The Hindu Business Line : Yunus made credit a `fundamental human right'

Once you have credit... you have money for investment... leading to higher income... to some more savings, better consumption and then you again inject more credit so this vicious cycle becomes a virtuous cycle. — MR KHALID SHAMS, MANAGING DIRECTOR, GRAMEEN TELECOM

recently in Dhaka

Grameen Bank's founder and winner of this year's Nobel Peace Prize, Dr Muhammed Yunus, has played a great role in the transformation of the rural sector in Bangladesh and establishing credit as a "human right" of the poor, said Mr Khalid Shams, Managing Director, Grameen Telecom, in a conversation with Business Line.

Excerpts from an interview:

Both Grameen Bank and Grameen Phone are profit-making entities; already Grameen Bank has 2.65 lakh Grameen phone ladies as subscribers. So you are meeting both social and economic goals?

Yes, the `village phone programme' is a unique initiative that attempts to provide modern GSM based mobile telephony to the remote rural areas; it tries to attain clear development objectives through a profitable telecom business. Grameen Bank MD, Muhammad Yunus, has made it clear that let Grameen Bank remain as aloof as possible from other business enterprises, so that they remain both transparent and financially accountable in the market contexts. The social business enterprises should be run as business, so that their financial success or failure can be assessed.

How is the general economic scene in Bangladesh?

In many ways the economy is changing and a lot of development is taking place. The macro-economic indicators are positive. Our savings rate, very low in the past, and investment rates have gone up, private sector is growing; export earnings have grown significantly.

The GDP, despite the political turbulence, is growing consistently at over 5 per cent. On the social side the indicators are reasonably good too. Since independence, a few important things have happened. One is the big change in the agriculture sector, which is still the main stay of our economy, now contributing 30 per cent of GDP.

So what has changed on the agri front — in India small farmers are facing a lot of distress?

A basic structural transformation has taken place here. Bangladesh did not have much of irrigated agriculture, we had only 5 per cent arable land under irrigation back in 1972. Now as much as 40 percent of the cultivable land is being irrigated through shallow tubewells.

The second big change was in communication and transportation. Because this was a country of big rivers, people could only move from place to place in boats or the railway; I remember visiting my grandmother in Comilla, about 150 km from Dhaka, it took three ferries and five hours. Now all the rivers have been bridged and we have a network of metalled roads; they may not be good quality roads but today there's no district town in Bangladesh that cannot be reached within eight hours from Dhaka by road.

Are you getting foreign investment in the infrastructure sector?

There is only a trickle, because of the government's very stringent policies. Unfortunately, the last government mismanaged the public sector investments, particularly power. They couldn't really decide who should get the business, it was more a question of allocating business; who would get what out of which contract.

But the telecom sector is really buzzing...

As I look at some of the subscription figures in both Bangladesh and India, I'd say the Bangladesh mobile phone sector is growing almost as fast as India, mainly because it's such a small compact country. It costs telecom operators much less to set up infrastructure, while India is a much bigger country. Even in the coastal belts you see people with sleek instruments.

How are mobile instruments priced, for instance, a basic Nokia set?

We are the dealers for Nokia phones; the cheapest Nokia is 3500 Taka and much cheaper sets are available. The telecom sector has generated a lot of new employment. Not only the village phone, which has the social side, but roadside bazaars outside Dhaka now have phone repair and service centres manned by young people. The third development is on the social side, particularly girls going to school.

It might not be good quality schooling but for the first time children are going to schools. And although people are scared about the rise of the fundamentalist I think that is the more extreme fringe...

I was coming to that, why is this happening? There is talk in India that more than Pakistan, India has to fear Bangladesh on the terror front. Is that fear justified?

I wouldn't know except for the media reports I see. But when I look at Grameen Bank, BRAC, these are all very secular organisations. At our centres Muslims, Christians Hindus are all there. But religion is more a political thing. Whenever parties try to garner votes, they play up religion; both parties (the Bangladesh National Party and the Awami League) try to court favour with the religious groups.

Do you feel this rising fundamentalism is a backlash to what is happening globally vis-a-vis Islam?

That is another factor. Even I would hesitate to go to the US these days, the very thought of requesting for a visa and going through the inquisition by the immigration there ...

And being looked upon with a question mark because your passport says...

Bangladesh! My youngest son came back after doing his bachelor's there. He feels it's not worth it. Also, in Bangladesh we have the emergence of a civil society that is increasingly playing a more vociferous role and telling the politicians what they've got right and what they've got wrong. But coming back to macro economic indictors, demography is one big concern for Bangladesh because any country with this sort of population growth is difficult to reverse. But in the villages, there is no tension that one finds in the cities. A segment of middle-class is frustrated and cynical and asks what is going to happen; these people are the ones who send their children abroad. But go to a Grameen Bank centre and you'll find the woman is happy that her son is finishing high school!

Well, it is all relative, and Dr Yunus has made a huge contribution here!

Yes, a tremendous contribution, Nobel or not! The bottomline... what Yunus and Grameen Bank (where Shams was Deputy MD till 2004) have demonstrated is that when you have a clear perception of your goals — poverty alleviation — and if you can set up appropriate delivery systems and institutions to deliver financial resources to the poor, it brings about a positive social and economic change.

How is Grameen different from other organisations such as BRAC?

NGOs like BRAC emerged immediately after the liberation war, for relief and rehabilitation. Subsequently NGOs such as Proshika came in to build awareness about the poor, deprived, and the women.

Yunus was the first one who with a tremendous business sense designed a financial system and said let us just zero in on one thing rather than do things which are abstract like building awareness. What would awareness do when your stomach is empty?

Money is the source of all power, so give money but give money not by the way of charity but by the way of credit, so that your system becomes viable and sustainable. That is what he demonstrated very convincingly.

But it's a long process, the initial results were very quick but there has been a lot of learning along the way. There is talk about human, social and financial systems but none of these are blue printed.

Fine these women are doing well, put children in schools, food on the table... But when will they grow into middle-classes, the backbone of any country?

That's where technology comes in. We see Grameen women definitely coming out of poverty as a process.

David Gibbons, a Canadian professor who taught earlier at a Malaysian university and is now involved in a regional micro-credit programme, did a case study of Grameen borrowers 10 years earlier and now, and came to the conclusion that maybe within 10 years 60 per cent have overcome poverty, 20 per cent barely meet basic needs like two square meals, better clothes, some sanitation, and the remaining 20 per cent remain very poor, as poor as before.

Why?

He said there are three reasons. You take the loan, start making some money and improve your condition, but suddenly you're taken ill with a prolonged illnesses that devastates your life. You then start selling your pots and pans, the roof over your head, to see the doctor, buy medicines.

Second come the natural disasters that we are prone to... floods and tornadoes. The coastal belt is more prone and people living on the embankments of the big rivers lose everything.

The third, strange enough, when you have to marry off your daughter, the dowry is the curse. We thought that was a powerful study.

So I'd say the hypothesis that Yunus developed is that credit is a fundamental human right and once you have credit you can intervene in the vicious cycle of poverty, credit means you have money for investment, investment leads to a higher income, higher income leads to some more saving, better consumption and then you again inject more credit for higher investments so this vicious cycle becomes a virtuous cycle. That's the hypothesis.

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