Dr Muhammad Yunus’s Bangladesh (Part II)

Grameen Bank found avenues for greater community engagement within the textile sector.  His goal was to create a multiplier effect on the economy.  He substituted fabric imported from India with Bengali handloom fabric.  It was made possible by organizing the individual weavers-who owned hand looms bought by Grameen loans- to create the desired economies of scale.  Backward integration provided livelihood to almost a million poor home-based weavers.  Through import substitution, Dr Yunus not only saved $80 million in foreign exchange, but also created an export industry, prepared to supply to India, Pakistan, Sri Lanka, Thailand, China, Vietnam etc.

Dr Yunus went on to establish the Grameen Agriculture Foundation and Grameen Krishi Foundation, an irrigation project.  His work extends to the major sectors of healthcare, nutrition, textiles, education, energy, telecommunication, ICT, food production and internet services.  He established a total of 54 social businesses.

These very sectors are the growth engines of the Bangladesh economy today.  Grass root level organic change transformed the country.

The cottage industry and small and medium enterprises have thus played a role in poverty reduction.

The poverty rate has decreased from 80 per cent in 1971 to 22 per cent in 2021.  In 1990, Bangladesh’s Human Development Index (HDI) was 0.392.  It stood at 0.632 in 2019.  Pakistan’s HDI stood at 0.557.

The development of human capital invited a Foreign Direct Investment boom in Bangladesh.   The Shaikh Haseena government has attracted $160 billion in FDI from 2009-21.   In the three years from 2019 to 2021 FDI stood at $8.7 billion.  The US, UK, Luxembourg, Netherlands, Saudi Arabia, Hong Kong and Singapore are the leading countries bringing FDI to Bangladesh.  There are now close to 1,000 local and foreign companies operating in Bangladesh.  While FDI has the downside of increasing the investor nation’s power over the host nation, Bangladesh’s geographically diverse group of investor nations mitigate this threat to a great degree.

Dr Yunus’s contribution has been tremendous but Prime Minister Shaikh Haseena’s investment, monetary, economic and foreign policy has also been conducive to economic development.

China is the main source of FDI in Pakistan.  Chinese citizens, professionals and even their diplomats are targeted through suicide bombings by disenfranchised locals who feel threatened.  The Chinese are not safe, even as academics inside a university.  Observing Bangladesh’s path, we can understand why that is happening and how it can be stopped.

It is important to note that being a Muslim majority country, Bangladesh also struggles with religious extremism and militancy.  There have been terror attacks on Prime Minister Shaikh Haseena Wajid.  There was even a religiously-motivated failed coup attempt by middle-ranking army officers.  Yet the religious militancy is not out of control- due to community engagement leading to economic opportunities, which mitigates recruitment.

Bangladesh’s Shaikh Haseen Wajid is the daughter of Shaikh Mujeeb-ur-Rehman, who created Bangladesh after a power tussle with Zulfiqar Ali Bhutto when the latter refused to accede power even after the former’s election victory.   Four years later, a military coup led to Prime Minister Shaikh Mujeeb-ur-Rehman and his family being murdered in cold blood.    Shaikh Haseena then lived in India for many years.  Yet, when she returned to Bangladesh and became the head of state due to dynastic politics, she did not proclaim any agenda of revenge and neither did she show any bitterness towards her country or its army.  Shaikh Haseena’s patriotic stance is diametrically opposed to that of Benazir Bhutto, who nursed grudges, lacked patriotism and epitomized opportunism when she stole billions of state wealth.

Shaikh Haseena’s government showed fiscal responsibility.  Bangladesh’s borrowing from the IMF has been minimal, showing the sincerity of its leaders towards the nation.  Bangladesh has maintained a public debt-to-GDP ratio between 30% and 40%.  Pakistan’s public debt to GDP ratio is close to 90%. Fiscal restraint has allowed Bangladesh’s private sector to borrow and invest.

Beginning with the fisheries project in 1987, the Bangladeshi upper bureaucracy did not steal donor funds.  It dutifully engaged Dr Yunus to transform the fisheries sector, even as the lower bureaucracy was corrupt and inept.

All these factors resulted in Bangladesh’s GDP per capita in 2020-21 standing at $2,227.  Pakistan stood at $1,543.  India’s was $1,947.  Bangladesh is a country on the frontline of climate change in the world, even as it has historically suffered from flooding.  Bangladesh employed sophisticated satellite weather systems to develop an early warning system  It also built cyclone shelters to house those evacuating their homes.

Women were housebound and culturally barred from public space and social interaction, so flood warnings did not reach them.  The state’s infrastructure was hence ineffective in preventing the loss of human life.

Dr Yunus’ work mainly involved remote rural households which empowered women.  This increased literacy and integrated the women into society as equal citizens with rights and responsibilities.  Literacy and empowerment included the female population in the loop of flood warnings and the need for timely evacuation.  They acted with responsibility and the state’s infrastructure has hence become effective in preventing the loss of human life.

In Pakistan, the clergy has actively preached keeping the women housebound, infantilized, voiceless and devoid of agency.  The Bangladeshi example shows us how humanizing women and turning them into responsible citizens can transform societies and economies.

On another note, Nirmal Chanda Bepary of the UK-based Development organization Practical Actions has developed a technique where flood water is making sandbanks fertile with pumpkin plantations.  This scientifically guided spirit of enterprise helps combat poverty from the loss of habitat to flooding.

Shaikh Haseena’s government has faced criticism for making Bangladesh a one-party state and for clamping down hard on critics, especially in the media.   There is a growing outcry about disappearances, imprisonments and missing persons, similar to Pakistan.

In 2007, Dr Yunus unsuccessfully tried to set up a rival political party, while Bangladesh was ruled by an interim military government.   He claims that this threatened Prime Minister Shaikh Haseena.  He came under attack from the government after a 2010 Norwegian documentary alleged Grameen Bank was dodging taxes.  In 2011, Bangladesh’s Central Bank ordered Dr Yunus sacked as the Managing Director of Grameen, because of his advanced age of 71 years.  The government now owns a 10 per cent share and appoints the chief executive and the CEO.  The residual 90 per cent shares are held by women borrowers of Grameen.

However, even with all the charges levelled against her, the prime minister’s performance is her redeeming quality.

In Pakistan, Yusuf Raza Gillani, Nawaz Sharif, Benazir Bhutto and Asif Zardari, had no goal beyond stealing state wealth and depositing it in offshore accounts.  They made the country live off debt to impoverish it.  These politicians actively promoted racism to divide and rule.  They politicized the bureaucracy and all state institutions, entrenching their henchmen everywhere, to embed corruption in the fabric of the body politic.  Their aim was self-aggrandizement at the cost of the nation. Imran Khan who marketed himself as the saviour of the nation also did not have any economic revival plan for Pakistan.  Imran Khan weaponized religion and relied on rhetoric.  He was hoping to get by through populism alone.  He turned friendly nations into foes with his irresponsible populist statements.  His dismissal has additionally flamed anti-army sentiments in his mesmerized loyalist followers.The story of Bangladesh has lessons for all developing nations.

(Concluded)