Muhammad Yunus

Grameen and microfinance

In 1976, during visits to the poorest households in the village of Jobra near Chittagong University, Yunus discovered that very small loans could make a disproportionate difference to a poor person. Village women who made bamboo furniture had to take usurious loans to buy bamboo, and repay their profits to the lenders. Traditional banks did not want to make tiny loans at reasonable interest to the poor due to high risk of default. But Yunus believed that, given the chance, the poor will not need to pay high interest on the money, can keep any profits from their own labour, and hence microcredit was a viable business model. Yunus lent US$27 of his money to 42 women in the village, who made a profit of BDT 0.50 (US$0.02) each on the loan. Thus, Yunus is credited with the idea of microcredit.

In December 1976, Yunus secured a loan from the government owned Janata Bank to lend to the poor in Jobra. The institution continued to operate, securing loans from other banks for its projects. By 1982, it had 28,000 members. On 1 October 1983, the pilot project began operation as a full-fledged bank for poor Bangladeshis and was renamed Grameen Bank ("Village Bank"). By July 2007, Grameen had issued US$6.38 billion to 7.4 million borrowers. To ensure repayment, the bank uses a system of "solidarity groups". These small informal groups apply together for loans and its members act as co-guarantors of repayment and support one another's efforts at economic self-advancement.

In the late 1980s, Grameen started to diversify by attending to underutilized fishing ponds and irrigation pumps like deep tube wells. In 1989, these diversified interests started growing into separate organisations. The fisheries project became Grameen Motsho ("Grameen Fisheries Foundation") and the irrigation project became Grameen Krishi ("Grameen Agriculture Foundation"). In time, the Grameen initiative grew into a multi-faceted group of profitable and non-profit ventures, including major projects like Grameen Trust and Grameen Fund, which runs equity projects like Grameen Software Limited, Grameen CyberNet Limited, and Grameen Knitwear Limited, as well as Grameen Telecom, which has a stake in Grameenphone (GP), the biggest private phone company in Bangladesh. From its start in March 1997 to 2007, GP's Village Phone (Polli Phone) project had brought cell-phone ownership to 260,000 rural poor in over 50,000 villages.

The success of the Grameen microfinance model inspired similar efforts in about 100 developing countries and even in developed countries including the United States. Many microcredit projects retain Grameen's emphasis of lending to women. More than 94% of Grameen loans have gone to women, who suffer disproportionately from poverty and who are more likely than men to devote their earnings to their families.

For his work with Grameen, Yunus was named an Ashoka: Innovators for the Public Global Academy Member in 2001. According to Rashidul Bari, the Grameen's social business model has gone from being theory to an inspiring practice adopted globally by leading universities, entrepreneurs, social business and corporations.

The Yunus Centre, located in Dhaka, Bangladesh, is a think tank focused on social business, poverty alleviation, and sustainability. Founded in 2008 and chaired by Yunus, it promotes his philosophy of social business and serves as a resource center for related initiatives. The centre's activities include poverty eradication campaigns, research and publications, support for social business start-ups, organizing the Global Social Business Summit, and developing academic programs on social business with international universities.

International career

In July 2007, in Johannesburg, South Africa, Nelson Mandela, Graça Machel and Desmond Tutu convened a group of world leaders "to contribute their wisdom, independent leadership and integrity to tackle some of the world's toughest problems." Nelson Mandela announced the formation of this new group, The Elders, in a speech he delivered on the occasion of his 89th birthday. Yunus attended the launch of the group and was one of its founding members. He stepped down as an Elder in September 2009, stating that he was unable to do justice to his membership due to the demands of his work.

Yunus is a member of the Africa Progress Panel (APP), a group of ten distinguished individuals who advocate at the highest levels for equitable and sustainable development in Africa. Every year, the Panel releases a report, the Africa Progress Report, that outlines an issue of immediate importance to the continent and suggests a set of associated policies.

In July 2009, Yunus became a member of the SNV Netherlands Development Organisation International Advisory Board to support the organisation's poverty reduction work. Since 2010, Yunus has served as a Commissioner for the Broadband Commission for Digital Development, a UN initiative which seeks to use broadband internet services to accelerate social and economic development.

In March 2016, he was appointed by United Nations Secretary-General Ban Ki-moon to the High-Level Commission on Health Employment and Economic Growth, which was co-chaired by presidents François Hollande of France and Jacob Zuma of South Africa. Following the Rohingya genocide in 2016–2017, Yunus urged Myanmar to end violence against Rohingya Muslims.

Breakdown in relations between Hasina and Yunus (2007)

Yunus maintained a professional relationship with Hasina. Yunus appointed Hasina—along with U.S. First Lady Hillary Clinton—as co-chair of a microcredit summit held 2–4 February 1997. In her statement she praised, "the outstanding work done by Professor Yunus and the Grameen Bank he founded.... The success of the Grameen Bank has created optimism about the viability of banks engaged in extending micro-credit to the poor". The inaugural ceremony of Grameen Phone, Bangladesh's largest telephone service, took place at Hasina's office on 26 March 1997. Using Grameen Phone, Hasina made the first call to Thorbjorn Jagland, the then-Norwegian prime minister. When her conversation ended, she received another call, from Laily Begum, a Grameen Phone employee.

On 11 January 2007, Army General Moeen U Ahmed staged a military intervention, and Fakhruddin Ahmed took office on 11 January 2007 as Chief Advisor saying he intended to arrange free and fair elections but also to clean up corruption. While Khaleda Zia and Hasina criticised Fakruddin and claimed that it was not his job to clean up corruption, Yunus expressed his satisfaction. In an interview with the AFP news agency, Yunus remarked "There is no ideology here." In reaction to Yunus's comments Sheikh Hasina called him a "usurer who has not only failed to eradicate poverty but has also nurtured poverty." This was Hasina's first public statement against Yunus.

The Awami League government of Sheikh Hasina campaigned against Grameen and Yunus. The New York Times reported, "Her actions appear to be retaliation for Mr. Yunus's announcement in 2007 that he would seek public office, even though he never went through with his plans". According to The Times of India, one other factor contributed to her decision against Yunus: the Nobel Peace Prize.

It was rumored that Hasina thought that she would win the Nobel Peace Prize for signing the 1997 Chittagong Hill Tracts peace treaty. On 9 March, Attorney General Mahbubey Alam expressed the government's attitude when he said, "Prime Minister Sheikh Hasina should have been awarded the Nobel Peace Prize". He went on to challenge the wisdom of the Nobel committee.

Dismissal from and cases against Grameen Bank (2011–2013)

The second Awami League government announced a review of Grameen Bank activities on 11 January 2011. In February 2011, several international leaders, such as Mary Robinson, stepped up their defence of Yunus through a number of efforts, including the founding of a formal network of supporters known as "Friends of Grameen".

On 15 February 2011, the Finance Minister of Bangladesh, Abul Maal Abdul Muhith, declared that Yunus should "stay away" from Grameen Bank while it is being investigated. On 2 March 2011, Muzammel Huq, a former Bank employee, whom the government had appointed chairman in January, announced that Yunus had been fired as managing director of the Bank. However, Bank General Manager Jannat-E Quanine issued a statement that Yunus was "continuing in his office" pending review of the legal issues surrounding the controversy.

In March 2011, Yunus petitioned the Bangladesh High Court challenging the legality of the decision by the Bangladeshi Central Bank to remove him as managing director of Grameen Bank. The same day, nine elected directors of Grameen Bank filed a second petition. U.S. Senator John Kerry expressed his support to Yunus in a statement on 5 March 2011 and declared that he was "deeply concerned" by this affair. The same day in Bangladesh, thousands of people protested and formed human chains to support Yunus. The High Court hearing on the petitions, was planned for 6 March 2011 but postponed. On 8 March 2011, the Court confirmed Yunus's dismissal.

On 2 August 2012, Sheikh Hasina approved a draft of "Grameen Bank Ordinance 2012" to increase government control over the bank. Hasina also ordered a fresh investigation into Yunus's activities and financial transactions in his later years as managing director of Grameen. The prime minister also alleged that Yunus had received his earnings without the necessary permission from the government, including his Nobel Peace Prize earnings and book royalties.

On 4 October 2013, Bangladesh's cabinet approved the draft of a new law that would give the country's central bank greater control over Grameen Bank, raising the stakes in the long-running dispute. The Grameen Bank Act 2013 was approved at a cabinet meeting chaired by Prime Minister Sheikh Hasina and was passed by parliament on 7 November 2013. It replaced the Grameen Bank Ordinance, the law that underpinned the creation of Grameen Bank as a specialised microcredit institution in 1983. 'The New York Times' reported in August 2013:

Since then, the government has started an investigation into the bank and is now planning to take over Grameen—a majority of whose shares are owned by its borrowers—and break it up into 19 regional lenders.Vikas Bajaj wrote on 7 November 2013:

The government of Bangladesh has played its trump card in its long-running campaign against Grameen Bank and its founder Muhammad Yunus. Last week, legislators passed a law that effectively nationalizes the bank, which pioneered the idea of making small loans to poor women, by wresting control of it from the 8.4 million rural women that own a majority of its shares.

Legal cases and trials (2010–2024)

Yunus faced 174 lawsuits in Bangladesh, 172 of which were civil cases. Allegations included labour law violations, corruption, and money laundering, which Yunus alleged were politically motivated.

Hasina launched a series of trials against Yunus. The former put the latter on trial in 2010 and ultimately removed him from Grameen Bank, citing his age. The government launched the first trial against Yunus in December 2010, alleging that in 1996 he had transferred approximately $100 million to a sister company of Grameen Bank. Yunus denied the allegations and he was found innocent by the Norwegian government. In 2013, he was tried a second time, because he had supposedly received earnings without the necessary government permission, including his Nobel Peace Prize earnings and royalties from his book sales. The series of trials against Yunus puzzled figures worldwide, from the 8.3 million underprivileged women served by Grameen Bank to U.S. President Barack Obama.

On 27 January 2011, Yunus appeared in court in a food-adulteration case filed by the Dhaka City Corporation (DCC) Food Safety Court, accusing him of producing an "adulterated" yogurt whose fat content was below the legal minimum. This yogurt is produced by Grameen Danone, a social business joint venture between Grameen Bank and Danone that aims to provide opportunities for street vendors who sell the yogurt and to improve child nutrition with the nutrient-fortified yogurt. According to Yunus's lawyer, the allegations are "false and baseless".

On 1 January 2024, a court in Bangladesh sentenced Yunus to a six-month prison term, along with three employees from Grameen Telecom for labor law violations. However, the court granted bail pending appeals. Amnesty International declared Yunus's conviction a "blatant abuse" of the justice system. The conviction was overturned on 7 August 2024 following an appeal. He was acquitted in a graft case filed by the Anti-Corruption Commission (ACC) just four days after getting acquittal for the labour violations case.

Allegations of political targeting

In December 2010, Grameen Bank was quickly cleared by the Norwegian government of all allegations surrounding misused or misappropriated funds. Yet, in March 2011, the Bangladeshi government launched a three-month investigation of all Grameen Bank's activities. This inquiry prevented Muhammad Yunus from participating in the World Economic Forum.

In January 2011, Yunus appeared in court in a defamation case filed by a local politician from a minor left-leaning party in 2007, complaining about a statement that Yunus made to the AFP news agency, "Politicians in Bangladesh only work for power. There is no ideology here". At the hearing, Yunus was granted bail and exempted from personal appearance at subsequent hearings.

These investigations fueled suspicion that many attacks might be politically motivated, due to difficult relations between Sheikh Hasina and Yunus since early 2007, when Yunus created his own political party, an effort he dropped in May 2007. In 2013, he faced a state-backed smear campaign that accused him of being un-Islamic and promoting homosexuality, after he signed a joint statement criticising the prosecution of gay people in Uganda in 2012 with three other nobel laureates.