Takeover Plan for Microlending Pioneer Grameen Spurs Anger

By SYED ZAIN AL-MAHMOOD
Source: THE WALL STREET JOURNAL
Published on: 5 Aug, 2013

Bangladesh Plans to Take Control of Bank Founded by Nobel Winner Yunus

The government is set to announce a plan to take control of globally praised microlender Grameen Bank, drawing criticism from the supporters of its Nobel Prize-winning founder and raising questions about the motivation behind the move.

Muhammad Yunus founded Grameen Bank. The government plans to take control of the lender and split it up.

Founded by Nobel laureate Muhammad Yunus, Grameen has garnered accolades for bringing credit to millions of rural people and showing that microcredit programs—which offer small loans to poor borrowers—can work on a large scale. Its success helped spawn a big international expansion of microcredit in emerging markets and inspired giants such as Citigroup Inc. and HSBC Holdings HSBA.LN -1.02% PLC to dive into the sector.

Under the plan, which could be announced by a government-appointed commission as early as this week, the government is expected to increase its stake in the bank to 51% from 25%, diluting existing shareholders and giving it control of the lender, which is now controlled by 8.4 million rural women who are borrowers and shareholders in the bank.
"This is a suicidal decision," said Tahsina Khatun, a member of the board of directors. "How can the government, which is a minority shareholder, impose its will on us who own the majority? The Grameen model is based on trust. There will be no trust after this."

The move comes as Bangladesh faces criticism for corruption and lax oversight in the collapse of the Rana Plaza garment factory in April that killed 1,100 people. Supporters of the bank say it is relatively well run and has been scandal-free in a corruption-riddled country.

The dispute is driven in part by the rapid growth of Grameen Bank, which is at the center of a sprawling empire that includes 48 companies including the nation's biggest mobile-phone operator and a yogurt maker.

Government ministers say the restructuring is needed to rein in Grameen, boost oversight, and bring the bank in line with the law that underpinned the creation of Grameen in 1983. They say the bank has strayed from its mandate of giving credit to the rural poor by forming multiple companies that have nothing to do with micro-lending. They have also accused Mr. Yunus of enriching himself and his family through the nonlending businesses.

A woman in Savar, Bangladesh, tends to cows bought with a Grameen Bank microloan.

"Yunus holds the position of the chairman of the social businesses set up by him," Finance Minister Abul Maal Abdul Muhith told parliament last month. "These businesses were set up by borrowing capital from Grameen Bank, but the shareholders were paid no dividends. We want to address this."

Mr. Yunus said in an interview that he didn't own shares in any of the companies bearing the Grameen name and didn't borrow from the bank to fund them. "I did not set up these companies using money from Grameen Bank since that would be a violation of its mandate," he said.

"These companies are either nonprofits or are owned by nonprofits and were set up with the aim of poverty alleviation through social business," he added.

Mobile operator Grameenphone, for example, was started with a loan from the Soros Foundation. The company, a joint venture with Norwegian telecom company Telenor, TEL.OS +0.76% is now the country's biggest mobile operator, a listed company with a market capitalization of $2.6 billion and a 40% market share.

Telenor holds 56% of Grameenphone. Grameen Telecom, a not-for-profit set up by Mr. Yunus, holds 34%, while the remaining 10% trades on the Dhaka Stock Exchange.

A Bangladeshi man stands in front of a poultry farm established with a Grameen Bank microloan.

Finance Ministry officials say the final plan to restructure Grameen is likely to hew closely to an earlier plan calling for the bank to be split into 19 parts serving 19 zones in the country. The government would inject money into the bank to raise its stake to 51%, diluting existing shareholders.

The battle over Grameen is part of a long-running tussle between the government and Mr. Yunus. In 2011, the government engineered the removal of Mr. Yunus, now 73 years old, from Grameen Bank, saying he had passed retirement age.
Prime Minister Sheikh Hasina famously called Mr. Yunus a "blood sucker" two years ago and has accused him of lobbying against her government abroad.

Critics say the government wants to control all the Grameen companies so it can profit from them and use the bank's millions of clients as a possible vote bank.

Women apply for a loan at a Grameen bank branch in Savar, Bangladesh.

"The government clearly has ulterior motives in trying to take control of Grameen Bank," said Mirza Fakhrul Islam Alamgir, a leader of the opposition Bangladesh Nationalist Party. "If voted to power, we will restore Grameen's independence."

The government denies it is trying to bleed Grameen of profits, tap its clients for votes or embarrass Mr. Yunus.
Mr. Yunus has drawn support from overseas, including from former U.S. secretaries of state Hillary Clinton and Madeleine Albright. During an official visit to Bangladesh last year, Ms. Clinton said she wanted to see Mr. Yunus's work "continue without being in any way undermined or affected by any government action."

The breakup plan is based on a recommendation from a commission started by the prime minister in May of last year.
The commission also recommended that the original license for Grameenphone be suspended, although it hasn't provided details on what was wrong with the license. The commission's head, Mamun ur Rashid, has called for Telenor to relinquish 16% of Grameenphone—a stake valued at about $415 million—to Grameen Bank, which the government would control if its proposed changes are enacted.

Sigve Brekke, chairman of Grameenphone, who is also head of Telenor Asia, said the company hadn't been officially notified of any government decision and couldn't comment further.

Whatever happens, Bangladesh's "battle of the bank" is likely to keep bruising the country's reputation.
"The Grameen Bank is not broken, so why fix it?" asks Akbar Ali Khan, an economist and former bureaucrat. "Grameen's management model is being replicated [in other countries]. The government must allow Grameen Bank to run without interference."

A version of this article appeared August 6, 2013, on page C1 in the U.S. edition of The Wall Street Journal, with the headline: Microlending Pioneer Faces Takeover.

Nobel laureate Yunus seeks to tackle poverty, unemployment in Japan

By HISASHI NAITO/ Staff Writer
Published on: July 28, 2013
Source: Asahi.com

OSAKA--Nobel laureate Muhammad Yunus, credited with helping millions of impoverished Bangladeshis through microfinance, is turning his attention to Japan, unveiling plans to establish funds that will invest in small ventures tackling poverty, unemployment and other social issues.

Yunus, 73, told The Asahi Shimbun in an interview here on July 27 that he wants to help small businesses, retirees and young people tackling those challenges by organizing funds to assist their efforts in Tokyo, Osaka, Fukuoka and other major cities.

He said he intends to raise the funding from the affluent, who are willing donors to nonprofit groups and to social causes.

The Bangladeshi economist was awarded the Nobel Peace Prize in 2006 for helping the impoverished escape poverty by providing no-collateral loans in small amounts through the Grameen Bank, which he founded in Bangladesh.

Yunus is a proponent of “social business,” a business model that reinvests all profits back into the company, instead of paying dividends to shareholders, to combat unemployment and other societal problems.

He said the social business model will take two to three years to spread among societies because it is a new vision.

Yunus was attending the Social Business Forum Asia in Osaka on July 27.

HOLT: Bangladesh Government Must Halt Attacks on Grameen Bank

(Washington, DC) Rep. Rush Holt (NJ-12) today issued the following statement on the latest efforts by the government of Bangladesh to control or dismantle the world-famous Grameen Bank, whose microcredit programs have lifted millions out of poverty around the world:

“It is past time for the government of Bangladesh to cease its efforts to destroy one of the true economic marvels of our age: Grameen Bank.  I call upon Secretary of State Kerry to make it clear to officials in Dhaka that America supports Grameen Bank and its work for the poor in Bangladesh and elsewhere in the world,” said Holt. “If the government of Bangladesh persists in its attacks on the bank and Professor Yunus, our government should reevaluate the wisdom of our current push to deepen political and security ties to the current government.”


This week, Nobel laureate and Congressional Gold Medal winner Professor Muhammad Yunus published an op-ed in the Dhaka Tribune condemning proposals for a government takeover or outright break up of Grameen Bank, which Yunus founded over 30 years ago to help poor women in Bangladesh and elsewhere create their own small businesses and rise out of poverty by providing small loans at generous terms.

Earlier this year, the Congress awarded America’s highest civilian award, the Congressional Gold Medal, to Yunus for his creation of microcredit and his life-long commitment to fighting poverty. Holt was the sponsor of the resolution authorizing the medal.

“Bangladesh needs more institutions like Grameen, and more pioneers like Muhammad Yunus. It’s past time for the government of Bangladesh to recognize those facts and work with Professor Yunus, not against him.”

Source: holt.house.gov

Reception accorded to Yunus

Business31

Source: The Daily Star
Published on: 10th July, 2013

Nobel laureate Prof Muhammad Yunus was accorded a reception for his life-long efforts aimed at eradicating poverty from the world and making Bangladesh proud in the process.

The family of AYBI Siddiqi, a former government secretary and inspector general of police, hosted the accord to Grameen Bank founder for winning the Nobel Peace Prize, US Congressional Medal and Presidential Medal of Freedom, at Spectra Convention Centre in Dhaka on Saturday.

Sir Fazle Hasan Abed, founder of BRAC, the world’s largest non-governmental organisation, was also given a memento.
Speaking at the event, Sir Abed said: “Prof Yunus has taken the microcredit to the world stage as a tool to eradicate poverty. Many countries are using it to eliminate poverty. We are a proud citizen of Bangladesh because of Yunus.”
Rehman Sobhan, chairman of Centre for Policy Dialogue, said through microcredit Prof Yunus empowered the people who were overlooked by the market economy.

Akbar Ali Khan, a former caretaker government adviser, said the board delegated power to the management of the microcredit organisation in many areas such as loan approval and promotion.

As a result, Grameen Bank and Prof Yunus won the Nobel Prize, said Khan, also a former chairman of Grameen Bank.
Latifur Rahman, chairman of Transcom Group and winner of Oslo Business for Peace Award, said: “Prof Yunus is such a great man who has not stopped despite winning the Noble Prize. He has continued to work for the country and the world.”
Prof Lutfe Siddiqi, one of the managing directors of United Bank of Switzerland and son of AYBI Siddiqi, and Rehana Siddiqi, wife of AYBI Siddiqi, were also present.

Uniqlo brings fashion back to the source in Bangladesh

By Nandita Bose and Ruma Paul
Published on: Thu Jul 4, 2013
Source: Reuters

uniqlo

(Reuters) - On a bustling Dhaka street full of buyers looking for deals on export rejects and designer fakes, a flight of stairs leads up to an anomaly in a country known for producing international clothing brands - a global high street fashion store.

Uniqlo, owned by Japan's Fast Retailing Co (9983.T), is opening two stores in Bangladesh, a favorite low-cost sourcing hub for many international retailers but a country where, until now, they have not sold their clothes.

Inside the brightly lit confines of the larger of Uniqlo's two Dhaka stores, staff frantically rushed among stacks of clothing manufactured exclusively for the local market to add the final touches before a grand opening on Friday.

The Japanese retailer, in a tie-up with Bangladesh's Grameen Bank, founded by Nobel laureate Mohammad Yunus, has dared to venture into a $70 billion retail market untouched by global chains, where about 30 million people make up the middle-income bracket.

In April, more than 1,100 garment workers died in the collapse of a eight-story building in Bangladesh, putting pressure on international fashion brands to improve worker safety and livelihoods.

MIDDLE CLASS FOCUS

At 1,000 sq ft (90 sq meters), the Dhaka store is a far cry from Uniqlo's large-format shops elsewhere and stocks mostly menswear - women in Bangladesh, a largely Muslim nation, still prefer to wear traditional clothes.

A group of college students, who looked curiously at the store from across the street, had never heard of the brand.

"The store looks good from the outside. I can shop here for Eid, but not always," said Jamshed Robin, a 25-year-old political science student, looking at the price catalogue.

Eid al-Fitr is a key religious holiday and marks a major shopping period for Muslims.

A typical slim fit pair of jeans here costs 990 taka ($12.73) and a short-sleeve shirt costs 890 taka ($11.44), before a 5 percent local tax. That means they are aimed at the small but growing middle class, rather than the masses who make up the ranks of garment factory workers and who earn a minimum monthly wage of $38.

Uniqlo, on its website, says its T-shirts cost 20-30 percent more than those sold in the local market, and says it is banking that customers will pay a little more for the higher quality.

"We're not selling Uniqlo products, we're going to be selling Grameen Uniqlo which is more geared to the local market, for between about 200 and 1,000 yen ($2-$10)," said Naoto Miyazawa, a Fast Retailing spokesman in Tokyo.

SAFETY PACT

Fast Retailing has so far not joined a global safety pact for factories in Bangladesh drawn up after April's disaster at the Rana Plaza complex, in an industrial suburb north of Dhaka, preferring instead to ramp up its own inspections.

Miyazawa said the company had not yet decided whether to sign up to the pact because its details were still unclear.

Uniqlo is investing $4.6 million in Bangladesh. The company describes the initiative with micro-lender Grameen as a "social business venture" on its website and plans to reinvest the profits to alleviate poverty in rural areas.

"We want to deliver innovative designs and fashion to the middle class customers here and have plans to open more stores across several cities that will create more jobs," said Yukihiro Nitta, chief executive officer of the joint venture.

Uniqlo will hold 99 percent of Grameen Uniqlo Ltd and Grameen Healthcare Trust will hold the rest.

At its second store, in a residential middle-class suburb, the power goes out twice before its restored with a generator.

Outside 28-year-old sales executive Omar Iqbal is eager to check out the glistening store.

"It will be nice to wear a global brand to work," he said. "Will their clothes have the Uniqlo logo on them like Adidas does?" ($1 = 77.7700 Bangladesh takas)

(Additional reporting by Sophie Knight in Tokyo; Writing by Nandita Bose)