Dr Muhammad Yunus’s Bangladesh (Part 1)

Bangladesh is the second-fastest growing economy in the world.  Its GDP has increased from $31 billion in 1990 to $355 billion, as per the latest figures quoted by IMF’s World Economic Outlook Report 2022.  It is expected to reach $1 trillion by 2030.

Bangladesh has initiated infrastructure and power megaprojects.

Out of the nine ongoing mega projects, China is funding five since Bangladesh has signed on to China’s Belt and Road Initiative (BRI). The Chinese projects include the $3.3 billion Padma Bridge, the $1.9 billion Pigeon Power Plant, the $1.32 billion power grid development, a $1 billion digital connectivity project, and finally, the $15 billion Payra deep-sea port.

Japan is funding the Dhaka Metro Rail and Matarbari deep seaport.  India has loaned money for the $1.6 billion Maitree Super Thermal Power Plant.  Russia is funding the country’s first nuclear power plant, the $13 billion Rooppur Nuclear Power Plant.

Bangladesh is choosing nuclear, coal and thermal power when the world is moving away from fossil fuels and hazardous nuclear energy.  Neighbouring India plans to become the green energy supplier of the world, but Bangladesh is making huge investments in energy projects that are not environmentally friendly.

The rise of Bangladesh has surprised everyone.  From 1947-71, as the eastern wing of Pakistan, it was desperately poor and regularly needed relief funds from the western wing, due to constant flooding.  After the creation of Bangladesh in March 1972, the then US Secretary of State Henry Kissinger called the country a Basket Case.  It was considered to be a non-viable state.

Bangladesh has made all prophets of doom eat humble pie.

It was classified as a Least Developed Country (LDC) by the UN.  The LDC status allows preferential trading terms (lower tariffs and higher quotas) by countries in the EU.  Bangladesh turned its weakness into its strength.  It focused on the garments export industry, following the growth trajectory of the now prosperous Asian countries such as South Korea, Hong Kong, Thailand and China.

Bangladesh – which did not have a cotton crop – ventured into garment production to utilise its competitive advantage of cheap female labour, which is a key element in this labour-intensive industry.   Bangladesh initially relied upon South Korea for technical and managerial assistance, but soon became independent.

A cotton-producing country like Pakistan never progressed beyond manufacturing T-shirts, mainly because the business sector has always parasitically sucked money from the state through subsidies and rebates-termed rent collection in economics.  Bangladeshi exporters, on the other hand, worked with diligence and ingenuity, which enabled them to enter and dominate the high-value-added fashion garments sector.

Its economy’s mainstay is its garment export industry. Bangladesh is the world’s second-largest apparel exporter.

Garment exports stood at $35.8 billion in 2020.  Bangladesh’s total export earnings in 2020 were 41.2 billion.

Oxford Internet Institute states that Bangladesh has a 16 per cent share in providing online labour, second only to India, which holds a 24 per cent market share.  Interestingly, the US ranks third with a 12 per cent market share.  As per UNCTAD, 700,000 registered online freelancers bring in $100 million to the Bangladeshi economy.  Bangladesh is looking to diversify its economy by encouraging growth in this sector.  Bangladesh has also registered growth in shipbuilding.  It has exported sea vessels to New Zealand, Denmark, Netherlands, Germany, Kenya and India.

In the arena of women empowerment and the global gender gap index, Bangladesh scores higher than the US.   This has probably been the single greatest factor in Bangladesh’s economic rise.  No country can progress if its women remain uneducated and housebound.

Bangladesh’s textile sector has actually only come full circle with the rise of its garment sector.  One has to be familiar with Bengali history, to appreciate how the past reconnected with the future, with some modern initiative and enterprise.

Bengal was the richest princely state of erstwhile Mughal India.  The fall of Bengal in 1756 established the rule of the East India Company in India.

Bengali craftsmen possessed peerless weaving skills.  Bangladeshi Rajshahi silk -dating back to the thirteenth century – is synonymous with supreme quality.  British historians admit to brutal British policies designed to destroy the Bengali textile industry to develop the inferior British textile industry.

Amartya Sen, the Bengali-Indian Nobel Laureate, concluded with his research that the Bengal famine of 1943 – which caused three million deaths – was solely due to British policy failure.

Poverty, starvation, floods and famine became the fate of prosperous and culturally sophisticated Bangladesh due to British colonialism.  Calcutta in Indian Bengal -partitioned during the independence of Pakistan and India- became the poster child of destitute India, thanks to Mother Theresa’s internationally acclaimed charity work.

Bangladesh’s meteoric rise is due to organic change that happened gradually but extended to all areas and sectors of the country due to one man’s tireless efforts. Nobel Laureate Dr Muhammad Yunus is the sole architect of the revolution in Bangladesh.

His compassion, patriotism, dedication and ingenuity transformed the country’s socio-economic landscape. through his various initiatives, beginning with the now internationally renowned Grameen microfinance bank.  He is known primarily for this initiative, although his monumental work is way larger in scope.

It is pivotal to understand that true progress only happens after changing mindsets.  Systemic and structural flaws inherited from colonial rule led the people to despondence and a complete lack of agency.  No economic planning can succeed if individuals do not feel driven and empowered.

The belief that every citizen has a stake in his country’s future has to be nurtured through community engagement and equitable resource allocation.

This shift in mindset must precede any successful development effort.

History bears witness to this fact.

In 1756, Robert Clive walked in with only five Englishmen to establish British colonial rule over Bengal. Locals did not resist the handful of British who had defeated their army and killed their ruler.  It is crucial to understand that the locals were the have-nots who had no stake in the future of Bengal.  They were subverted and denied any stake in the country’s future.  This was the raison d’etre of Bengal being subjugated and oppressed by brutal colonial rule.

Dr Yunus addressed this factor and transformed Bangladesh through community engagement and social consciousness.  He was an assistant professor of economics at Middle Tennessee State University in the US in 1971.  He could have led a cosy life in the west, teaching marxism, communism and capitalism- romanticising the various economic systems within the ivory towers of academia. Instead, he chose to return to Bangladesh.  He first became an academic, and his fieldwork led him to discover the problems of the impoverished.

Dr Yunus observed that rural Bengali women were caught in the vicious debt traps of money lenders.  They were leading lives of utter desolation with no hope of change for their future generations. He pioneered microfinance as an optimal socio-economic tool for upliftment.  Microfinance initiatives in rural Bangladesh freed the poor from generational debt and empowered the local women.

The scope of his work expanded to include the public sector when the Bangladeshi government first sought his assistance in the fisheries sector.

Dr Yunus said and I quote:

“In 1986 Government of Bangladesh invited us to take over a large fisheries project.  The project was not getting off the ground after investing several million dollars of donor money. We did not know anything about growing fish.  Government records showed that the actual annual fish harvest remained below 50 tons.  Grameen brought in a new management style, new determination and a new drive.  Poor people around the ponds were organised into groups to become partners in the pond management and share the harvest on a 50:50 basis.  Grameen provided the capital and know-how; poor people provided their labour.  The stealing of fish was brought down to near zero.  The poor, who under the previous regime, either stole fish for themselves or stole fish as agents of others, now became growers and protectors of the fish and owners of the fish.  In 1993 Grameen produced 805 tons of fish, 402.5 tons went to the poor group members.

Encouraged by the results of our fisheries project we have created a non-profit, non-stock new company called the Grameen Fisheries Foundation.  In a capitalist framework, we have always ignored the role of another type of entrepreneur, the social-consciousness-driven entrepreneur.  I think it is time we pay serious attention to them.”

He then transformed the garment industry.  The capitalistic model of production focuses on achieving optimal mechanical output at the least cost, relying on efficient production processes and Management by Objective (MBO).  This approach is plagued by labour issues, leading to all kinds of human rights violations.

The recent mob lynching of a Srilankan General Manager of a Pakistani garment factory demonstrates how a disenfranchised male workforce reacts violently to demands for higher standards of performance.  People need an incentive to work efficiently.  Those who have no stake in the success of an enterprise will never strive for it.  Community engagement and economic incentives foster diligence and a sense of duty as they are aligned to justice and fair play.

On a darker note, the Chinese and Bangladeshi apparel industry relies on a female workforce.  There are many human rights violations linked to this practice.  Women are subverted, controlled, exploited and even abused in the labour sector.  This is enabled through the abuse of patriarchy.  Had there been a female workforce in Sialkot, the factory manager would not have faced mob violence.

(To Be Continued)