From: Patrick Bond (pbond@MAIL.NGO.ZA)
Date: Fri Oct 13 2006 - 13:31:37 EDT
Jurriaan Bendien wrote:
> the original capital accumulation
> comes about through micro credits!
And don't forget accumulating tin by ripping roofs off women's houses...
November 27, 2001
Grameen Bank, Which Pioneered Loans
For the Poor, Has Hit a Repayment Snag
By DANIEL PEARL and MICHAEL M. PHILLIPS
Staff Reporters of THE WALL STREET JOURNAL
Microcredit is a great idea with a problem: the bank that made it famous.
Grameen Bank, launched in Bangladesh in 1976 by an economics professor
named Muhammad Yunus, popularized the idea of giving poor people tiny
loans to launch businesses. The bank has helped inspire an estimated
7,000 so-called microlenders with 25 million poor clients worldwide.
To many, Grameen proves that capitalism can work for the poor as well as
the rich. It has become an icon for the drive to give needy
entrepreneurs a share in economic development. And that iconic status
owes a lot to an almost miraculous loan-repayment rate of "over 95%," as
the bank's Web site says. (www.grameen.org)
But Grameen's performance in recent years hasn't lived up to the bank's
own hype. In two northern districts of Bangladesh that have been used to
highlight Grameen's success, half the loan portfolio is overdue by at
least a year, according to monthly figures supplied by Grameen. For the
whole bank, 19% of loans are one year overdue. Grameen itself defines a
loan as delinquent if it still isn't paid off two years after its due
date. Under those terms, 10% of all the bank's loans are overdue, giving
it a delinquency rate more than twice the often-cited level of less than 5%.
Some of Grameen's troubles stem from a 1998 flood, and others from the
bank's own success. Imitators have brought more competition, making it
harder for Grameen to control its borrowers. The bank's loan portfolio
grew rapidly in the early 1990s, but it has now shrunk to 1996 levels,
at $190 million. Profits have declined about 85%, to the equivalent of
$189,950 last year from $1.3 million in 1999. The bank, with 1,170
branches, all in Bangladesh, has high operating costs. Grameen would be
showing steep losses if the bank followed the accounting practices
recommended by institutions that help finance microlenders through
low-interest loans and private investments. And the situation may be
worse than it appears; the bank is converting many overdue loans into
new "flexible" loans that Grameen reports as up-to-date.
Safeguarding an 'Idea'
Microlenders have been reluctant to call attention to Grameen's
troubles. "Grameen's repayment rates have never been as good as they've
claimed," says Jonathan J. Morduch, associate professor of economics and
public policy at New York University. "Because Grameen has been so
well-known, nobody has wanted to risk undermining the reputation of the
idea."
Microcredit is getting renewed attention as other poverty-fighting tools
come under attack. Left-wing protesters accuse the World Bank of selling
out the poor to corporate interests. Right-wing U.S. politicians argue
that aid to the Third World has been wasted. U.S. lobbies often try to
quash efforts to open American markets to imports from poor countries.
But microcredit is an idea everyone can agree on: It uses private
enterprise, can be profitable and gets money straight to the poor.
Bridging the gap between rich and poor "will help eliminate conditions
of despair and hopelessness that breed violence and extremism,''
declares an e-mail message circulated after Sept. 11 by Bill Clapp, the
chairman of Global Partnerships, a microcredit support organization
based in Seattle.
Alarmed by Rumors
The microcredit industry knows its reputation rides largely on
Grameen's. Damian von Stauffenberg, chairman of a Washington-based
microcredit rating agency called Microrate, was alarmed by recent rumors
of financial weakness at Grameen, even though the agency doesn't rate
the bank. "If it's true, it would be a blow to the rest of us, because
of the symbol Grameen is," Mr. von Stauffenberg says. He says he
repeatedly asked a Grameen affiliate, Grameen Foundation USA, this
summer for detailed information on the bank's loan portfolio, but got
only a brochure and a 1998 annual report.
"I didn't hear back from him after that, so I assumed he had the
information he wanted," says Alex Counts, president of the foundation,
which promotes Grameen in the U.S.
Mr. Yunus, a congenial man of 61, acknowledges that Grameen has had some
repayment difficulties in the past five years. He blames political
upheavals, the 1998 flood and management errors. Told that the Web site
still claimed a 95% recovery rate, Mr. Yunus said it was through
"inefficiency" that Grameen hadn't updated some information. Grameen has
added a footnote to the Web site saying the information was true as of
1996. But more recent figures still aren't listed.
The repayment troubles are temporary, according to Mr. Yunus. "There is
no problem," he said in an August interview in his modest office, which
has no air conditioning despite Bangladesh's steamy climate. He says
three-fourths of borrowers repay on time every week, and Grameen assumes
that the poor will repay even long-delinquent loans. The bank, he says,
is stronger than ever.
Mr. Yunus says borrowers have surprised him with their ability to take
on new challenges. Borrowers who reach a certain level of savings can
buy one share in Grameen, and collectively they own 93%. Mr. Yunus is
setting up a mutual fund allowing borrowers to invest in other ventures
under the Grameen umbrella: mobile phones, textiles and high-tech office
space for rent on the top floors of the Grameen Bank tower.
"We have proved beyond a reasonable doubt that poor people are
bankable," Mr. Yunus says. "We are not looking for charity."
Grameen, which means "village" in Bengali, got started after Mr. Yunus
visited a village in southern Bangladesh. He met a woman who wove bamboo
stools but had to sell them for meager profits to the man providing the
materials. As an experiment, Mr. Yunus lent a total of $27 to 42 women
in the village. All of them repaid.
When Mr. Yunus approached the Bangladesh government for funds in 1979 to
expand his experiment, government bankers were skeptical that poor,
landless women would repay. So Mr. Yunus conducted an experiment in
Tangail, a fertile district north of Dhaka. His staffers showed up
unannounced in villages and recruited groups of women to take loans.
Again, all of them repaid.
The '16 Decisions'
The new bank was a kind of small-business lender, with some unusual
policies. It took no deposits at first. It lent only to poor women who
had no collateral. Borrowers formed groups of five, each member getting
loans only as long as everybody made payments. Borrowers recited Mr.
Yunus's "16 decisions" -- including enforcing loan "discipline" within
the group, keeping families small and not giving a dowry for a
daughter's wedding -- a difficult "decision" to follow in this culture.
Grameen, which has provided millions of poor Bangladeshi women with
access to credit, became the industry's symbol mostly through Mr.
Yunus's personality and proselytizing. He set up the Grameen Trust,
which gives loans and holds workshops for start-up lenders who have
adopted the Grameen model from Arkansas to Zimbabwe, with mixed results.
Mr. Yunus is also the guiding force behind the industry's main
public-relations vehicle, the Microcredit Summit. At the first summit,
in Washington in 1997, Mr. Yunus sat at the head table at a private
lunch with Queen Sofia of Spain and World Bank President James D.
Wolfensohn, who ended the meal by giving Mr. Yunus a big hug. At a
regional summit last month, he gave an opening address beside Mexican
President Vicente Fox. Friends tout Mr. Yunus for a Nobel Peace Prize.
Mr. Yunus's 1997 autobiography, "Banker to the Poor," gave no hint of
doubt in Grameen's future. "All the strength of Grameen comes from its
near-perfect recovery performance," he wrote. "It is not merely the
money which is reflected through the recovery rate, it is the discipline."
Even then, however, Grameen's recovery rate was slipping. In 1997, 4.6%
of Grameen's loans were more than two years overdue, up from 0.7% a
couple of years earlier. And Tangail has now become Grameen's worst
region, with 32.1% of loans two-years overdue as of August.
One reason is that microlending has lost its novelty. In Tangail,
signboards for rival microlenders dot a landscape of gravel roads, jute
fields and ponds with simple fishing nets. Shopkeepers playing cards in
the village of Bagil Bazar can cite from memory the terms being offered
by seven competing microlenders -- a typical repayment plan for a
1,000-taka ($17) loan is 25 taka a week for 46 weeks. At an annualized
rate, that works out to 30% in interest. Surveys have estimated that 23%
to 40% of families borrowing from microlenders in Tangail borrow from
more than one.
Rebellious Borrowers
Borrowers have also become more rebellious. "The experience was good in
the beginning," says Munjurani Sharkan, who became leader of a Grameen
group in Tangail's Khatuajugnie village in 1986. To put pressure on
"lazy" group members who were slow making payments, she says she used to
start removing the tin roofs of their homes. But one day, the whole
group decided to stop making payments.
They were protesting Grameen's handling of a fund it created for each
group, using 5% of each loan and additional mandatory deposits. The
"group fund" was meant for emergencies, but many borrowers wanted to
withdraw money from the group fund. After a protest movement, complete
with placards and amplified speeches, Grameen finally agreed to give
borrowers easier access to the fund.
Borrower groups had become lobbying groups, and Mr. Yunus hadn't noticed
the change, says Muhammad Yahiyeh, former director of Grameen Trust. "An
entire group would say, 'Unless you pay this person 5,000 taka, we will
all stop paying,' " says Mr. Yahiyeh, who now runs a small microlender.
Mr. Yunus says he still thinks groups are good for loan discipline.
Grameen just didn't explain the group fund properly, he says, and
politicians stirred up the borrowers.
The typical Grameen success story features a woman who turns a small
loan into a successful shop or craft business. But Grameen also has
customers such as Belatun Begum, a borrower in Khatuajugnie since the
late 1980s. She took one loan in three installments, totaling 30,000
taka (about $525). She says the original loan was to buy a cow, but she
actually gave some money to her husband, a well-digger, and used the
rest to improve her house. She confesses to borrowing a neighbor's cow
to show Grameen at meetings. One recent study found one-fourth of
microcredit loan money in Bangladesh is used for household consumption.
Mr. Yunus says that doesn't bother him as long as borrowers repay.
Grameen tells women to think of a loan as a mango tree and to eat only
the fruits, he says, not the tree itself.
But Grameen introduced so many loan options in the early 1990s --
housing loans, student loans, seasonal loans -- that borrowers were
often paying off one with another, says Aminur Rahman, an anthropologist
based in Ottawa, Canada, who studied Grameen borrowers in a Tangail
village six years ago. Returning earlier this year, he found only six of
120 borrowers were getting income from Grameen-funded investments.
Massive floods in 1998 hit Grameen's borrowers hard. The bank let
borrowers skip several payments. Grameen borrowed $80 million from
Bangladesh's government banks, with a sovereign guarantee, and used the
money to make new loans to borrowers. Informally, it forgave the old loans.
A 'Flexible Loan'
Grameen also bailed out borrowers whose problems had nothing to do with
the flood. Ms. Begum, for instance, stopped paying when she had to
provide dowries for two daughters. She skipped group meetings, but
Grameen workers came to her door asking for her 200-taka weekly payment,
she says. "Let us make some income and we'll pay you," she told them.
Earlier this year, Grameen came up with a proposal: pay just 50 taka a
week for six months, and then take a new Grameen loan for twice the
amount she repaid. Ms. Begum accepted. Grameen calls the program a
"flexible loan," and treats the old, delinquent loans as back on
schedule, as long as some regular payment is being made.
At a Grameen branch near Khatuajugnie, manager Mohammed Imam Modem shows
his computer-printed ledger, full of cross marks to indicate missed
payments. The rescheduling program and Grameen's personal visits to
husbands as well as wives are improving the picture: The branch had
1,510 defaulters before; now it has 846. Attendance at weekly meetings
is up to 66%, from 47% before.
"Grameen Bank's philosophy is not to abandon but to rehabilitate," says
Muzzamal Huq, a Grameen general manager.
But Grameen may simply be delaying inevitable defaults and hiding
problem loans. One paper produced by the Consultative Group to Assist
the Poorest, or CGAP, a donor group that sets industry standards, warns
that heavy use of refinancing "can cloud the ability to judge its
loan-loss rate." CGAP is a collective of 27 public and private donors,
including the World Bank, the U.S. Agency for International Development
and several U.N. agencies, that account for the vast majority of aid to
microcredit institutions around the world.
CGAP says refinanced loans should at least be listed separately. Grameen
doesn't do so. It says refinanced loans are one-fifth of its portfolio.
CGAP recommends that microlenders report as at risk the entire remaining
balance of any loan with a payment more than 90 days overdue. The Palli
Karma-Sahayak Foundation (PKSF), which Mr. Yunus helped set up in 1991
to distribute foreign funds to other Bangladesh microlenders, requires
its microlenders to report as overdue any loan that is one week late.
The average overdue rate among the foundation's lenders is 2%. It's
impossible to know Grameen's overdue rate by that standard, since it
reports only loans that are one year and two years overdue.
PKSF also says it requires borrowers to make a 50% provision against
potential loan losses for any loan overdue by a year. Grameen made a 15%
provision for such loans in 1999, and none last year. Following PKSF
guidelines would have produced a loss of more than $7.5 million for 2000
instead of Grameen's reported profit of less than $200,000.
In early 1998, Grameen approached the International Finance Corp., the
business-finance arm of the World Bank, about turning some of Grameen's
portfolio into securities. The IFC declined to proceed, in part because
Grameen "didn't provide all the account information the IFC requested,"
an IFC official said. The official requested anonymity because the IFC
is reticent about discussing its negotiations with clients.
Mr. Yunus denied the IFC official's claims. He said Grameen is
"generously covered" against loan defaults.
Other microlenders have become much more stringent. Accion
International, a U.S.-based network of microfinance institutions,
requires its affiliates in Africa and Latin America to list as "at risk"
any loan overdue by 30 days or more. Asked about Grameen's two-years
standard, Accion Chief Executive Maria Otero says, "I don't think any
[bank] superintendency in a million years would agree to something like
that."
Grameen Bank isn't under any formal supervision. "They are regulated,
but they are regulated by themselves," says Akhtaruz Zaman, director of
the Financial Institution Department for the Bangladesh Bank, the
country's central bank. He means the board of directors, which is led by
borrowers. Mr. Zaman says Grameen's deposits are "well-protected " and
the bank is "doing fine."
Harder-headed microlenders are stealing the spotlight, though. One
rising star is the Association for Social Advancement (ASA), a
Bangladesh charity, which boasts 1.5 million borrowers and just 0.7% of
loans overdue, even by a week. Dispensing with borrower groups, ASA
leans on borrowers' husbands and relatives if payments are missed, says
the managing director, Shafiqual Haque Choudhury. To him, Grameen's
approach is an ingenious idea that didn't stand the test of time.
"If we manage our operation in the Grameen way," says Mr. Choudhury,
"we'll never be able to cover our costs."
Updated November 27, 2001
***
http://www.intercooperation.ch/finance/download/devfin/devfin-review-2001q4-annex.pdf.
Devfinance – Annexes to Quarterly Review October - December 2001
- 1 -
ANNEXES
To the Devfinance quarterly Rewiew
October - December 2001
Article on Grameen Bank in Wall Street Journal (15 mails)
From: J. D. Von Pischke [jdvp@erols.com]
Sent: Sa 01.12.2001 19:30
Subject: Grameen's Come-uppance
On a bittersweet day last week the financial world read on the front
page of The Wall Street
Journal that Grameen Bank had been at best lax, and more likely at
worst, deceptive in reporting
its financial performance.
How little reaction this has generated! Most of us in the trade probably
had long suspected that
something was fishy, wishing that we had a current analysis as thorough
as that provided by
Mahabub Hossain back in the 1980s and including factors that may not
have seemed to be very
important when Hossian was writing. But, we were well served by WSJ—a
serious, well-balanced
article on microfinance, the second in less than a year that has
appeared on its front page.
I gave up on trying to make sense of Grameen’s financials in the
mid-1990s when they were so
late in appearing, when consistency seemed hard to track from year to
year, and when they
continued to report so much “filler,” data that seemed of little import.
One year they produced a
report that did not include financial data, an operations report dressed
up as an annual report, with
a note that financial statements would be available later, on request.
By contrast, the Grameen Foundation USA has got it right in its annual
reports. Full financial
statements followed by a raft of notes. Presided over by an audit firm I
never heard of, but that is
OK—my company uses an auditor you never heard of either, located in
Chantilly VA (where’s
that?). Small clients might get the most inexperienced staff of one of
the Big 6 audit firms (or
however many are left) and pay dearly for it. The small audit firms are
less expensive and have
incentives to perform well. But, an audit by an unknown firm may lead a
lender to spend more time
on due diligence of a small business seeking a loan.
I recently trolled the web in search of financial data made available by
the large actors in
microfinance. The results were mixed. One large and famous one (not
Grameen) also gave me
old data that was virtually useless, but with lots of pictures of
photogenic poor women. (Gotta like
those gals.) I’d suggest that dfn readers do the same—pick one or two
and have a look.
IMI offers an interesting format that suits its owners (www.imi-ag.de).
Results on its website do not
include the value of TA in the investments it has made, as discussed at
the recent Frankfurt
Seminar. (See Chapter 3 in Kimenyi et al., STRATEGIC ISSUES IN
MICROFINANCE, for details
of the TA approach and cost.) What do others do?
Will the WSJ piece foreclose the possibility of a Nobel Prize? Can a
bunch of bean counters derail
a major brand? Or is something else at stake, i.e., the transparency
demanded by an increasingly
skeptical and information-conscious world that relentlessly seeks lower
transaction costs and
equity, comparing like to like? Is Grameen doing any better in reporting
the truth than the
nationalized banks in Bangladesh? (Probably Grameen is lightyears
ahead—but this is based on
my experiences of 10 years ago in Bangladesh.) Is Grameen’s pickle any
different from
development assistance at large: promoted too strongly and “results”
reported too generously? (A
good friend from the World Bank once suggested the process, at least as
it relates to financial
sector operations generally, has historically been one of reverse
alchemy—turning gold into lead.)
The good that should come out of the WSJ piece is first of all a better
understanding of a
diminished Grameen and second but more importantly, a race to the top as
the industry generally
provides more useful data. The MBB is in the lead on an industry-wide
basis. MicroRate seeks to
create a commercial market in data. What can individual providers do to
meet normal commercial
disclosure standards? Do donors have a role to play, requiring public
disclosure—websites are
most accessible—at the level of the individual mirofinance institution
on the ground, as part of
conditionality? Will microfinance advocates in Washington and around the
world use their political
clout to provide excuses for Grameen or to push for more detailed
industry-wide disclosure?
J.D. Von Pischke
2529 Trophy Lane
Reston VA 20191-2126
Page 5
Devfinance – Annexes to Quarterly Review October - December 2001
- 5 -
U S A
fax 703 758 1388
From: CROULET, C. ROSS [R.CROULET@AFDB.ORG]
Sent: Mo 03.12.2001 08:58
Subject: Grameen's Come-uppance
A thoughtful and interesting analysis of the Wall Street Journal article
on Grameen by one of the
old sages of microfinance, J.D. Von Pischke. I myself have been
suspicious for a long time about
the true situation of Grameen so often disguised by Dr. Yunus’s global
steller status what being
considered for a Nobel Prize, initmate with the Clintons and frequently
invited to the White House,
etc.
The lessons, of course like for any financial institution of
intermediation (an investment bank, Bank
of America, Goldman Sachs, PADME in Benin, Socremo in Mozambique,
Ecobank, etc. etc.) is
complete transparency in financial reporting and disclosure. These of
course are underpinned by
sound financial management, operations and administration. More
importantly, people within
financial institutions dedicated to and owners of the fiduciary duty
they hold being in possession
and custodians of other people’s money.
C. Ross Croulet
Coordinator, AMINA
African Development Bank
01 B. P. 1387
Abidjan, Côte d’Ivoire (Ivory Coast)
West Africa
Telephone: (225)20-20-57-43
Fax: (225)20-20-59-72
Internet web site: http://www.afdb.org/about_adb/AMINA.htm
Email: r.croulet@afdb.org
From: Robin Ratcliffe [rratcliffe@accion.org]
Sent: Fr 07.12.2001 18:12
Subject: ACCION Responds to WSJ article re Grameen
Richard...thank you for your comment and certainly we at ACCION are well
aware that most MFIs
are tiny, donor dependent and fairly unsophisticated in terms of
financial reporting. The letter
actually says: Grameen’s borrowers represent a small percentage of the
estimated 25 million poor
“microentrepreneurs” being served by large, specialized microfinance
institutions (MFIs)
throughout the world. The vast majority of these MFIs are rigorous,
transparent etc. etc.
What we meant to point out and perhaps did not do so effectively is that
the vast majority of the
recipients of credit are being served by large MFIs which operate in a
rigorous way. We were
thinking of ASA, BRAC, Bank Rakyat Unit Desa, Compartamos, Mibanco, a
number of Bolivian
institutions, K-Rep Kenya and the like.
Hope this helps. Kind regards, Robin Ratcliffe
-----Original Message-----
From: Richard Meyer [mailto:meyer.19@osu.edu]
Sent: Wednesday, December 05, 2001 3:15 PM
To: devfinance@lists.acs.ohio-state.edu
Subject: Re: ACCION Responds to WSJ article re Grameen
Robin: Thank you for posting this letter and my appreciation to Maria
for sending an important
clarifying letter to the WSJ. Perhaps one sentence in the letter
deserves comment.
It reads “The vast majority of these MFIs are rigorous, transparent and
financially self-sustaining.”
Page 6
Devfinance – Annexes to Quarterly Review October - December 2001
- 6 -
I think all of us who are close to the industry wish that was the case,
but the general perception is
that worldwide the majority of the total number of MFIs in operation are
weak, not very transparent
because they have not reached that stage in the sophistication of their
accounting procedures, and
in fact are subsidized in the sense of not covering their full costs
through earned revenue and/or
they have access to resources at less than market rates. The numbers are
imprecise but we
generally understand that there are thousands of MFIs operating
worldwide but there are only a
couple of hundred that have sufficiently good records to submit them to
the MicroBanking Bulletin
and/or to be rated by one of the rating agencies. As I understand it,
most if not all ACCION
affiliates fall into this strong category. One of the shared objectives
of the industry is to improve
the weaker ones as quickly as possible.
Dick
At 05:16 PM 12/3/2001 -0500, you wrote:
Dear Colleagues:
Our ongoing discussions “in the family” of such topics as reporting
standards, institutional
transparency and regulation and supervision of microfinance institutions
have been catapulted to
the “outside world” with the publication of the WSJ article last week.
Since ACCION’s María Otero
was quoted in the article, we sent an immediate Letter to the Editor
which I have included below for
your information. As yet, it has not been
published. <<WSJ Letter to Editor 11-27-01.doc>>
Robin Ratcliffe
Vice President, Communications
ACCION International
56 Roland Street, Suite 300
Boston, MA 02129 USA
tel: 617-625-7080x1235
fax: 617-625-7020
email: rratcliffe@accion.org
www.accion.org
From: Dave Richardson [dcr@bwn.net]
Sent: Di 11.12.2001 04:55
Subject: Grameen's Come-uppance
Wow J.D.....
I’m late in responding, but your bucket of cold water was very
provoking!! It might cause some
sizzle within the Grameen labyrinth, but then again, maybe not. When you
are the bell cow, you
don’t need to pay attention to the barking dogs ....
Aside from the sin of omission, Grameen has committed another grievious
infraction: Dancing with
the Devil while trying to enter into Heaven!
“Elastic” loan recoveries may work in some cases, but under no condition
should they be
accompanied by “elastic” loan loss provisions. A prudent financial
institution may take a soft
approach with it’s delinquent borrowers, but should internally take a
“hard line” approach in the
creation of loan loss provisions. It also has a responsibility to the
savers who are financing such
loans. This means that even though a borrower is given two years to pay,
the bank should
adequately provision (read 100% provision) such loans to protect their
innocent savers.
The only way that justice and mercy can both be satisfied is if someone
pays the fiddler. In the
case of Grameen, it appears that they want to be merciful, but are
unwilling to underwrite the risk
within a prudent time frame. In case the message is not clear, let me
repeat myself: The gateway
to Brother Yunus’s proverty-free heaven can only be accompanied by
someone who pays the entry
fee!
Cooperative Greetings,
Page 7
Devfinance – Annexes to Quarterly Review October - December 2001
- 7 -
Dave Richardson
World Council of Credit Unions
dcr@bwn.net
From: dfitchett [dfitchett@email.msn.com]
Sent: Fr 14.12.2001 02:59
Subject: Grameen Bashing
Chuck,
The discussion continues to very interesting, if at times a bit intemperate.
But one should ask who are Grameen’s real friends? Are the real friends
those who wish that
Grameen would adhere to standard financial reporting practices in order
to assure sustainability
and solid growth of the program, or are the real friends those who are
not concerned that
“Grameen’s accounting practices are quite creative”, as Eugene phrases
it? (Just as Enron, or
Xerox, or Cendant, etc., resorted to “creative” or “innovative”
financial accounting and reporting
practices and “proformas”.)
For example, what does Grameen lose by adhering to the standard accepted
definition of Portfolio
at Risk (PAR)? Kudo’s to CGAP for trying to introduce some generally
accepted definitions and
financial reporting standards for the MFI industry.
Just think what a great contribution Grameen would make to the future of
the MFI movement
around the world if it would put its enormous prestige and outreach to
support that CGAP effort!
Del Fitchett
From: J. D. Von Pischke [jdvp@erols.com]
Sent: So 16.12.2001 04:24
Subject: Grameen's Unfortunate Fumble
Grameen Bank’s letter to the editor of the Wall Street Journal’s
editorial page appeared in the
December 12 edition. Unfortunately, it compounded any difficulties that
the WSJ’s front page
article of November 27 may have caused Grameen. In his letter Prof Yunus
chided the WSJ for
seeing problems where he sees progress, i.e., dealing with an arrears
situation by running them
down by colleting them rather than writing them off against reserves
that he claims more than
adequately cover the bank’s risks. He also says that by the end of 2002
the repayment rate will
reach 98%, and invites the WSJ back to provide a “fair hearing.”
All well and good. But, how are arrears calculated? Still one or two
years after the due date of the
final installment? Why not five, if the poor in fact repay and you have
abundance liquidity and
capital? How is “clockwork precision” in repayment measured—for those
85% of borrowers
claimed to behave in this manner? One day late, 7, 30, 90 or 180 days
are industry conventions.
Are new loans used to erase arrears on old ones? Without attention to
detail in describing the
arrears situation, providing disclosure of standards or criteria used to
classify loans, the reader is
no better off than she was on 27 November.
The letter fails to deal comprehensively with the specific concerns the
WSJ raised. This may be a
cultural issue, as in NGOs in poor countries vs bank regulators in rich
ones, and it just might also
reflect sensitivities about disclosure in Bangladesh, a pretty
contentious place, where big numbers
may attract predators. If so, this is something we should know about and
probe, as it could have
some bearing on the industry generally. And, if Grameen no longer
accepts subsidies of any type
as a matter of policy and if it faces a local threat, it of course has
the right to remain silent. What
does it advise that its replicaters do?
Otherwise, the response represents an incredible lost opportunity,
playing the wrong card at the
wrong table. Grameen Bank and its friends in Washington must surely be
aware of the readership
of the WSJ and have some appreciation of their expectations and
standards. How many of its
readers subscribe generously to charitable causes, or would consider
investing part of their
fortunes in microfinance if the industry can come up with an attractive
vehicle? In fact, there is no
Page 8
Devfinance – Annexes to Quarterly Review October - December 2001
- 8 -
richer vein in the large scale media than the WSJ for this sort of
audience. A clear and detailed
explanation by Grameen, in response to the original article, might have
pried some funds loose for
the cause or, more importantly, brought microfinance closer to the
mainstream in many readers’
minds.
Simply to provide assurances and to tout helping the poor does not carry
the day for WSJ’s
audience. Even less the stance that “We consider credit as a human
right,” which would be
offensive, pathetic or even laughable to many American readers of the
WSJ and possibly
questionable to others in countries where rights are to a high degree
enforceable. (I’d be happy to
elaborate on this for those not familiar with the view of human rights
incorporated in the US
Declaration of Independence and Constitution.)
Has Grameen’s website been dusted off since the original article? What
does the balance sheet
and income statement look like for 2000 and for the first six months of
2001?
How regrettable that the public relations situation was allowed to get
worse when it could have got
better. Rather than stonewalling, a better result could have been
achieved by the provision of
more detail about Grameen’s financial performance. How sad if Grameen’s
Washington
supporters did not sufficiently coach Prof Yunus on the sort of response
that would resonate and
be culturally congenial to WSJ readers and within the world of finance
generally, or if they did, that
they did not prevail. All the worse because the WSJ is almost alone
among the global media,
presenting more good news than bad news.
J.D. Von Pischke
From: Dale W. Adams [dwadams@burgoyne.com]
Sent: Mo 17.12.2001 17:52
Subject: Caesar's Wife
I second J.D.’s lucid comments about M. Yunus’s letter to the editor of
the <<Wall Street Journal>>
on December 12
th
. His letter is evasive and unresponsive to the concerns raised in the
earlier
November 27
th
Journal article on the Grameen Bank.
No one is criticizing GB for rescheduling loans when borrowers suffer
natural disasters. Likewise,
no one is criticizing the bank’s efforts to provide financial services
to people of modest means. It is
not bashing a bank when one asks serious questions about the loan
recovery measures it uses or
to question its loan provisioning policies. If that is bashing, then
every single bank in the U.S. is
regularly “bashed” by bank examiners to the benefit of all depositors.
If GB wishes to act like a
bank it ought to use understandable loan recovery measures and not
continue to pull the mythical
loan recovery number of 97% out of thin air.
Yunus fails to define how the GB measures a loan that is overdue in his
letter. As J.D. asks, is its
loan recovery performance “improving” simply because bad loans are being
refinanced or the loan
recovery measure is being flexed?
In the days when agricultural development banks were doing most of the
altruistic lending, it was
common for them to be casual about publishing audited annual statements,
use creative measures
of loan recovery performance, and set aside too little to cover real
loan losses. To obscure the
sorry state of their loan recovery the worst of these banks would often
publish figures on the total
amount they had ever lent, and the total amount they had ever recovered
and hope the reader
would conclude their current loan recovery performance was much better
than it actually was.
Yunus does the same thing in his letter by saying the total amount that
GB has ever lent is $3.5
billion and the total amount they have ever recovered is $3.2 billion.
From these number I suppose
he hopes readers will conclude that his loan recovery performance is
still over 90% and
supposedly improving. Instead, the skimpy information he provides
suggests that up to one-
quarter of GB’s current loan portfolio may be in arrears and who knows
about the collectability of
the loans that are yet to come due? Like a cancer, loan recovery
problems tend to cascade and
spread.
Page 9
Devfinance – Annexes to Quarterly Review October - December 2001
- 9 -
Again, I’d be less concerned about GB’s casual financial reporting and
cavalier response to
criticism if the deposits and savings of millions of poor people were
not at risk. Yunus preachs
about debt being a human entitlement; I’d feel more comfortable if he
concerned himself more
about the rights and assets of his poor shareholders and depositors.
If this is a sign of things to come, god help the poor if the microdebt
industry ever gets heavily
involved in mobilizing deposits!
If one sets themselves up as the pope or prophet of the microdebt
industry, then one must lead a
life beyond reproach as was expected of Caesar’s
wife..............................jane.
From: Navraj Simkhada [navrajs@cmf.org.np]
Sent: Di 18.12.2001 07:08
Subject: [cmf-list] The Wall Street Journal Article on Grameen Bank {01}
Dear all members of the CMF list serve:
Greetings from Nepal. This is to forward the following e-mail sent by Mr
Sam Daley- Harris,
Director, Micro-Credit Summit Campaign regarding the wall street journal
article about Grameen
Bank. Sam’s response together with response by others and Professor
Yunus to the article follows.
I also want to put in my response as follows:
I agree to every word written by Sam in his response (please read it
below). I also want to add my
personal feeling that providing financial services to the poor is not a
joke and an excluded aspect
by the commercial sector. Now, when the campaign to eradicate this
exclusion and provide
financial service to as many poor people all over the world as possible
in order to improve their
livelihood is finally gearing speed I must say that articles as the one
published by the wall street
journal will hamper the movement of the Micro-Credit /Finance sector.
This undoubtedly will
hamper the interest of the millions of poor people all over the world
who are still deviod of such
services. As we are witnessing all over the world that day by day due to
war or other calamities the
number of poor are increasing. Now we do not want “distructive
criticism” to push the Micro-Credit
movement behind. If organisations and individuals are concerned let
people come up with
constructive criticism which will help improve the methodology of
financial services to reach as
many poor people all over the world as possible. As Sam rightly says
Grameen like any other
progam may have its problems but they are working at solving it and will
do so ultimately. But
more important than that is the fact that the THE GRAMEEN MOVEMENT HAS
DEFINITELY
BEEN SUCCESSFUL IN BRINGING THE ISSUES OF PROVIDING FINANCIAL SERVICES TO
THE POOR TO THE FOREFRONT. Therefore the organisations and people behind
this movement
will, I am sure, join hands to combat the difficulties in the movement
but at the same time not let
any adverse propaganda disrupt the good work commenced.
I just want to point out the fact here that in Nepal alone following is
the approximate figure of poor
household being serviced by finacial products offered through grameen
replication:
1. About 1,30,000 Household by a combination of 5 Government subsidised
Grameen Banks
2. About 100,000 Households by private sector Grameen replicators
including NIRDHAN, CSD,
DEPROSC, NSSC, and others I would also like to point out here that most
of the organisations
mentioned under point 2 have their business plan showing when and how
they will reach financial
sustainability and they are moving towards it. Please note that the
approximate 230,000
households quoted here are some of the poorest households in the world.
Therefore if anyone is
concerned it may serve better to join hands with us in the summit
campaign to improve the living
conditions of all these poor people rather than disrupting commendable
work which have already
been commenced. With best wishes for the season and committmet to
strengthening the Micro-
Finance movement
Namrata Sharma
Managing Director
Centre For Micro-Finance, (CMF) Nepal
From: Sam Daley-Harris, Director
Date: December 14, 2001
Page 10
Devfinance – Annexes to Quarterly Review October - December 2001
- 10 -
Re: The Wall Street Journal article on Grameen Bank
Many of you know that on November 27, 2001, the Wall Street Journal
published a negative article
on Grameen Bank and its founder and managing director, Muhammad Yunus. I
am taking this
opportunity to circulate links to the article, links to Muhammad Yunus’
response which was
published in the Journal on December 12, and, since the Journal has not
yet published any of the
many letters written in response, I am also sending a few of the letter
prepared by members of the
campaign. Many of these links will take you to CGAP’s website which
includes additional
responses.
What follows are:
1. The Wall Street Journal article. http://public.wsj.com/home.html
2. The response from Muhammad Yunus
http://www.grameen.com/wallstreetjournal
3. A response from Grameen Foundation USA President Alex Counts:
http://nt1.ids.ac.uk/cgap/html/gramhl5.htm
4. A response from ACCION President Maria Otero
http://nt1.ids.ac.uk/cgap/html/gramhl1.htm
5. A response from World Council of Credit Unions President Arthur
Arnold
http://nt1.ids.ac.uk/cgap/html/gramhl8.htm
6. My own response to the Journal is here:
November 29, 2001
Letters to the Editor The Wall Street Journal 4300 Route 1 North South,
Brunswick, NJ 08852
To the editor,
With the U.S. engaged in a war in Afghanistan and President Bush
assuring the world that our fight
is not with Islam but with terrorists, I find myself wracking my brain
to understand why the Wall
Street Journal finds it front page news that the Grameen Bank is having
repayment problems in
some of its branches (November 27 story, “Bank that Pioneered Loans to
the Poor Hits Repayment
Snag”).
Reporters Pearl and Phillips note that “...10% of all the bank’s loans
are overdue, giving it a
delinquency rate more than twice the often-cited level of less than 5%.”
Yes, Grameen has a
repayment problem. Your reporters say that Grameen Bank founder and
Managing Director
Muhammad Yunus, “acknowledges that Grameen has had repayment
difficulties in the past five
years” and that the bank is working with staff and clients to correct
the problem.
But with Grameen providing small loans and other financial services to
2.4 million poor or formerly
poor Bangladeshis, 95% of them women..., I believe you are missing the
real story.
I know the piece was started before September 11 (I was interviewed by
one of the reporters
several times in August). But the world has changed since then and your
reporting must do a better
job of reflecting that change. Here are some other challenges you might
also have focused on that
Grameen and Professor Yunus have tackled. Their success in meeting these
challenges is a
beacon of hope in a world that so needs it.
1. Dr. Yunus has struggled with fundamentalist clerics, starting in the
late 1970s, in his effort to
reach women clients who now number more than 2.2 million. This is a
problem that, if not solved,
would have hampered other institutions in Bangladesh who, along with
Grameen, are now
reaching more than 7 million women according to the State of the
Microcredit Summit Campaign
Report 2001...
Page 11
Devfinance – Annexes to Quarterly Review October - December 2001
- 11 -
2. In the late 1970s and early 1980s Prof. Yunus struggled to convince
Bangladeshi banks and the
government that poor people were creditworthy without collateral. He
succeeded and, as your
article states, now there is great competition in Bangladesh—but
Bangladesh is one of the few
countries where that is the case. This has to change. If the world is to
reach the UN Millennium
Summit’s goal of cutting absolute poverty in half by 2015, an even more
important goal since 9/11,
then we will need more commitment to high quality microcredit delivery
around the world because
of its significant contribution to relieving poverty. A World Bank study
from 1997 found that every
year Grameen Bank helps 120,000 families (some 600,000 family members)
move out of poverty.
The Microcredit Summit’s goal of reaching 100 million poorest families
by 2005 would be a good
place for the Journal to start its new vein of reporting.
3. Grameen argued long and hard during the 1980s to get the government’s
permission to offer
$300-600 housing loans. Can you imagine what a villager’s one-room house
must have been like if
a new one, built with a $600 loan, is a major improvement? For one
thing, a new roof, now made of
tin, means that it won’t rain inside anymore. Grameen has given more
than 500,000 housing loans.
Grameen Bank works in a society where many of the well-off don’t repay
their loans, where
government loans might be forgiven before an election, where corruption
is too often the rule rather
than the exception, where husbands can’t understand why loans are given
to their wives, where
most of its clients are illiterate, where bank branches are likely to
have no electricity, and where
women had previously never touched money and still never go into the
marketplace.
Yes, Grameen has a repayment problem and they have been working
successfully to solve that
problem and many, many others. I am not asking for the use of kid gloves
or for special treatment,
just for balanced reporting.
Sincerely,
Sam Daley-Harris, Director Microcredit Summit Campaign
This is a response to my letter from Jeff Ashe:
Sam,
I thought your comments were well taken. Let’s put these repayment
problems (which are by no
means institution threatening) into the context of what Grameen has
accomplished.
There are many who are licking their chops about the troubles of one of
the leaders in the field.
Every initiative has its strong points and its difficulties and running
a bank with more than
2,000,000 poor women clients must rank among one world’s more difficult
undertakings.
Jeff Ashe, Visiting Scholar Institute for Sustainable Development Heller
School Brandeis
University
From: BRCS [brcs@iafrica.com]
Sent: Mi 19.12.2001 07:38
Subject: Grameen Bashing
Hello
This is a topic near and dear to my heart (see
http://www.talk.to/BRCS/mfpasa.pdf
for details). The
Grameen problem is indeed ‘cultural’, but the clash is between people
who see microfinance in
different ways, not Yankee suit bankers and Bangladeshi professors.
On one hand you have those who believe passionately that to be
sustainable, microfinance has to
be abstracted from the social conditions in which it is employed and
treated as a scarce resource
subject to maximum conservation. Social externalities from microfinance
practise are valued, but
not in the technical sense that money is valued. ‘Performance’ is
therefore seen in terms of
equilibrium amongst the financial variables involved, including
opportunity costs, albeit in the
context of trying to achieve the specific goal of alleviating financial
poverty as opposed to making
profits.
Page 12
Devfinance – Annexes to Quarterly Review October - December 2001
- 12 -
On the other hand there are those who believe equally passionately that
the social externalities
Eugene
Versluysen cites should be valued not just as morally ‘good’, but as
legitimate outputs of a
development effort that uses money to mobilise poor people and to change
their survival
strategies. These changes are not just about savings and credit, but
also about shifting attitudes
and social and political relationships that contribute to poverty. As
such they have both proximate
and mediate economic value. ‘Performance’ is therefore seen more broadly
than financial
equilibrium since the concept of opportunity costs also includes forgone
opportunities to shift social
conditions.
Problem No. 1 is that the ‘money people’ and the ‘social change people’
speak the same language
- sort of - but operate from such different underlying assumptions that
common words have
different conceptual meanings for them. ‘Money people’ (who are
invariably those hired to do
evaluations) want to evaluate all programmes on the basis of what they
themselves know and
value, whilst the programme practitioners might have very different
values. Donors are caught in
the middle, since they often have no expertise in either approach and
become alarmed when
‘money’ and the ‘social change’ people give different assessments of the
same thing, using the
same language, but with diametrically opposed conclusions. This leads to
confusion and distress
for all involved.
Problem No 2 is that the ‘social change people’ often neglect to develop
and use the skills needed
to talk to the ‘money people’. For example, many social change MF
practitioners cite positive
social externalities and social asset creation in their programmes, but
are either unable to value
these in a financial sense or unwilling to do so because they believe
(wrongly, IMHO) that “you
can’t win if you enter the terrain of technical microfinance debate, so
rather don’t go there at all”.
So they leave the terrain altogether, leading to a bifurcation in the
donor community between those
who deal with ‘sustainable’ MF programmes (usually bilaterals) and those
who deal with the others
(usually church-based).
It should be possible to develop a framework that (a) allows both
parties to communicate
effectively without leaving so much implicit, and (b) specifies under
what conditions the ‘money’
and ‘social change’ approaches can and should be employed.
Otherwise we remain stuck with apples and oranges.
Ted Baumann
Bay Research and Consultancy Services
Specialist Support to Community Development and Microfinance Organisations
Cape Town, South Africa
Tel: +27-21-788-2311 - Fax: +27-21-788-6380 - Cell: +27-82-602-4330
brcs@iafrica.com
-
http://www.talk.to/brcs
The views expressed in this email are those of the author and should not
be attributed to BRCS
clients unless otherwise stated.
----- Original Message -----
From: Linda MAYOUX
To:
devfinance@lists.acs.ohio-state.edu
Sent: Thursday, December 13, 2001 1:19 PM
Subject:
Re: Grameen Bashing
I was also rather dismayed at the way the debate went. Mohammed Yunus,
together with others
like Ela Bhatt of SEWA should indeed be applauded for their life’s work
of bringing the issues of
poverty and the injustices faced by poor women onto the agenda of donor
agencies like USAID
and World Bank.
From: Eugene Versluysen]
Sent: Tuesday, December 11, 2001 7:05 PM
Subject: Grameen Bashing
Page 13
Devfinance – Annexes to Quarterly Review October - December 2001
- 13 -
Greetings All.
Bashing Grameen seems to be a popular pass-time for MFI experts.
It is true that Grameen's accounting practices are quite creative, and
that Muhammad Yunus
comes a close second to Madonna as a celebrity. But let's not blame
Yunus for being a frequent
guest at Clinton's White House or for
corralling kings and queens to the cause of microfinance. His aim, I
believe, is to make
microfinance more widely acceptable and to attract more donor support.
As for his being a
potential Nobel Peace Prize nominee, I wouldn't mind.
Or do people think that the likes of Arafat (1994), Kissinger (73),
Anwar Al-Sadat (1978), F.W. De
Klerk (85), and Shimon Perez (94) were worthy winners? If so, Yunus had
better stay at home; no
fancy trip to Oslo for him.
Let's also remember what Grameen has achieved. Anyone who has spent time
at a Grameen
Bank branch in a small village in Bangladesh soon realizes that Grameen
has done a great deal to
emancipate rural women in a strict Muslim society, and change archaic
and repressive social
practices, such as dowry. Not only that. Grameen turns social norms
upside down when male staff
serve lunch to women clients, and when Grameen convenes meetings of its
clients' spouses and
brothers to make them realize that women too have a place in society and
can be breadwinners.
I've been there, seen it, and it's really impressive. Knocked my socks
right off.
Evidence in Bangladesh and other poor countries shows that domestic
violence is far less frequent
in households where women are breadwinners, and that giving women a more
equal role in the
family increases school enrollment of girls. It used to be a saying in
Bangladesh that sending one's
daughter to school was like watering one's neighbor's garden. No longer.
Perhaps purists who look
solely at balance sheets and take audit reports as the next best thing
to holy water (anyone
remember Enron?) don't give a toss about women's fate. I do. Does anyone
remember the head
of the SEC in the early 1980s who was a wife beater? Broke his wife's
ribs in a bout of rage
andwas promptly sacked. He could have benefited from attending a Grameen
workshop for
spouse.
Not only that. By financing and building monsoon-proof houses for its
better clients Grameen has
helped to dramatically reduce monsoon-related deaths. I find that quite
impressive. Let's add to
that Grameen's numerous and successful replicators.
Enough about that. Let's look at what went wrong at Grameen, and why,
and look at other MFIS
too.
One of the reasons Grameen's payment record tumbled is the tremendous
losses clients suffered
in the 1998 tyuphoon. Of course, it is perfectly acceptable to
reschedule a developing country's
loans after corrupt officials have squandered gazillion dollars on dumb
projects, but it apparently
stinks if Grameen extends a loan maturity and calls it a flexible loan.
Now, how do others fare when their clients experience calamities on the
scale of Bangladesh's
devastating 1998 typhoon? The AIDS pandemic in eastern and southern
Africa, and its impact on
MFIs is a good example. In November 1999 I spent about four weeks in
that region and met scores
of MFIs whose clients and staff were dying in droves from AIDS. One of
these MFIs, FINCA
Uganda, which had 10,000 active clients at the time, still boasted 99.9%
repayment rate. Now I
found that stretching the facts, given the high
incidence if HIV/AIDS among its staff and clients. In Zimbabwe, ZAMBUKO
Trust had an average
default rate of 20% due to AIDS mortality, and K-REP's loan defaults
were of the same magnitude.
I also doubt that BRI's Unit Desa have sailed unscathed through
Indonesia's financial crisis, and
the last I heard about BancoSol, angry clients had stromed a number of
brach offices demanding
loans.
Now a final note on the source/cause of this recent fuss and splurge of
Grameen bashing; the Wall
Street Journal! It's a right-wing Republican paper whose editorial lines
would have made Genghis
Page 14
Devfinance – Annexes to Quarterly Review October - December 2001
- 14 -
Khan blush. Let's presume that it has a hidden agenda and that anyone,
Yunus included, who
frequented the Clinton White House must be bad. Let the WSJ wallow in
its prejudices and give
Muhammad Yunus a break.
Hapy holidays to everyone, Yunus bashers included.
Eugene Versluysen
Washington DC
From: On Behalf Of Linda MAYOUX]
Sent: Thursday, December 13, 2001 3:20 AM
Subject: Grameen Bashing
I was also rather dismayed at the way the debate went. Mohammed Yunus,
together with others
like Ela Bhatt of SEWA should indeed be applauded for their life's work
of bringing the issues of
poverty and the injustices faced by poor women onto the agenda of donor
agencies like USAID
and World Bank.
Addressing issues of poverty and women's empowerment is an enormous and
ongoing task and it
is therefore to be expected that there will be shortcomings. What is
needed is not Grameen
bashing and the sort of point-scoring I saw from Accion and others but a
really serious debate
about how the shortcomings can be overcome. I was also surprised that
anyone serious about
poverty alleviation should suggest that Grameen should not have
rescheduled its loans after the
cyclone. In UK and US bank borrowers would expect no less support in
times of crisis. It is some of
the assumptions underlying the WSJ article which should have been
bashed, not Grameen.
Although balance sheets are obviously important, where these become the
main preoccupation it
is inevitable that programmes will attempt to massage the figures. Any
honest programme which is
really trying to address issues of poverty and women's empowerment is
bound to have higher
costs and will need greater flexibility than those who are only
concerned with pushing out money to
the better-off and recouping it.
I think we need to get beyond both Grameen adulation and Grameen bashing
to a real informed
debate about the problems and what to do about them.
Linda
From: Didier Thys [dthys@freefromhunger.org]
Sent:
Monday, December 17, 2001 8:00 PM
Subject:
Grameen Bashing
Linda,
Nice call to action. I think we have all had our opportunity to send in
our "tsk, tsk, Grameen but
that's not us" or "don't pick on Grameen because they mean well"
letters. Since we are all
obviously motivated by our desire to eradicate the absolute, life
threatening deprivation that affects
so many of the world's poor, how might we use this opportunity to
improve our own performance?
Two issues come to mind with regard to the transparency of our actions.....
1. Some organizations have begun to float the idea for developing a code
of conduct for
microenterprise institutions. This would be in the vein of developing a
self-regulating mechanism
which we could all adhere to as practitioners. I have no clue as to what
should go into such a
code, but a lot of people on this listserve obviously do. Let's hear
some suggestions. We've heard
a lot about common accounting standards and practices which is useful
and thanks to CGAP is
getting some good promotion and backstopping. The challenge here is to
think about this and
more. What standards would we be willing to commit ourselves to?
Page 15
Devfinance – Annexes to Quarterly Review October - December 2001
- 15 -
2. I like financial transparency, but we all have a long way to go. That
is why a lot of the money
designated for microfinance has gone to "capacity building" through
training and technical
assistance and most of that money has gone to "support organizations"
from North American and
European countries. Our message to our partners in developing countries
has been improve your
services, improve your governance, improve the transparency of your
operations and finances.
We even rate them now on their balance sheets and income statements and
determine how
subsidy dependent and cost-effective (great new book by Yaron and
Schreiner for doing this -
check it out on the CGAP website!) they are. However, I have been trying
for two years now to find
out the value of technical assistance and training that organizations
receive and I keep
encountering the same problem. They cannot give it to me, because that
information is in the
hands of their northern partners and is not generally shared with them.
Moreover, northern
partners rarely look at the cost structure of their technical assistance
and training since it is almost
entirely subsidized through public and private grants or
government/multilateral contracts. We
spend a lot of time ascribing a value to a grant provided to an MFI, but
we spend no time
determining the value of our technical assistance and incorporating it
into the subsidy dependence
index for that same MFI. Given the call to transparency, do I hear a new
openness to sharing our
own cost data with regard to technical assistance for MFIs? I think it
would be great. I am seriously
interested in hearing if there are any institutions out there who would
like to work on developing a
subsidy dependence index that incorporates the full value of externally
subsidized technical
assistance.
Didier
From: Linda MAYOUX
Sent: Thursday, December 20, 2001 3:10 AM
Subject: Codes of conduct
Dear Didier,
Thanks for this.
This idea of codes of conduct is really important. I think though it
should go beyond just accounting
procedures to areas like:
• social responsibility : In the States I believe banks have social
responsibility requirements to
invest part of their profits in community development - or am I
misinformed in this? In UK the banks
are bending over backwards to get social responsibility credentials -
however small the actual
measures taken are in practice. Few MFIs make profits, but there are
many ways in which loans,
savings, insurance and pensions could be designed to take social
responsibility considerations into
account. This could include things like commitment to act in the best
interest of the client eg not
pushing inappropriate loan products, not tying clients into unprofitable
savings and insurance and a
concern with loans which would assist local community development eg to
enable local trained
health care workers to purchase the necessary equipment, for girl’s
secondary education, for
purchase of land and house sites in women’s names.
• gender equity : equal opportunities policies for staff,
non-discrimination against clients (either
women or men unless this is justified by their mandate as a ‘women’s or
men’s programme). In
Canada I believe banks are required to conform to these principles and
women who feel they are
discriminated against in loan applications can take the banks to court -
or again am I misinformed?
• environmental responsibility : to consider the environmental impact of
the use of loans eg when
used for widespread purchase of pesticides, for expansion of polluting
industries
Obviously these would raise many contentious issues, and actual concrete
measures may be
difficult to arrive at (as with the financial measures) but the
discussions would lead to a real debate
about how the potential development contribution of micro-finance can be
increased - as most are
and are likely to continue to be recipients of development funds.
An integral part of this should also be discussion of setting up systems
for proper impact
monitoring and assessment - more along the lines of the SEEP approach
than that of AIMS but
Page 16
Devfinance – Annexes to Quarterly Review October - December 2001
- 16 -
also building on other participatory and sustainable innovations. Some
of these are discussed in
my paper on the DFID-EDIAIS website:
www.enterprise-impact.org.uk
which is an ongoing draft which will be periodically updated and
comments/contributions gratefully
received.
I also think the point about donor financial transparency is also
important. The large amounts of
money spent on expensive international consultants who spend very short
periods in a country on
‘development tourism’ and often play havoc with programmes does I think
need to be justified.
Linda
From: Didier Thys [dthys@freefromhunger.org]
Sent: Sa 22.12.2001 00:19
Subject: Codes of conduct
Linda,
I like the direction you are taking this. Let us say that financial
transparency would be one of the
categories that would need to be included and that there is already a
wealth of work to draw from
for setting these standards. Despite how we may feel about Grameen, the
accounting and
reporting techniques it pioneered when there were no standards or tools
are not the ones that the
rest of the movement/industry will be or are carrying forward. The work
in this area has been
abundant over the last 5-10 years so there are plenty of good ideas and
tools to draw from.
Your comments point us to areas where there has been less investment and
effort and it would be
fun to stimulate the thinking on what they imply in terms of our own
codes of conduct.
1. Social Responsibility: This is near and dear to the hearts of
everyone in this business, but have
we truly expressed what the social responsibilities of microfinance
institutions are. A lot of the
issues you raise I would actually put into a separate category as they
are very important in their
own right. These are the questions of appropriate financial products,
terms and conditions. I
think the organizations—it would be nice if one of them spoke up! --
that have proposed a code
of conduct were thinking about these and have mentioned “consumer
protection” as a guiding
theme. We should probably make a commitment to consumer protection - ya
think? What
kinds of rules would microfinance institutions be willing to abide by in
this area? The other
aspect of social responsibility is along the lines of the examples you
mention that banks in the
US and Canada have to follow - committing a portion of their resources
to underprivileged
zones or client populations. This is a depth of outreach question. Is
there some statement
about an organization’s commitment to the poor that can be made and a
process for auditing or
rating that commitment that microfinance organizations could commit to?
2. Gender equity. No argument here, particularly in terms of policies
for governance and staff
structures. I am constantly struck by the fact that this industry
markets itself in terms of serving
women and that most of the organizations are run by guys!
3. Environmental responsibility. Here’s something we never talk about.
The USAID Bureau for
Africa has developed an interesting document called “Environmental
Guidelines for Activities
with Micro and Small Enterprises”. I wonder how many of us are aware of
it and would agree
with the standards they would like to see microfinance (and BDS)
institutions follow? Don’t
worry - there is still time to make comments.....you can find the
document at
www.encapafrica.org/smallscaleguidelines.htm
.
These are three (or four if you separate out consumer protection) that
maybe we can work on and
bring to the level of development of the financial standards and
guidelines. That would give us
five areas to look at for an institutional code of conduct. Would this
not serve to both validate the
need for financial transparency while appropriately contextualizing it
within a wider spectrum of
issues an organization must be vigilant about?
Didier
From: J. D. Von Pischke [jdvp@erols.com]
Sent: So 30.12.2001 21:17
Page 17
Devfinance – Annexes to Quarterly Review October - December 2001
- 17 -
Subject: Let's Embrace a Microfinance Curriculum
I am concerned about a couple of things from the recent exchanges
arising from the items in the
Wall Street Journal concerning Grameen Bank.
One is interpretation: My guess is that almost or even virtually
everyone on this list respects, if not
stands in awe, of what Grameen has accomplished. Some of us have put
this in writing in the
literature. Yet, any criticism whatsoever seems to be interpreted as
“bashing.”
Second is the false dichotomy: Invidious distinctions rank below
holistic reflections about what it
takes to run a bank or any other financial institution or service that
can help empower the poor on
a sustainable basis. (I believe that most of us are committed to
sustainability, however defined.)
These false dichotomies come in two types.
One is that since Grameen has done such a great job, it is not important
that it disclose data or
report accurately. Any disagreements or concerns about how financial
data are handled can be
dismissed as “bashing” or otherwise deemed irrelevant.
The second form is stereotyping us/them, good guys/bad gals, white
hats/black hats. If we’re
interested in balance sheets and related financial statements, then it
goes without saying that we
are indifferent toward the poor. But, if we really do care about the
poor, then financial statements
and by extension financial performance are by definition entirely
irrelevant to our quest or dream
to ease the burden of poverty. Mere impediments planted by bean counters
along the road that
need not concern the right thinking traveler.
Also, isn’t it interesting that “they” are tainted by ideology while
“we” have values. Yet it is all the
same at the end of the day. Who would not want to have both values and a
corresponding
ideology?
I believe that the place where good things are most likely to occur is
at the frontier or margin.
There are two broad positive possibilities when two or more forces,
factors, actors, schools,
institutions or whatever meet. One is that they discover synergy and
create mutual empowerment
through collaboration. The other is that they compete and in so doing
reduce costs to their clients
through innovation and efficiency. Aren’t these the whole story of
microfinance? Deep answers
unto deep, but from different backgrounds and directions. In the process
skills are broadened
because we want to know why the other side, or another side, is either
having so much fun or else
missing so much opportunity. Clients benefit.
If microfinance is where microenterprise meets “formal” finance at the
frontier, what identifies a
microfinance practitioner or professional? I propose that the following
“microfinance curriculum”
defines our club.
Anyone who has been involved for about five or more years (excluding
undergraduate work)
should:
A) be dedicated to helping the poor,
B) have dealt in some capacity with the poor face to face, preferably in
a language spoken by the
target group, at some stage in his or her career,
C) have a good feel for the financial flows of target group households,
D) be able to identify and quantify the risks the target group face in
their most common
occupations and from the most common external shocks, and evaluate their
most common
responses to these risks,
E) be fully conversant with at least one lending technology,
F) understand the changes in a lender’s financial structure and
performance over time by
comparing the lender’s balance sheet and income statement as of the end
of different
accounting periods,
G) have a grasp of the construction of financial ratios that are
commonly used to describe the
financial condition and performance of microlenders, and their
applicability,
H) be able to recite the target or threshold norms for such ratios for
at least the part of the industry
or crusade to which the practitioner belongs,
I) be actively curious about technical and institutional issues beyond
the daily concerns.
Possibilities include being able to discuss and compare i) innovations
that have occurred or are
Page 18
Devfinance – Annexes to Quarterly Review October - December 2001
- 18 -
occurring in microfinance at the national level, regionally or globally;
or ii) the strengths,
weaknesses, opportunities and threats (SWOT) inherent in a) different
types of institutions as
providers (e.g., NGOs, cooperatives, commercial firms that are not
cooperatives, government
entities); or b) different types of lending technologies (e.g. group
based, individual, credit scoring);
or iii) the ins and outs of impact analysis.
This core curriculum is celebrated in varying proportions at Boulder, in
Frankfurt, at the Summits
and elsewhere as posted on dfn and the usual list of other sites.
Criteria A) is required and non-negotiable. But if, say, three of the
others are not met by
practitioners with five or more years experience, it seems to me that
such people are oriented
toward professions or jobs other than microfinance: e.g., social work,
community development,
advocacy or lobbying, financial management, accounting, IT, research,
policy analysis, contract
management, grant management, philanthropy. People in these occupation
are clearly extremely
useful in assisting microfinance practitioners. However, lacking
sufficient familiarity with the
curriculum they are unlikely to be able to contribute very much to
sustainability.
Is my outlining this microfinance curriculum an attempt to create an
“us” and “them” dichotomy?
Absolutely, but it is also an invitation, open to anyone who wants to
develop an integrated
perspective. This is important for young people who seek career
development in a viable
profession, for their mentors, for MFI executives and the board members
to whom they report. The
curriculum can affirm best practice, and standards of credibility and
seriousness. And no one ever
graduates.
For those no longer on the front lines, our club fortunately welcomes
folks who in their journey
have traversed most of the curriculum.
Let’s move on to 2002.
J.D. Von Pischke
***
Response to the Wall Street Journal Article
Grameen Bank, Micro-Credit and
the Wall Street Journal
Muhammad Yunus
For the past several months I was being forewarned by my friends in the
USA that the Wall Street Journal (WSJ) is "going to get you" -- they are
coming up with a damaging report on Grameen Bank. WSJ's Asian bureau
chief Daniel Pearl came to see me briefly at my office in August, on the
day he was leaving Bangladesh. Later he sent me questions by e-mail. I
answered. (Please visit our web-site: www.grameen.com/wallstreetjournal/
to see the Q & A.) Finally, on November 27, the report appeared, and, as
forewarned , it was damaging to Grameen.
A Story Which WSJ Missed
The WSJ missed an opportunity to deliver some good news to the world at
a time when we are so hungry for it. Appropriate story and the headline
could have been : "Grameen Bank Overcoming Repayment Snag : Proves
Credit for the Poor Sustainable Under Difficult Conditions". That's what
it really is. Grameen's problem loans have declined over the past
sixteen months by 50 per cent. Trend shows that the repayment rate will
reach 95 per cent within the next six months. We expect that by
December, 2002 repayment rate will reach 98 per cent. Instead, the WSJ
chose to present a snap shot to the world, ignoring the positive trend,
to show that the repayment rate at the time of writing the report was 90
per cent, instead of 95 per cent, and built the major thrust of the
story around it.
I felt very happy that the WSJ endorsed micro-credit as a "great idea".
It indeed is. It is a very effective instrument to empower the poor,
particularly the poor women, in all cultures and economies of the world.
It is cost-effective, sustainable and works in a business-way. It gives
a poor person a chance to take destiny in his/her own hands and get out
of poverty with his/her own efforts. The world, which has committed
itself to reduce the number of poor people by half by 2015, will find
micro-credit a powerful tool in its tool box.
The WSJ article points out that Grameen Bank (a) is not as good as it
claims. It conceals its repayment rate to make it look good, (b)
Grameen's accounting system, the procedure for determining the overdues,
and making provisions for them does not follow industry standard, (c)
And predicts that Grameen's future will be worse because of it is
"delaying inevitable defaults and hiding problem loans".
Whatever accounting system, procedures and definitions we have today, we
had them with us for the last twenty-five years. Grameen is probably the
most researched institution in the world. Books have been written on
those research findings, students got their Ph.D.'s around the world
doing their research on Grameen, the World Bank conducted a multi-year
multi-million dollar research project on Grameen, thousands of experts
visited Grameen poring over our books --- nobody headed for the alarm on
Grameen's system, procedures and definitions. Many expressed their
discomfort, dissatisfaction, unhappiness that we do not follow the
"industry standard" --- but did not think our system and procedure had
any fault. We always argued that as long as we are generating all the
information to produce every single table, index or ratio familiar in
the conventional banking world anybody can translate our information
into their information. We do what we need to do. It works fine with us.
Conventional banks do not lend money to the poor because they do not
consider them creditworthy. We demonstrated that there is nothing wrong
with the poor. Bank rules procedures and concepts are at fault. We
created a bank based on completely new set of premises and procedures.
Unlike conventional banks, this bank is based on trust. We have no legal
instruments between lender and the borrower. Grameen is owned by the
borrowers. Nine elected representatives of the borrowers make up the
board of Grameen, besides three top government officials (usually from
the finance ministry) and the CEO. The board was chaired by the finance
secretary to the Government of Bangladesh from 1991 to 1996, and
succeeded by Professor Rehman Sobhan, an internationally reputed
economist, who is still the chairman.
A Counter-Culture
Grameen had to create a banking counter-culture of its own. Grameen's
central focus is to help poor borrower move out of poverty, not making
money. Making profit is always recognised as a necessary condition of
success to show that we are covering costs. Volume of profit is not
important in Grameen in money-making sense, but important as an
indicator of efficiency. We would like to make more profit so that we
can reduce interest rate --- and pass on the benefits to the borrowers.
In Grameen system when a borrower cannot pay back we try to activate our
system to help her overcome her problems, rather than go in a punishing
mode.
We consider credit as a human right. We built our system on the faith
that the poor always pay back. Some times they take longer than the
originally scheduled time period, sometimes natural disasters like
flood, drought, cyclone, etc and political unrest, rules and procedures
of the bank, make it difficult or impossible to pay back; but given the
opportunity they pay back. Non-repayment is not a problem created by the
borrowers, it is created by factors external to them.
We have always carefully avoided the practices of the conventional banks
to make sure we do not fall into the same logical loop which kept the
poor out from financial institutions. Grameen had to create new systems
to balance financial and human considerations. For example, it presents
loan information separately for women and men, lists meticulously every
single business of the borrowers in its annual report, and recognizes
that a house is not just a house, but a workplace for the poor women,
something that is categorised as a 'consumption' loan by the
conventional banks is actually a 'production' loan for the poor. Grameen
is a system based on human-relationships, not on threats of penalty
imposed by legal system or any other agency. Grameen required new style
of business, new banking culture of its own.
Sometimes people who are used to conventional banking become suspicious
of Grameen because it is different. It is a conflict of two different
banking cultures. Just because they do not understand us, they think we
are wrong. When they spend some time with us with patience they start
enjoying the exciting world of Grameen banking.
Grameen is owned by 2.4 million borrower, 95 per cent of them women. It
is almost like a co-op. It is a closed club. Borrowers save, they
borrow. Over the last 25 years they took cumulative total loans of Tk
151.88 billion ($ 3.5 billion) and repaid Tk 139.17 billion ($ 3.2
billion). The present outstanding amount is Tk 12.71 billion. When we
"worry" about repayment problems, we are "worrying" about the borrowers
who already paid back collectively $ 3.2 billion ! The WSJ looks at the
dollar figures and gets worried. We look at our hardworking struggling
poor women who already demonstrated their capability to repay their
loans many times over. We have good reasons to feel confident. Today 85
per cent of the 2.4 million borrowers are paying back their loans with
clockwork precision. Only 15 per cent of them are having difficulties in
paying back --- that situation was created by our standardised
procedures. Borrowers are also depositors. they have a total of Tk 6.5
billion as balance in their savings account. Fifteen per cent of the
borrowers who are having temporary difficulties in paying back their
loans also have their balance in their savings accounts.
Grameen has stopped accepting new donor money for its operation since
1995. It has borrowed Tk 3.0 billion ($ 60 million) locally to give
fresh loans during the devastating flood of 1998. This amount will be
fully repaid in May, 2002, without requiring Grameen to borrow again to
replace it. Now Grameen generates enough savings, mostly from its
borrowers, to repay its loans and finance its future growth. Because of
steady flow of deposits, Grameen does not see any need to borrow in
future. It has always paid back its domestic and international loans
exactly on the dot. It will continue to do so in future.
Repayment Problem
Repayment problem was born because of our standard methodology applied
in a national disaster situation, not because of the borrowers
reluctance to pay back. It always amazes me how sincere the poor are in
paying back their loans. If a bank staff meets a defaulting borrower,
who has discontinued her contact with the bank for a period of several
years, and reminds her about the outstanding loan, she never says
"Forget it", or "Who Cares". She always says: "I am sorry I could not
pay back. I'll like to do that as soon as I can". Given an opportunity
she always does that.
We created the repayment problem in two ways. First immediately after
devastating flood of 1998 (half of the country was under flood water for
ten weeks, water flowed over the roof-tops) we disbursed fresh loans
without requiring the borrowers to pay back the existing loans. We
explained to them that they do not have to worry about the existing
loans, this will be converted into a long-term loan. New loans will be
their current loan. But we did not change the status of the previous
loans in our books. Our internal reasoning was that this will make
monitoring more easy, even though repayment rate will show a decline.
We'll always understand why the decline took place. But in reality
repayment problem did not remain as an accounting phenomenon, it became
a real phenomenon --- some borrowers found the loan burden too heavy and
discontinued paying their installments.
The WSJ says we forgave the previous loans during the flood. This is not
correct. Grameen never forgives loans. Bulk of the amount we are now
describing as overdue loans are these previous loans.
New Generalised Grameen System
Gradually we started noticing that our rules were not appropriate for
the borrowers in this situation. We took a long preparation to develop a
new flexible system and field-tested it over months. We finally
introduced the new system in September of 2000. It is a simplified and
generalised Grameen system. This can work equally well both in normal
and disaster situations. It allows the enterprising borrowers to move
ahead faster. Everybody fell in love with it. Borrowers loved it, staff
loved it --- because it is so simple, it can offer tailor-made loans
rather than previous single-size-fits-all type of all loans. Good news
for the WSJ, the questions they raised about provisioning, defining
overdue, repayment rate etc have become irrelevant in the context of
Grameen's new generalised system.
New system, basically has two types of loans --- (a) Basic loan, and (b)
Flexible loan. A borrower can take a basic loan for any
income-generating purpose. It can be of any duration mutually agreed
between the bank and the borrower, unlike the old system where all loans
were for one year. Basic loans can be for 3 months or 6 months, or for 2
years or 3 years. Unlike the old system, now amounts of weekly
repayments can be varied during the loan period, according to the
pre-negotiated amounts documented in an agreed repayment schedule.
Borrower has to pass through a very strict six-monthly loan quality
check-point. If a borrower fails to pay the total amount she is supposed
to pay, according to the repayment schedule, during the past six-months,
she is classified as a defaulter. Now the entire unrepaid amount, even
if it is the first six months of a 3 year loan, becomes overdue. Hundred
per cent provision will be made for all overdue loans, unless it is
converted into a "flexible loan".
If a defaulter wants to continue to repay her overdue loans she can do
it by converting the overdue amount into a flexible loan. Flexible loan
is actually a rescheduled loan. She can negotiate her repayment
schedule. Fifty per cent provisioning will be made for the outstanding
amount under the flexible loan, even if her repayment rate is 100 per cent.
If a borrower fails to repay the flexible loan according to the
schedule, the loan becomes overdue, and hundred per cent provisioning
will be made for the overdue loan. The borrower will again have the
option to renegotiate the loan and convert it into a flexible loan.
Fifty-five per cent of borrowers of Grameen have already moved from the
old system of multiple loans to generalised single loan system. Now it
has become easy to check the quality of the loans; basic loans mean
loans having hundred per cent repayment, flexible loans mean loans at
risk. Year 2002 will be the year of completion of the transition process
from the old system to the new system. By the time this transition
process will be completed our guess is 85 per cent of the borrowers will
be on basic loans and 15 per cent on flexible loans, aggregate repayment
rate will be 98 per cent and above. In the new system the repayment rate
is determined by the ratio between what was the weekly installment the
borrower agreed to pay on a particular week according to the repayment
schedule, and what is the amount she actually paid. It would no longer
be determined under the old method. We'll not have any misunderstanding
left on this issue.
Fifty-one per cent of our 1170 branches now have switched to
computerised book-keeping and MIS. We hope to have 85 per cent of our
branches come into computerised book-keeping and MIS by the end of 2002.
This makes it easier for the generalised Grameen system to offer all its
attractive features for the benefit of the borrowers.
New system has brought another excitement and inter-branch competition
in Grameen. This system has introduced a grading system for branches.
This grading system awards colour-coded "Stars" to indicate the quality
of performance of a branch. If a branch (typically 2,500 borrowers) has
100 per cent repayment record for two consecutive years it is awarded a
green star. If the repayment falls below it during any two successive
years, the star is lost. A branch can similarly earn stars for earning
profit (blue star), for carrying out its entire loan programme with its
own deposits, even generating surplus of deposits for the use of other
branches (violet star), by making sure that hundred per cent of the
children of Grameen families are in school or have graduated from
primary school (brown star), by making sure that all the borrowers in
the branch have crossed over the poverty line, certified through an
evaluation of each family with a rigourous ten-point test of Grameen
(red star). Branch staff can actually wear the stars as a badge of
honour and display their stars in the branch stationery to show their
achievement.
Now there are 388 branches with one star or more. There are 10 branches
with 4 stars. No five star branch yet. We are expecting that by the end
of next year branches with atleast one star will increase to 550, that
is nearly one-half of all branches. We hope to find atleast one branch
with 5 stars. Someday we hope all our branches will be five star
branches. That's our mission --- to make all our branches five star
branches. Our 12,000 staff work very hard to make that dream come true.
Central Bank Supervision
We can raise our repayment rate to 100 per cent instantaneously by a
simple decision to write off all our overdue loans. We have more money
in our loan-loss reserve (Tk 3.8 billion) than the present overdue
loans. But we chose not to go that way, we want to do it the harder way
--- by improving the repayment situation and recover the overdue amount.
We do not want to abandon our borrowers/owners by disqualifying them to
remain within the Grameen fold. We want them to change their life with
Grameen, by solving their problems with Grameen. We don't want to push
them away with their problems. We never think of walking away from them.
If they don't succeed, there is no reason for us to exist.
The WSJ gives the impression that Grameen makes less than required
loan-loss provisioning. Industry standard in Bangladesh is set by the
central bank of Bangladesh. We make more generous loan-loss provisioning
than the central bank wants us to do. Central bank of Bangladesh has the
responsibility of audit and inspection over us. They check our books
carefully. We have never heard any complaint from them about our
provisioning criteria.
Factual Error
WSJ says PKSF was set up in 1991 "to distribute foreign funds to other
Bangladesh micro-lenders". WSJ could not be more wrong. You give a bad
name to another reputed world-class organization. PKSF was set up to
resist donor money. It started out by stubbornly refusing donor money
which was put at its doors. PKSF did that not because it did not need
money, it did that because it did not want the dependency that comes
with receiving the donor money. PKSF started out with 100 per cent
Bangladesh government money. It developed its own organizational and
operational style. It established its own credibility as a sound
financial organization. When it knew exactly what it wants, how it
wants, firmly set up the standard for its programme, only then it opened
its doors for the donor money at its own terms. Now international donors
come to give money to PKSF. But since PKSF knows how much money it
needs, and for what, most of the time PKSF is saying, "No, thank you" to
the donors.
Concealing Information
Grameen always tried to remain as transparent as an organization can be.
It started to distribute widely its monthly statement containing all
basic information about its operation from February, 1980, nearly
twenty-two years back, when it was not even a bank yet. It contained all
information about disbursement, repayment, borrower numbers etc. all
disaggregated by gender, and by region. It never failed to produce it
and distribute it globally every single month for the last 262 months !
Among the many universities, donors, and libraries who receive this
monthly statement US Library of Congress is one. One may not like our
information format, but nobody can complain that we do not share our
information. Web-site never became part of our management system. It was
the product of IT enthusiasts in the bank. It remained unattended, and
unupdated. Sorry that it carried wrong information on our repayment
rate. Your reporter collected samples of old monthly statements
beginning from the very first one in 1980 and quoted from the
most-recent monthly statement, but did not mention its existence in the
report.
We publish our Annual Report every year. This contains, besides many
other interesting economic, financial, and social information, balance
sheet, profit and loss accounts, and cash flow statement for the year,
audited by two top audit firms of the country, firms which are
affiliated with international audit firms. Nobody ever complained that
these reports lacked anything by way of disclosure.
Safety of Depositors' money
Ninety per cent of Grameen deposits come from the borrowers. They borrow
several times more money from Grameen than the money they put in their
accounts. So the safety of their deposits is automatically guaranteed.
Again, they are the owners of the bank too.
A Proposal for WSJ
Grameen has just reached its twenty-fifth birthday. It has been a long
way to get here. It is the only bank in the world owned by poor women.
We did not expect the most highly respected financial daily of the world
would rush to negative conclusions about us without giving us a fair
hearing.
I have a proposal for the WSJ. I propose that the WSJ send two top
financial reporters (atleast one woman) to Grameen for two weeks or more
to find answers to the following questions :
a)
Will Grameen have more overdue loans (by any definition they choose) one
year from now than it is today ? Will there be increase in
non-performing loans ?
b)
Is Grameen's repayment rate (by any definition they choose) likely to be
lower one year from now ?
c)
Do they find Grameen's reporting system transparent and adequate ?
You owe this to Grameen, to its owners, to the large network of
committed social entrepreneurs who follow Grameen in their work, as well
as to the millions of poor women and their families around the world who
would have benefited from micro-loans if you had not put a cloud over
Grameen and confused the policy-makers in a year when world leaders will
be frantically looking for solutions to massive global poverty.
I hope you'll find my proposal very reasonable.
E-mail Q & A between the Wall Street Journal Asia Bureau Chief Mr.
Daniel Pearl and Dr. Yunus during August - October, 2001 in the process
of preparing for the WSJ report published on November 27, 2001.
Letter from a friend in the USA
Date: Sat, 18 Aug 2001 01:11:34 -0400
Subject: Wall Street Journal interview request
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Dr. Yunus,
Hello, I'm the South Asia correspondent for the Wall Street Journal. I'm
currently in Dhaka, and am working on an article on Grameen Bank, and
how it is responding to current market conditions in micro-lending in
Bangladesh. I met Mr. Haq on Tuesday, and left a message seeking a
meeting with you. Yesterday I received a message from Mustafa Kamal, but
the two numbers he left seem to be fax machines. Anyhow, I would very
much like to get a few minutes with you if possible; my wife (also a
journalist) and I are scheduled to depart Dhaka on a 5 p.m. flight
Sunday, and I wasn't able to reschedule the flight. So I'm hoping you'll
get this message soon and that we can meet earlier in the day Sunday.
We're at the Sonargaon Hotel room 523. Also reachable by Bombay mobile
phone as below.
Thanks and regards,
Daniel Pearl
South Asia Bureau Chief
The Wall Street Journal.
Sanskriti Building, 8 Dongarsi Road
Malabar Hill, Mumbai (Bombay) 400 006
India
+91-22-367-5712(office)
+91-22-367-5727(fax)
+91-98213-39741(mobile)
Date: Sat, 25 Aug 2001 20:31:18 +0600
Subject: some follow-up questions
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Prof. Yunus,
I wanted to thank you for giving us your time and thoughts last week in
Dhaka. I've been typing up my notes and sharing them with my colleague,
Michael Phillips, in Washington - he covers international lending
institutions and has been following microcredit. Some of his questions
have looped back to you, but I wanted to put some more focus on what
we're seeking as follow-up:
- Is there any data that would allow us to compare Grameen's current
repayment rate with those of other micro-lending institutions, even in
Bangladesh? For example, PKSF's partners are supposed to report as
unpaid any loans unpaid even for less than a year. Does Grameen have
that data available, or only the one-year and two-year data?
- If Grameen's repayment rate is worse than the others, do you think
that suggests that it is hard to sustain the performance of microcredit
over time (as some suggests) or that small lenders have an advantage (as
others suggest), or that Grameen, by getting involved in so many other
activities, lost some focus on the repayment issue?
- Can we get the 2000 financial information, so that we're using the
latest figures to assess Grameen's financial strength?
- Why have the figures of 98% or 95% repayment rate been used so
consistently in the last two years, by Grameen and in the press, if
they're no longer true? Did Grameen consider the lower figures to be a
temporary aberration?
- In your book, you said that in replicating Grameen, it just isn't
Grameen if the repayment rate is near perfect. Do you think, in
retrospect, you put too much of an emphasis on the repayment rate?
I appreciate your help. We're trying to produce something fair and
serious that looks at microfinance in its mature state, and reflects
both problems and successes. Please let me know if you'd like to
continue the dialogue by telephone, I'll be back in Bombay today.
Thanks and regards,
Daniel Pearl
South Asia Bureau Chief
The Wall Street Journal.
Date: August 26, 2001
Subject: Letter to Daniel Pearl
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Danny :
1.0 We have no data on other micro-credit institutions. Best place to
find them are :
i) Palli Karma Shahayak Foundation (PKSF)
House no. 31/A, Road no. 8
Dhanmondi R/A
Dhaka 1205, Bangladesh
Phone : 880-2-9126243
Fax : 880-2-9126244
Email : pksf@citechco.net
ii) Credit and Development Forum (CDF)
House no. 9/2, Block D
Lalmatia, Dhaka
Bagladesh
Phone : 880-2-9132493/495
Fax : 880-2-9112340
Email : CDF@bdonline.com
I am sending our data to you. I am sending a table showing repayment
rates each year from the start of the bank to this date, and a graph
showing repayment rates for the recent years. Considering the interest
in our repayment information I have decided to put this graph and the
table on our web-site. Now this information will be available to more
people than the people on the mailing list of our Statement Number One.
I have already sent you by fax the Statement No. 1, for the last three
months. We monitor borrowers who could not repay the due amounts at 25
weeks, 38 weeks, 53 weeks, 104 weeks.
On July 1, 2001 17, 856 borrowers failed to pay the exact due amount at
25 weeks. Amount of under-payment was Tk. 30 million. 26, 193 borrower
could not pay the full amount at 38 weeks. Amount of under-payment was
Tk 62 million. Information on 52 weeks and 104 weeks are available in
the Statement Number One.
2.0 I don't think "old age" or "too big an organization" are problems in
micro-credit. Each are may be more of an advantage, than a drag. "Old
age" gives you more experienced borrowers and staff. You have already
weathered many problems and adjusted your system to handle crises. Most
likely you have a strong financial base; you have gone over the hump and
making profits.
"Large size" is also not a problem if your system is in place to handle
large number of staff. Grameen Bank has over 12,000 staff. It has very
attractive salary package and pension plan. A Grameen staff can retire
after putting in 10 years of service, and can get half the pension money
in cash. More than 3,000 Grameen staff have already taken early
retirement. We have paid them Tk 15.0 billion in cash as pension benefits.
3.0 There may be advantage for new-comers in maintaining high repayment
rate, because they have not accumulated problem loans yet. It takes time
to accumulate problems. If you are "old" and still doing well, you have
learnt the business. Everything depends on how prompt the organization
is in addressing problems. It is just like management any where else.
4.0 "Grameen Bank" has not gotten involved in many enterprises. There
are many enterprises with a common name of "Grameen". But Grameen Bank
is not involved in them in management or financing. Actually creating
some of these new organizations has helped Grameen Bank to concentrate
on its own exclusive task of banking. Many of these companies were
hidden inside Grameen Bank as its projects. Grameen Fund, Grameen
Enterprise (Uddog), Grameen Kalyan, Grameen Fisheries Foundation,
Grameen Agricultural Foundation were all spin off companies from Grameen
Bank ! They were born as "projects" of Grameen Bank. Each Grameen
company is totally independent of Grameen Bank in its management and
policies. Some of the companies provide services to Grameen Bank
borrowers. Grameen Phone is a great source of creating roaring
telecommunication business for telephone ladies of Grameen Bank. It has
taken the business of Grameen Bank to a new hight. Grameen Business
Promotion Company is actually totally dedicated to give guarantee to
micro-enterprise loans to successful Grameen borrowers. Success of
Grameen Business Promotion Company leads to the success of Grameen
borrowers, and as such, GB.
Grameen Information Technology (IT) companies will play a vital role in
bringing IT related services to Grameen borrowers. Ultimately Grameen
companies will be owned by Grameen borrowers through purchase of their
shares through Grameen Mutual Fund. Grameen companies are rather a big
help to GB than a burden. There is no question of these being burden
because GB has no financial and management responsibility of these
companies.
5.0 Yes, I still insist that it isn't "Grameen" if the repayment rate is
not over 95 per cent. If you are providing credit to the poor you are
under constant pressure to compromise your quality. World is used to
offering charity to the poor. When they see that you want your money
back, they urge you to go easy on them. That is a mistake. We insist
that in credit for the poor the best thing you can do for the poor is to
be serious about your business. During the flood of 1998 we were under
constant pressure from outside the bank to forgive loans. We stood our
ground. We did not write off a penny. We borrowed some Tk 40 billion to
give fresh loans on top of the existing loans, to help them overcome the
disaster. It worked. When we say "it isn't Grameen if you do not have a
repayment record of over 95 per cent" we simply emphasize that you must
take this business very seriously.
6.0 Overlapping. When you came to see me, you talked about the
"overlapping" problem. You seemed to be worried about this problem. I
don't know if I could put you at ease on this issue. My position is ----
it is an interesting development, but it is by no means a problem. This
is arising because of clustering of programmes. There are favourite
spots for NGO's. Every NGO wants to work in those areas. So they create
"overlapping problem". But this problem luckily has built-in
self-correcting features. Borrowers do not suffer from this problem.
They gain from it. It is the MFI's who suffer. So, some of them, who
suffer the most, have to relocate themselves. There are many areas where
nobody is working. Now MFI's will look for those areas. Overlap forces
MFI's to improve the quality of their work. That's what makes me feel
happy about this problem. All said and done, it is a minor issue. Not
even 5 per cent of all borrowers are involved in multiple sources for
their loans ! In some location it may be high, but over-all it is not
worth worrying about.
Date: August 26, 2001
To:
Michael Phillips
From: Professor Muhammad Yunus
Subject: Grameen Bank
Copy: Daniel Pearl
1.0
Grameen Bank defines the amount remaining unrepaid beyond two years as
the amount overdue and defines repayment rate as the overdue, amount
divided by amount outstanding. The repayment rate remained above 95 per
cent until 1996. It declined to 93 per cent in 1997 and moved to 94 per
cent in 1998. In 1999 it declined to 91 and to 89 in 2000. In 2001 it
moved to 90.
We always considered this decline below 95 per cent as a temporary fall,
basically caused by the devastating flood of 1998. Our borrowers lost
their assets and working capital during that flood. We gave them fresh
loans, without recovering, and without rescheduling, the previous loans.
Obviously, as the old loans became due in 1999, it started showing up as
overdue loans. We understood that this was because of our accounting
treatment rather than any inherent problem with the bank. But loan
burden continued to remain heavy on the borrowers. Ultimately we decided
to reschedule the loans since 2000 to make it easy for the borrowers to
pay back. It produced result. Repayment flow started becoming regular.
Now we stipulate that the rescheduled loans will be repaid in two years
from now.
2.0
Newspapers and media continued to mention that Grameen's repayment as
over 95 (or 98) per cent by way of description of Grameen Bank as an
institution, not as a piece of recent information. We never supplied any
information to mislead them to use such figures. Whenever I am asked
about the repayment I usually say : "It is now down to 88-89 per cent.
Normally our repayment rate is 95 per cent and above."
3.0
Somebody today mentioned to me that our web-site says that our repayment
rate is "95 and more". This was put on the web-site in 1996. We did not
update this opening page of the web-site since 1996. I got embarrassed
that we did not notice the mistake. We do not visit our own web-site !
This information may be creating wrong impression about us. This is part
of our inefficiency, rather than deliberate attempt to mislead people.
We could have said "normally it is 95 per cent and above." Today I have
instructed our staff to put a note on that opening page of the web-site
to say that the statistical information given on that page is valid only
upto 1996.
4.0
We publish our basic information every month in a bulletin known as
"Statement Number One". We have been publishing it for the last 258
months (21.5 years !) without fail. In that bulletin we give the
percentage of loan remaining "overdue" (i.e. unrepaid beyond 104 weeks)
zone by zone. We also give the percentage of loan remaining unrepaid
beyond 52 weeks, so that anybody can check out our repayment status
after one year. Mailing list for this bulletin includes US Library of
Congress, US-AID, World Bank, IMF, many universities around the world
and within Bangladesh, UNICEF, Indian Institute of Management, among
many others. Our information is so well-publicised each month on a
routine basis we never felt anybody could misunderstand us.
5.0
Now I think I should say something about our way of doing things. I
always take the position that "Grameen banking" and conventional banking
is like European football versus American football. Both are football
games --- but they are played by entirely different rules. You cannot
judge one, with the understanding of the other.
6.0
Banking for the poor, called "Grameen banking", did not exist. We
created it. That means that we made up our own rules. We still keep
making up our rules. We improve on the rules which do not work for our
purpose, or create problems for us. We add new rules. We elaborate our
existing rules. We try to make them logically and financially
consistent. I hope we succeed.
7.0
In the back of our mind we always keep it as a faith that the poor
people are creditworthy. We do not need collateral to do business with
them. They always pay back --- some times they may take longer time than
the rules governing loans permit them. But in the end they pay back.
"People" are not like "businesses" --- they (people) do not go down and
disappear from the screen without paying the loans. When our borrowers
have difficulties Grameen banking is there to help them out and make it
a success with their loans. We take this as our "mission".
8.0
Grameen banking is not based on the support from the legal system. We
never go to the court. There is no legal instrument between the borrower
and the lender in Grameen banking. So the word "defaulter" has no legal
significance in Grameen banking. That is a legalistic word. We always
avoided the word because it is "insulting" to people. If somebody cannot
pay, we would describe her as someone who is in difficulty to pay back.
They simply needed more time, more support.
9.0
We laid down our basic lending policy in the following way :
We put a time-line (i.e. 104 weeks) to our loans for accounting and
monitoring purpose, and also to help the borrowers to make up their
time-budget within their business plans. Although the loans are for two
years (104 weeks), borrowers are required to pay them back within one
year in weekly installments. If they cannot pay back within one year, we
do not consider that they have "violated" any contract.
If a borrower cannot complete total payment of the entire loan,
including interest, in 52 weeks, staff of the bank and the "borrower's
group" pay special attention to the person. If she cannot pay back in
104 weeks, the bank makes 100% bad debt provision for the amount as a
part of financial prudence. If she paid Tk. 90 in 104 weeks against a
loan of Tk. 100, we say her repayment rate is 90 per cent.
This does not mean that she is not going to pay the remaining Tk. 10.
This does not trigger any procedure to take her to the court for
non-repayment. Grameen banking has no room for such a procedure.
10.0
We are computerised. Nearly half of our branches (560 branches out of
1190) do their accounting & MIS through computers. By the end of next
year 75 per cent of branches will come under computerised accounting and
MIS system. Every bit of daily transactions is available in the
computer. We keep record of amount due on any given day for every single
borrower, and we record the amount actually paid on each day by each
borrower of Grameen Bank. We calculate repayment status on the basis of
the ratio between amount due and amount actually paid by each borrower.
11.0
30 day & risk (!!)
Grameen banking does not use this 30-day rule. I have never heard of
such a system of assessing portfolio at risk in the conventional banks
in Bangladesh. (Danny, do you see it in Indian banks ?) Although Grameen
banking emphasizes the value of the discipline of regular weekly
repayment, it considers remaining absent in the weekly meeting as more
serious breach of discipline than missing a weekly installment.
12.0
Grameen banking is made up of banking elements and social elements.
Group formation, centres weekly meetings, weekly installments, election
of group chairman, secretary, centre chief etc., sixteen decisions,
building centre house, generating group savings, disaster savings, etc
are social dimensions of Grameen banking. Repaying loans in two years is
the banking dimension of Grameen banking.
If you look at Grameen Bank (GB) with your banking glasses on, all
you'll see whether borrowers are paying back their loans with 20 per
cent interest within two years. Rest of Grameen Bank will disappear.
13.0
GB has a very generous bad debt provisioning arrangements. GB has a
total bad debt reserve of Tk. 3.3 billion. Amount of loan overdue (above
two years) is Tk. 1.2 billion.
14.0
My guess is, with the facilitating system that has been put in operation
now, 90 per cent of the unrepaid loan amount beyond one year, will be
repaid by the borrowers by the end of next year. 79 per cent of Grameen
Bank borrowers repay their loans on the dot. Their repayment record is
100 per cent. Only 21 per cent of borrowers have difficulties.
15.0
Grameen banking has a rule --- if a borrower takes a very very long time
to pay back her loan, total interest due to her will never exceed the
principal amount she borrowed. I don't think conventional banks will
like such a rule.
16.0
We never forget that the borrowers of Grameen Bank are also 93 per cent
owners of the bank. In the Grameen banking system there is no punishment
mode, there is only helping mode.
17.0
Grameen banking requires that when a borrower dies, the branch manager
must take an active role in organising her funeral and attend the
religious ceremony for burial at her village along with her relatives.
18.0
GB provides scholarships to the students of Grameen families. All
students coming from Grameen families in the institutions of higher
learning can receive 100% financing of their education, as education
loans, from GB. Nobody is refused an educational loan.
Date: Mon, 27 Aug 2001 07:54:18 -0400
Subject:
Letter from Grameen Bank, Bangladesh
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Hello,
thanks for the faxes - I got the first batch, and my colleague just
confirmed that the remaining pages arrived too. I also received your
emails, which look quite useful. I'll look over everything carefully and
will probably send some follow-up questions tomorrow or Wednesday.
Thanks again, and my apologies for all the transmission trouble.
Danny Pearl
Date: Wednesday, August 29 2001
Subject:
Notes to Balance Sheet
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Danny:
I just got the fresh set of questions. I am in the middle of a series of
appointments. I'll get back to you soon.
Ref: Your question No 22:
I did send you the Balance Sheet 2000 and Profit and Loss Statement with
the Notes attached to it. I am sending it again. Please tell me if you
are looking for something else.
Can you please send me a list of items you have received from me by
e-mail and by fax? That way I'll know what you got, and what you did not.
Best wishes.
Yunus
Date: Thursday, 30 Aug 2001
Subject:
RE: Notes to Balance Sheet
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Prof. Yunus,
Thanks for your note. I have received
- several recent monthly reports
- your note to Mike
- the Balance Sheet 2000 and Profit and Loss Statement
but not the Notes to the Accounts. If they're available, they'd probably
answer at least one of my questions (on the reserve against one-year
delinquent loans for 2000).
Two other questions (sorry):
- Does Grameen have a statistic for what percentage of its borrowers
have more than one loan outstanding?
- A study by Khalily, Imam and Khan found Grameen's 1997 subsidy was 1.2
billion taka. Does that sound right, and how much would that have
changed since 1997?
Thanks again,
Danny
Date: Thursday, August 30, 2001
Subject:
Acknowledgement
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Mr. Daniel Pearl :
We sent a fax (total 6 pages) at fax no. 91-22-367-6940 this morning.
Please confirm that you have received them.
Warm regards.
Sincerely yours,
Date: Thursday, 30 Aug 2001
Subject:
Re: Acknowledgement
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Hello, I know the first fax arrived, but I haven't been able to reach my
colleage this evening to ask about the second. I'm hoping to see both of
them by end of the day. Will confirm later.
Thanks,
Danny
Date: Sat, 01 Sep 2001 13:18:10 +0600
Subject:
Answer to some follow-up questions
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Danny :
I am sending my responses to your questions. I hope this will
sufficiently answer to your questions. But please feel free to raise
more questions and clarifications. Grameen is my (and for many of my
colleagues) life-time work. You are asked to sit on judgement on it on
the basis of a quick glimpse at it. I know how difficult your job is. I
hope you'll do the best you can.
I am sending these responses quickly so that you can ask more questions
before September 3. I'll be out of Dhaka from September 3 to 6. If you
need some urgent information or clarification please fax it to my office.
About phone conversation. I would prefer written questions. I'll give
written responses. That way it is all on record. Once your report is
published I am sure many people would like to know what is our story. I
can then pass around my responses to your questions.
Also written responses are safer in the context of avoiding any
miscommunications.
Thanks for the hard work you are putting in for the story.
Best wishes.
Sincerely yours,
Muhammad Yunus
Attachment: Q & A Part-I
Date: Sunday, September 02, 2001
Subject:
Publication List from Grameen Bank
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Prof. Yunus,
I will be travelling in remote parts of India for a few days, so I would
appreciate if you could cc your responses to Mike Phillips on the above
email address.
Thank you,
Danny Pearl
Date: Monday, September 03, 2001
Subject:
Re: Publication List from Grameen Bank
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Hello,
Thank you for sending the publications. I notice these publications all
have prices. I don't think we journalists deserve any special favors, so
I'm mailing you a check for the following:
Annual reports 1996, 1997, 1998 - $34
Women at Center - $15
Grameen Bank as I see it - $10
Fedex (this is a guess) - $30
--------------------------------------
total: $89
Please let me know if there is any change necessary for the bill,
otherwise I'll mail the check tomorrow. The invoice can be mailed to the
address below.
Thanks and regards,
Daniel Pearl
South Asia Bureau Chief
The Wall Street Journal.
Date: Wed, 5 Sep 2001 22:16:03 -0400
Subject:
Acknowledgement
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Dr. Yunus,
I received yesterday the two books you sent. Thank you,
Danny
Date: Sat, 08 Sep 2001
Subject: Letter to Daniel Pearl
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Danny :
I am back. I am sending the responses to your questions. I am glad you
raised these questions. This gave me an opportunity to clarify.
I found another error in my previous responses (August 1, 2001). Please
look at the last paragraph of page 9 (response no. 14). The para should
read :
"Amounts which are written off also get repaid later on. We have
recovered a total amount of Tk 43 million so far against Tk 637 million
which was written off. This is 7 per cent of the amount written off."
Please confirm that you have received the responses with all the
attachments, and the faxes.
If you have more questions please do not hesitate to ask.
Best wishes.
Muhammad Yunus
Attachment: Q & A Part-II
To:
"Professor Muhammad Yunus" <yunus@grameen.net>
From: "Pearl, Danny" <danny.pearl@wsj.com>
Subject: acknowledgement
Prof. Yunus,
I wanted to let you know I received your emails with responses to our
questions. Thank you for the incredible amount of effort you have put
into this. We're going to need to digest and perhaps do some further
reporting, and will let you know of any other questions.
As you can probably surmise, the attack yesterday on Washington and New
York has pushed all other news aside, so it may be some time before an
article on Grameen will appear. Thanks again for your help and patience.
Best regards,
Danny Pearl
Date: Sat, October 6, 2001
Subject:
follow-up
From: "Pearl, Danny" <danny.pearl@wsj.com>
To: "Professor Muhammad Yunus" <yunus@grameen.net>
Professor Yunus,
I don't want to take up too much more of your time, but I hoped I could
get the following:
- Latest monthly report
- Response on Khalily study on Grameen subsidies.
- Has anything changed at Grameen as a result of the Sept. 11 attack on
the U.S.? We saw one editorial suggesting U.S. had to pay some attention
to the Third World more than ever now, and resume earlier levels of
foreign aid. I assume you wouldn't necessarily agree with that second part.
Thanks very much,
Daniel Pearl
South Asia Bureau Chief
The Wall Street Journal.
Date: Wed, 17 Oct 2001
Subject: Re: follow-up
From: "Professor Muhammad Yunus" <yunus@grameen.net>
To: "Pearl, Danny" <danny.pearl@wsj.com>
Dear Danny:
I am back from a trip to Venezuela and Mexico.
My office has already sent you the monthly statement.
I am faxing some comments we sent him at that time. I hope this will
serve your purpose.
I think subsidy is a non-issue for us now, because we do not receive new
money from donors, or government. Now we are in the process of paying
back all their loans whenever they fall due.
September 11 has not changed anything in Grameen. On the broader issue I
wrote an op-ed which you may have look at. I am attaching it. Let me
know if you agree with my views.
Best regards.
Yunus
This archive was generated by hypermail 2.1.5 : Tue Oct 31 2006 - 00:00:03 EST