By Nick Stace

Nobel Peace Prize winner Professor Muhammed Yunus is being investigated for alleged corruption by Bangladesh's government. Nick Stace defends the man who has helped millions of the world's poorest people.

A year ago, I along with other social enterprise leaders from around the world visited Nobel laureate Professor Yunus at his Grameen headquarters in Dhaka, Bangladesh. I'm lucky that through my work I get to meet some interesting people in life, but I have met few people who can match the Yunus magic - his charisma and vision has transformed the lives of some of the world's poorest and most vulnerable people.

But ever since Professor Yunus received the Nobel Prize in 2006 for his amazing work on micro credit, and his stand against corruption in politics in 2007, he has been distrusted by the Bangladeshi government. This has now taken a sinister turn with Sheikh Hasina, the Bangladeshi prime minister, giving credence to unsubstantiated claims of corruption at Grameen. According to supporters of Yunus, this is a clumsy attempt to wrestle the world's leading social enterprise away from the poor.

Yunus set up the Grameen Bank, which today is giving opportunities through small loans to 10 million of the world's poorest families in 73,000 villages, in 1983. But it didn't stop there. Through social business partnerships with global brands such as Adidas and Danone, Yunus is tackling underlying causes of poverty. These sustainable social businesses now employ over 30,000 people and deliver benefits to many millions of people.

At our first meeting in Dhaka, Professor Yunus used a vivid analogy to explain the problem that the poor face: "To me poor people are like Bonsai trees. When you plant the best seed of the tallest tree in a flower pot you get a replica of the tallest tree only inches tall. There is nothing wrong with the seed you planted - only the soil base is too inadequate. Poor people are Bonsai people. There is nothing wrong with their seeds, only society didn't give them the base to grow on."

"Real" banks have never wanted to loan to the poor, only loan sharks do with business models that extract bone-crushing interest rates attached to violence and intimidation. Grameen in contrast provides loans at reasonable rates, in a supportive environment. It's inspiring stuff because it puts people at the heart of business solutions, and without political interference it will continue for the benefit of generations to come.

There is no question that Professor Yunus is challenging to the world as we see it; he turns on its head conventional thinking, which of itself can allow the seeds of doubt and suspicion to fester in an insecure regime.

In the mid-1990s, I was introduced to Muhammad Yunus, whose micro-credit movement in Bangladesh was just beginning to attract attention. The concept was brilliantly simple: small loans, mainly to women, enable people to create money streams of their own-like, purchasing a sewing machine, for example. Virtually all of the loans were repaid. Hillary Clinton, as first lady, among other international figures, endorsed the Yunus concept, and his Grameen Bank became recognized as a founding pillar of a truly innovative way to support some of the world's poorest people.

PublicAffairs published Yunus's Banker to the Poor: Micro-Lending and the Battle against World Poverty in 1999. The book sold steadily but modestly. While I was personally impressed with Yunus and tried to learn as much as possible about Grameen and the concept of micro-credit, I kept wondering whether or when some reporter or critic would do a major take-down of the principle, the bank or the man. But it never happened. In fact, micro-lending spread to countries around the world, both as nonprofit and for-profit enterprises. To date, about 175 million families have received micro-loans.

I particularly remember the launch of Grameen Phone around 2000, in which village women, known as "phone ladies," would purchase equipment with a loan and serve as the local operator in the early stages of cellular technology. "Who were these people calling?" I asked, vastly underestimating the power of communication. (At that stage, it was mainly relatives working abroad.) Mobile phones are now so widely available in Bangladesh and most of the rest of the developing world that these early initiatives, conceived barely more than a decade ago, now seem distant and quaint. Grameen moved into other businesses and even established a foothold in the United States as a micro-lender.In 2006, Yunus and Grameen were awarded the Nobel Prize for Peace, which elevated him into the stratosphere of celebrity, with a Presidential Medal of Freedom, a cascade of honorary degrees, and admiring profiles in publications everywhere. Banker to the Poor became a global bestseller.

Then, in 2007, Bangladesh, once described by Henry Kissinger as a "basket case" for its severe economic and social problems, went through a period of political turmoil, with military intervention required to stem the upheaval. Yunus, responding to the pleas of leading Bangladeshis, briefly considered a political role for himself and his movement. But Yunus was not made for politics. He is a superb economist, and a genuinely original and visionary humanitarian, but the fierceness and authoritarian discipline (let alone the tendency to corruption and the acquisition of personal wealth) expected of politicians were not in his character. The more I saw of Yunus as we continued to work with him, the more I realized that his personal integrity and genuine commitment to values could turn into a vulnerability when less scrupulous imitators and the rough-and-tumble politicians of Bangladesh began, one way or another, to try to undermine Yunus and his work.

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Letter from Asia

he community centre, its corrugated iron walls set into a dirt floor, is jam-packed. It's collection day in Atalora, a village about 50 kilometres from Dhaka, Bangladesh's capital. The "banker" is here, one hand on her accounts book and the other on her calculator, as she sits opposite about 30 women cloaked in their shawls. One after another, they get up and come to give a small wad of notes to the employee of the Grameen Bank, the "bank for the poor" devised by professor Mohammad Yunus, microcredit pioneer and winner of the 2006 Nobel Peace Prize.

Outside, a cock is crowing. Taslima Begum hands over 3 665 takas (37 euros) as repayment for the loan she took out to buy her fruit stall. Mofida, on the other hand, went into debt to put up a henhouse. Asia Begum opened a cosmetics and jewellery business. Just one figure sums it all up: 97% of the 8.3 million borrowers from the Grameen Bank in Bangladesh are women. "Now, my husband consults me on managing the family's affairs", says Asia Begum. "And I'm proud of that" The Grameen Bank is not the only one that prefers to deal with women, who are considered to be "safer" than men. The other microcredit institutions (Brac, Asa, etc.) do the same.

Bangladesh goes against the clichéd image. Here is a Muslim country - or 90% Muslim - where the women are the agents of a genuine silent revolution. From the remote villages to the palace in Dhaka, they can be seen. Sheikh Hasina is in her second term as prime minister. And if she were to lose power at the next election, her place would be taken by another woman, Khaleda Zia, leader of the opposition, who has already been at the head of government on two occasions.

Of course, these "two begums" derive their legitimacy from men. They are respectively the orphan and the widow of a great man. Sheikh Hasina's father was none other than Sheikh Mujibur Rahman, the "father of the nation", assassinated in 1975. And Khaleda Zia is the widow of Ziaur Rahman, another hero of independence, assassinated in 1981. Bangladesh is no exception to the dynastic approach at work throughout South Asia. Women there carry the torch for the clan as in Pakistan (Bhutto), India (Nehru-Gandhi) and Sri Lanka (Bandaranaike).

However, Bangladesh remains special, particularly in terms of its membership of the Muslim world. In contrast to Pakistan, where Benazir Bhutto scarcely sought to overthrow male hegemony in Islamabad, the government of Dhaka is much more open to women. Today, in addition to being at the head of the executive, women are leading important ministries such as the ministries for foreign affairs, the interior and agriculture. And this is only the visible part of a more pervasive present in society as a whole. According to Unicef's figures, the rate of school attendance by girls at primary school in Bangladesh is higher than in Pakistan or India. The same applies to the literacy rate for adult women.

This special feature is related to the very circumstances of the foundation of Bangladesh, born in 1971-1972 of a violent separation from Pakistan. The war was very bloody and, according to the official figures, left approximately 3 million dead from among the Bangladeshi - most of them men. "So, the widows took responsibility for the country" explains Sultana Kamal, one of the most prominent feminists in Bangladesh.

This eruption of women into the public sphere only reinforced the secular dimension inscribed in the ideological "DNA" of the new State. In fact, Bangladeshi cultural nationalism, rather than Islam, is at the root of national identity. Of course, the country then experienced developments similar to those in Pakistan, where the army planted the seeds of Islamisation. The dying convulsions of this tendency were seen in the explosion of fundamentalism in the early 1990s, culminating in the violent campaigns against the feminist writer Taslima Nasreen, who was forced into exile for "blasphemy".

I have pleasant memories of this time. We stayed at the bank manager's residence on top of the office of a Grameen Bank branch in Suruj Tangail, one of the oldest branches, sleeping in a simple bed, eating lunch sitting on a bamboo mat, chatting with bank employees and visiting the houses of Grameen Bank borrowers, mostly women.

Once the mission started, my task was to evaluate the socioeconomic impact of Grameen Bank on its members. Throughout the six weeks, I and other mission members visited various locations all over Bangladesh. I had the chance to talk to many borrowers and look at the pattern of loan utilisation and socioeconomic impact on borrowers.

Most of the loans were taken to buy livestock and poultry and as working capital for various trading activities and small shops. Thus, the poor could expand their meager resource base and the scale of their activities. There were some defaulters who could not use the loans effectively, but these were few in numbers.

The Grameen model is a unique model which uses social mobilisation of the poor into groups of 5 women and then 8 groups to a centre (40 women) to give them access to credit and motivate them to improve their economic condition. The motivation is incorporated into the sixteen decisions of Grameen Bank. Group formation was important both from the social mobilization aspect and also to use peer pressure to realize the loans.

The groups met at the "Kendra" (centre) where they did simple exercises, received advice on family planning, maternity welfare, and other social issues, besides receiving and paying back the loans. They also discussed amongst themselves many of the social issues of concern.

I also participated in several of these centre meetings as part of the evaluation. Grameen was then a social movement. It later took institutional form and according to some reports the behaviour of members has become routinised, losing some of the zeal of earlier years.

On submission of our evaluation report, we met Prof. Yunus at the Grameen Bank headquarters. What was remarkable about this meeting was that at the end all donor representatives mentioned that should he need further financing, he knew where to find it. Yunus politely declined their offer.

I was impressed by his honesty and straightforward manner and his unbowing attitude to donors. This was remarkable in a country which constantly solicited aid and bowed to donor conditionalities in return for the loans they gave. I later learned that Prof. Yunus refused a $100 million loan from the World Bank about the same time.

This donor dependence could be reduced because of the structure of the Grameen model. The group formation involved social mobilisation and thus the setting up of a revolving fund for the loans which could perpetuate itself, without need for further injection of money. Before the groups were officially recognised by the Bank, the members also had to be able to at least sign their names. Thus a small dent was made in terms of adult literacy.

What has been the contribution of Grameen Bank or microcredit to the rural economy? It has given access to credit to many who did not have this access to formal institutions and banks because they required collateral for their loans which poor people did not have. As a result, many activities in the informal sector -- small-scale manufacturing and trading --could be financed through micro credit.

DHAKA (AFP) - Nobel prize winner and microfinance pioneer Muhammad Yunus is in trouble in Bangladesh -- the price for crossing the country's powerful Prime Minister Sheikh Hasina, observers say.

Lauded internationally for his innovative work making small loans to poor entrepreneurs, at home he has been dragged to court to answer charges of defamation and faces a government probe into his bank.

The two blows in quick succession over the last month have led to speculation -- denied by the government -- that his woes stem from personal differences with Hasina, who said in December that microfinanciers were "sucking blood from the poor."

M.M. Akash, a commentator and economics professor at Dhaka University, said Yunus's problems are rooted in events in 2007, a tumultuous period in the history of the impoverished South Asian country.

"Hasina and Yunus appeared to be on good terms before he floated the idea for a political party," he said. "That was a huge political blunder and he is now paying the price for it."

After months of political turmoil, including violent street clashes between supporters of the two main parties, the Bangladesh Nationalist Party and the Awami League, the military seized power in January 2007 in a bloodless coup.

A month later, Yunus announced plans to set up his own party, the Nagorik Shakti or Citizen Power, which the septuagenarian "banker to the poor" said would change Bangladesh's confrontational political culture.

"My politics will be the politics of unity and peace to establish honesty in politics and to change the fate of the nation," Yunus said at the time, offering an alternative vision to the country's two main parties.

By May 2007, however, he had abandoned his plans and the following year in December 2008, Hasina's Awami League returned to power in a landslide victory.