangladesh’s highest award; King Hussein Humanitarian Leadership Award (2000), King Hussien Foundation, Jordan; Volvo Environment Prize (2003), Volvo Environment Prize Foundation, Sweden; Nikkei Asia Prize for Regional Growth (2004), Nihon Keizai Shimbun, Japan; Franklin D. Roosevelt Freedom Award (2006), Roosevelt Institute of The Netherlands; and the Seoul Peace Prize (2006), Seoul Peace Prize Cultural Foundation, Seoul, Korea. He is a member of the board of the United Nations Foundation.

From Dr. Yunus’ personal loan of small amounts of money to destitute basketweavers in Bangladesh in the mid-70s, the Grameen Bank has advanced to the forefront of a burgeoning world movement toward eradicating poverty through microlending. Replicas of the Grameen Bank model operate in more than 100 countries worldwide. As of 2019 there were approximately 10,000 microfinance institutions serving more than 140 million borrowers worldwide.

In a big part, this success was made due to the very active promotion of microfinance by the main actors of so-called “development policies” including governments of the Global North, so-called “philanthropic” billionaires (an oxymoron!) such as Bill Gates, and first and foremost by the World Bank. For some years now, “financial inclusion” has been a keyword of the World Bank’s agenda: the idea is that the poor populations need to be connected to the global financialized economy in order to get out of poverty – this means that they have to get loans, and if possible to get some other kinds of financial products or bank accounts.

Stephanie Wykstra wrote for Vox in 2019, “Rather than see microcredit as it was portrayed in its heyday — as a way to get people out of poverty — we should see it through a different lens: as a way to expand options for poor people by offering more reliable financial services. Extremely poor people need these services just like everyone else, and the availability of capital to deal with irregular and at times unpredictable incomes is a huge help to them.”

Microloans are mostly taken by women (more than 80% of microloan borrowers in 2014 were women), and in particular by widows and single mothers, in areas that have often been hit by disasters that affect the whole community. the interest rates are often not clearly announced – microfinance agencies simply announce the amount that will have to be paid by the debtor at each due date. Agencies also lend money to people who cannot read.

A March 2022 evaluation of Grameen America provides strong evidence that the Grameen America program contributed to reducing types of material hardship experienced as well as to positive impacts on several other outcomes. Grameen America offers women entrepreneurs loans to start or grow a small business. Borrowers, however, decide on their own what type of business they wish to start or invest in. Businesses of special interest in this study are those that use a direct-selling or multilevel marketing (MLM) model. Critics point to the potential for pyramid schemes, in which a distributor receives compensation primarily from recruiting new distributors, instead of from sales. This type of scheme requires a perpetual recruitment chain in which the design of the scheme’s compensation plan dooms the vast majority of participants to financial failure.

One alternative is the “tontine” which exists in some West African communities: women come together and put the same amount of money at the disposal of the group. Then a woman of the group can borrow this money for the particular needs she has at the moment – for instance getting health care for a member of the family – and pay it back to the group of trusting fellow women without having to pay interests.

Yunus faced the rough and tumble of politics beyond the reams of theory. His immediate task will be to restore stability after five weeks of deadly protests, but the larger issue is the economic crisis that has seen the ballooning of food prices and a stagnant private job sector. “The new government will need to stabilise the economy and contain inflation … and stabilise exchange rates,” Ahsan from the Policy Research Institute told Al Jazeera.

Jon Danilowicz, a former US diplomat who spent eight years working in Bangladesh, believes that Yunus’s appointment is a good choice as his international profile will help the South Asian nation of 170 million. “His great strength is his credibility and his profile internationally, particularly in the United States. He can tap into the reservoir of goodwill that exists there and the willingness of the United States to do what it can do to help Bangladesh,” Danilowicz told Al Jazeera. The former diplomat, who is a board member of a rights NGO based in Bangladesh, thinks there are three big challenges for the interim government: dealing with the economic issues; unravelling the politicisation of the country’s institutions including the civil service, police and judiciary; and how to deal with the issues of accountability for serious human rights violations.

“He must establish civilian control and supremacy early on and make sure that the army goes back to its normal role of supporting the civilian administration,” Danilowicz said. On the diplomatic front, Yunus will have to strike cordial ties with India, which backed the Hasina administration despite her rights violations and repression of opposition voices. Hasina is currently in India. “The new government must have cooperative relations with India as a hostile Indian government could be a spoiler, causing problems for Bangladesh,” Danilowicz said.