Dhaka, Bangladesh (BBN)Nobel laureate Prof Dr Muhammad Yunus has been selected as one of the six greatest business pioneers by The Financial Times.
In an article entitled ‘Business Pioneers in Finance’, UK-based international newspaper placed the microcredit guru alongside five other greatest pioneers — Warren Buffett, Amadeo Giannini, Henry Kravis, JP Morgan, and Mayer Amschel Rothschild.
The newspaper selected the founder of Grameen Bank as one of the 50 business pioneers of all time.
The article, published in the newspaper’s March 31 issue, describes “how financial innovation seems to be all around us today yet, it’s not only technology that shapes it, but it’s rather about how a few pioneers in finance chose their investments and expanded credit.”
His championing of small loans to the poor in Bangladesh — and the related idea of social business — has spread around the world. At home the same socially responsible values are very much in evidence in BRAC Bank, for example, according to the FT.
Born in Chittagong, then in East Bengal, in 1940, Yunus pursued research in economics, moving to the US to study for a doctorate.
But the war that led to the independence of Bangladesh in 1971 drew him home.
Within three years, at a time of famine and persistent poverty, he grew frustrated with university teaching and focused on working directly with the poor.
In 1976, he began offering very small loans without security to the poor, notably women, to bypass loan sharks, initially extending the money interest-free and then underwriting bank loans himself, while insisting on immediate and regular repayments by instalment.
That became the basis for Grameen Bank (“the bank of the village”), which in 2013 made 7m loans totalling $1.6bn.
Its model has since been exported to many other countries, even the US.
His efforts won Yunus and the bank a joint Nobel prize in 2006 — for peace rather than economics.
“Yunus’s long-term vision is to eliminate poverty in the world,” the jury concluded.
“That vision cannot be realised by means of microcredit alone. But Muhammad Yunus and Grameen Bank have shown that, in the continuing efforts to achieve it, microcredit must play a major part.”
Microfinance has faced growing criticism, however, with accusations that in many countries the interest rates are usurious and that it misallocates finance at the expense of mid-sized and larger enterprises while doing little to alleviate poverty.
A study in Hyderabad in India in 2015 by Esther Duflo of Massachusetts Institute of Technology concluded it had made little difference to lifting households out of poverty.
“Microcredit may not be the ‘miracle’ it is sometimes claimed to be, although it does allow some households to invest in their small businesses,” she concluded.
Grameen came under criticism, with Sheikh Hasina Wajed, Bangladesh’s prime minister, accusing it of “sucking blood from the poor”.
Yunus himself became embroiled in a battle for control with the government and stepped down as head of the bank aged 70 in 2011.
Undeterred, he continues in books and speeches to champion “social business”, which, like Grameen, reinvests profits rather than paying out dividends.
BBN/AS-21Apr15-1:00pm (BST)