Credit is a human right. Is debt?
The heading is not mine. The first portion is a quotation from Mr. Muhammad Yunus and challenged by Thomas Dichter â€” one of the development experts who participates in my film, â€śCaught in Micro Debtâ€ť which was aired in the Norwegian Television on November 30.
The film was the Norwegian version of an upcoming international film on microcredit which we have been working on over the last couple of years. The new version, which will be named, â€śThe Micro Debtâ€ť will be released at the end of January in both Sweden and Denmark. From there we can only hope that other countries will air our film. Thomas Dichterâ€™s retort, â€śIs debt?,â€ť pinpoints what our film actually is about: does microcredit really eradicate poverty? Is poverty just a matter of handing out a small amount of money and then letting â€śthe marketâ€ť do the rest?
After talking to scores and scores of poor people in Mexico, India and Bangladesh I do not believe so.
One billion poor people in the world need access to money â€” just like you and I â€” but when the poor have to pay interest rates ranging from around 30-200 percent â€” one could with good reason question how this is being done. And that is what we have done. Asked questions. We have studied loan books, and we have seen some of the consequences of an unfettered market, where poor loan takers tell us about harassment, intimidation and threats. What they told us is a million miles fromÂ the smiling faces we see depicted in the many websites and adverts which hail microcredit as the number one solution to poverty problem. As far as I know it is the first time ever that a TV-documentary has turned the lens the other way, and tried to look at the other side of the coin â€” the flipside where people drink poison or burn themselves to death in India or where poor Mexican women who have lost everything because they are so indebted with loans with 200 percent interest rates or where the small villages in the area of Dinajpur have not moved themselves one bit out of poverty.
On the contrary in order to service the debt, houses have been sold and people have fled to big cities. Embroidery, jewellery, pots and pans â€” even the tin-sheets from the roofs are being sold to pay the weekly instalments. Not only to the NGOâ€™s and banks but also to the local loan sharks who still exist and have better days than ever.
One little feather and the five chickens
A part of our story is about Grameen Bank and Mr. Yunus and without being personal, I can conclude â€” after almost a month in the centre of the enormous media attention in the Bangladeshi and international medias â€” that the famous Danish poet, Hans Christian Andersenâ€™s fairy tale of the feather that became five chickens is not only right â€” itâ€™s also very scary.
However, and because not many journalists in Bangladesh, France, Italy and the UK are fluent in the Norwegian language, I can understand that some misunderstanding can occur. But that cannot and should not be an excuse for not doing the job properly!
I have seen and read so many wrong things, that most of my times have been spent correcting various journalists and commentators spreading rumours about Grameen Bank and Mr. Yunus. Iâ€™m therefore glad that bdenews24.com has given me the opportunity to clarify a few of the many misunderstanding/misinterpretations of what my film is actually saying:
â€˘ We have never said â€” nor claimed â€” that the transfer of money from Grameen Bank to Grameen Kalyan was done to enrich Mr. Yunus and/or Grameen Bank
â€˘ We have never said â€“ nor claimed â€“ that corruption or any misuse of the money has occurred
â€˘ We have never said â€“ nor claimed â€“ that Grameen Bank broke any law.
However, we have said â€“ and we still do:
â€˘ The transfer was violating the agreement between Norway and Bangladesh.
â€˘ The official report from Norway does NOT give any substantial answer as to what happened with the remaining Norwegian donation to Grameen Bank.
â€˘ We are still puzzled as to what the so-called â€ścompromiseâ€ť actually contained.
â€˘ We have published a number of documents that were stamped â€śConfidentialâ€ť at the offices of Norad and at the Norwegian embassy in Dhaka. We have asked: Â If there was no problem with the transfer, why were the documents kept away from the public? So far â€” no one has come up with an answer to that question.
â€˘ We are still puzzled as to why the First Secretary at the Ministry of Financeâ€™s ERD-division turned 180 degrees after initially deciding that all the money should be transferred back from Grameen Kalyan to Grameen Bank. We still donâ€™t know why. (However, I have read that Mr. Yunus said that all the money finally (when?) was later transferred back. If so, why was that done, when it has been said that nothing wrong was done in the first place?)
â€˘ The transfer was done for tax reasons. A point that was one of the major concerns in the documents from Norad and the Norwegian embassy in Dhaka.
â€˘ We are still puzzled about the â€śtaxation-questionsâ€ť. To my knowledge, Mr. Yunus has shifted from saying the transfer was not done for tax-reasons to that it was. We only quote from his personal letter and we would still like to know why or what motive was behind the transfer.
â€˘ When the Norwegian aid to Grameen Bank finished in the mid 90â€™s, it was agreed, that there should be made a joint evaluation (NOT an independent evaluation) where both Grameen Bank and the Norwegian embassy participated. Why did the evaluation not mention one single word about the transfer of money?
According to the head of the evaluation, it was not part of the agreement. We have never received an answer as to why. Who decided the terms of reference for the evaluation?
I have with interest read Grameen Bankâ€™s official response on their website as I have for almost six months asked Mr. Yunus and Grameen Bank for an official interview on camera. He and the Bank decided not to participate. It is their decision. I can only regret that one of the most dedicated promoters of microcredit rejected the opportunity to answer the many critical points I presented to them in email after email.
Letâ€™s â€śGrameeniseâ€ť the society
In an earlier response on bdnews24.com, Mr. Afsan Chowdhury correctly concludes that microcredit is merely a simple loan system â€” and not the miracle solution to alleviation of poverty that it has been sold as by aid agencies and Grameen Bank â€” and the plethora of evangelistic microcredit organisations.
The way microcredit works in almost all developing countries is unfortunately not as simple as it looks. The IPOâ€™s in India (SKS) and Mexico (Compartamos) have highlighted that there is big money to be made out of poor people. And in Bangladesh the facts and figures from e.g. UNDP contradicts the glorious path envisioned by Yunus which purports to â€śsee poverty in a museumâ€ť. In the Human Development Report from UNDP 1990, more than 84 percent of the population in Bangladesh lived below the official poverty line. 29 years later, the annual report from UNDP said that almost 81 percent of the population of Bangladesh lived (survived!) on less than 2 USD a day.
After three decades of microcredit and being the worldâ€™s motherland of microcredit, one should expect that the figures would have dropped dramatically in Bangladesh. Sadly they did not. The reason is that poverty is not simple at all. People are poor for a lot of reasons, and to â€śGrameenise the private sectorâ€ť is not the answer: â€śNot all of us can become Bill Gates. Why do we believe that poor people are better entrepreneurs than you and Iâ€ť, asks Thomas Dichter in our film.
The Scandinavian welfare model has shown that creating a well functioning society means that the state needs taxes to provide free education, free healthcare, good infrastructure and provide jobs and basic rights for the inhabitants of the country. Â That development has been achieved over generations and is or should not be in the hands of liberal marketers and greedy loan sharks â€” whether they are private or NGOâ€™s/banks.
It can seem almostÂ masochistic to pay from 50-60 percent in income tax, but thatâ€™s the reality in Scandinavia. On the other hand, my children can become doctors and professors without paying oneÂ single taka. They even get money from the state to study. I can get a heart surgery for free and if I loseÂ my job, the state will give me money for my food and basic expenses.
When confronted, most say that offering microcredit is a costly affair. The banks/NGOs have to employ numerous people to administrate the system and that is why they â€śhave toâ€ť charge the exorbitant interest rates. Iâ€™m asking: is that the poor peopleâ€™s fault that the system is built in that way? Do the loan officers have to be paid in terms of how many weekly payments they can collect or how many loans they can hand out? Is their â€śsuccess rateâ€ť based on the fact that most of the borrowers we met had from 3-7 loans at various banks/NGOs â€“ and the main reason was the fact that defaulters were offered a new loan â€“ just to cover the old one in order to make the proclaimed â€śsuccess rateâ€ť higher than even Danish banks can flash.
And what about basic consumer rights? Do they exist when it comes to microcredit? Almost all we met in the villages in Bangladesh and India canâ€™t read or write. We asked: So if you do not know how to read and write, how do you know whatâ€™s said in the loan documents you signed?
â€śThe loan officer told usâ€ť, they said.
Itâ€™s like asking a blind man to cross a highway â€“ ensuring him that everything will be fine.
Mr. Asfan Chowdhury asks for better and more thorough investigations into these issues. I totally agree. However, there are lots of evidence-based and imperative reports that have addressed the â€śnot-so-success-fullâ€ť side of microcredit.
The problem is, hardly anyone likes to listen.
It is about time they did.
Tom Heinemann is an independent journalist and filmmaker based in Copenhagen, Denmark.