While delivering a speech in Oslo, Norway, on 10 Dec 2006 Muhammad Yunus, who invented microcredit and founded Grameen Bank said, “Nine elected representatives of the seven million borrowers – cum owners of Grameen Bank have accompanied me all the way to Oslo to receive the prize. I express thanks on their behalf to the Norwegian Nobel Committee for choosing Grameen Bank for this year’s Nobel Peace Prize. By giving their institution the most prestigious prize in the world, you gave them unparalleled honour. Thanks to your prize, nine proud women from the villages of Bangladesh are at the ceremony today as Nobel laureates giving an altogether new meaning to the Nobel Peace Prize.”
Six years after that on 23 August the government of Bangladesh, which neither travelled to Oslo nor was mentioned anywhere, issued a notification to constitute a search committee to prepare a panel for the government for appointing a managing director of its choice for the bank. Sheikh Hasina’s cabinet had approved on 2 August, an amendment to the Grameen Bank Ordinance ,1983 assuming all powers to appoint the managing director to monitor a privately owned enterprise.
Now 8.4 million underprivileged own the bank, mostly women, holding 97% shares, with the government retaining barely 3% of the total shares. On August 2, the government arbitrarily decided to nationalize the private property of the poor women entrepreneurs much in the same way as the Sheikh Mujib government nationalized the private properties during the years between 1972 and 1975.
On 23 August Dr. Muhammad Yunus issued a statement: “This day will go down as a black day in the history of our nation. Our government has obliterated the unique characteristics – one of which is the bank being owned and run by women – which made the institution universally lauded and a Nobel Prize winner. Thanks to the amendment the institution has been rendered into another cookie-cutter public organization. I cannot bear the sorrow.”
Although the Grameen Bank take-over evokes sorrow it is not simply a matter of sentiment or emotion, but a hard practical question involving individual liberty and property rights which has to be answered by ripe political sense and wisdom.
“The political liberty of the subject,” says Montesquieu, “is a tranquillity of mind arising from the opinion each person has of his safety. In order to have this liberty, it is requisite that the government be so constituted as one man need not be afraid of another.” According to him: “When the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty; because apprehensions may arise, lest the same monarch or senate should enact tyrannical laws to execute them in a tyrannical manner.”
“Again, there is no liberty,” he says, “if the judiciary power be not separated from the legislative and executive ….There would be an end of everything, were the same man or the same body, whether of the nobles or of the people, to exercise those three powers, that of enacting laws, that of executing the public resolutions, and of trying the causes of individuals.”
Indeed, there has been an end of everything in Bangladesh after the arbitrary adoption of the August 2 amendment of the Grameen Bank Ordinance.
In Bangladesh, the government is not democratic. It is autocratic or at its best is aristocratic. Here the legislative and executive powers are united in one person who is the prime minister and the leader of the House in the parliament. The same person appoints the judges. There is no liberty here in Bangladesh because the same person can adopt an ordinance or amend it when the parliament is not in session and execute it in tyrannical manner. Here the life and liberty of the people is exposed to arbitrary control. The government is despotic. It can arrogate to itself whatever power or authority it pleases.
The August 2 amendment carried out arbitrarily by a cabinet decision has violated the property rights of citizens. Ordinarily property rights are cherished as personal benefits by those fortunate enough to own a substantial amount. But property rights are best assessed in terms of their economic effects on the well- being of the population at large. And the property rights of the women of Grameen Bank have been rightly assessed by the international community in terms of their economic effects on the well-being of the people at large. And how do the people with property rights differ from the people without it ? One example was the erstwhile Soviet Union where individuals did not own agricultural produce as their private property. Here the monitoring of the produce handling was done by the Communist Party members who were honeycombed throughout the society to report on dereliction of duty and violation of law. But the widespread corruption and inefficiency found even under Stalinist totalitarianism suggest the total failure of governmental monitoring as compared to automatic self-monitoring by the property owners themselves.
In a democratic country where free-market system prevails, property rights create self-monitoring which is more effective and less costly than third-party monitoring. Normally animals not owned privately are threatened with extinction. Inanimate things like air and water are easily polluted because they are not owned by anybody. Similar neglect of property not owned privately occurred in the Soviet Union. Bangladesh, unfortunately , now is following the footsteps of the Soviet Union, abruptly taking over management of privately owned enterprises just for the hake of it.
Through the Grameen Bank the poor entrepreneurs changed their economic conditions using their own savings or borrowings. The powerful people in the government do not like it. Leaders of the party - in - power have already declared that the Grameen Bank is a public property like the state owned enterprises which means the 8.4 million women who own 97% of shares in the bank will be dispossessed of their property. The apprehension of Dr. Muhammad Yunus that the bank “has been rendered into another cookie-cutter public organization” is not unfounded. The take – over bid is intended to keep out people of average or low income from the production-distribution chain.
It is incentives which matter in the Grameen Bank and in this institution property rights are assessed economically in terms of the incentives . The powerful incentives created by a profit –and - loss economy depend on the profits being private property. When government owned enterprises in the erstwhile Soviet Union made profits, those profits were not their private property and could be taken by government for whatever purposes it chose to spend it. Soviet economists pointed out the adverse effects of this on incentives: “We are taking away from those who work well in order to keep afloat those who do nothing.”
Job crisis is not only the cause of poverty in the Third World but also the cause of the double –dip recession in the developed countries. Entrepreneurship could be the answer to the global need for employment opportunities. At the moment there is an uneven playing field that makes the choice to become an entrepreneur. Dr. Muhammad Yunus has matched this uneven playing field by his microcredit tool. In an article published in the September 13 , 2010 issue Tim Kane drew the attention of the U.S policy makers in the following words:
“All human beings are entrepreneurs”, says Nobel Peace Prize winner Muhammad Yunus, an economist who kicked off microcredit in his native Bangladesh. Well, Washington: Are you listening?
To Yunus every individual is an entrepreneur. In the process of implementation of the concept he has turned 8.4 million low-income women into self-employed, self-starter entrepreneurs giving a boost to the country’s economic development.
Knowledge has now been recognized as a factor of production. In fact there is much that the ruling party hierarchy do not know that knowledge is vital to the functioning of an enterprise. One may ask, “How much knowledge does it need to fry a hamburger?” And the answer, certainly, is best known to McDonald’s.
One may ask again, “How much knowledge does it need to run the Grameen Bank? The answer to this question is best known to the man who took the nine village women of Bangladesh to Oslo in 2006 to receive the Nobel Prize. Anybody who studies the history of the Grameen Bank will be astonished at the amount of detailed knowledge, insights, organizational and technological innovation, financial improvisation, all-out efforts, and desperate sacrifices that went into creating an enormous economic and social transformation. In both the cases, it was the knowledge that was built up over the years – the human capital – which ultimately attracted the financial capital to make ideas become a reality. This fact alone is sufficient to answer the question why Dr. Muhammad Yunus is indispensable for the Grameen Bank. He is irreplaceable. No sensible man in his right mind will ever think of taking the place of Yunus, the icon whose microcredit is a modern marvel. The whole nation is proud of him.
BY : Abu Hena. (The author is a former Member of Parliament )