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203 Chapter Eleven The “Scandal” of Grameen The Nobel Prize, the Bank, and the State in Bangladesh Lamia Karim Introduction This chapter examines the absence of a critical global or local engagement with the harsh realities of microfinance in the lives of poor women. The power of Grameen Bank–­ style microfinance lies in its ability to showcase poor Bangladeshi women as model “entrepreneurs.” It is a rhetoric that has seamlessly fed into donors’ desire to create non-­ Western societies that conform to Western capitalist norms, as well as local nationalist desires to become equal with the West. Grameen has always been celebrated as an innovation in banking for the poor; however, I argue that the true significance of Grameen can be found not in banking, but in the interstices of culture, kinship, and social hierarchies. I analyze how power and politics intersected in the making and unmaking of two global icons: Grameen Bank and its founder, Nobel laureate Muhammad Yunus. In Bangladesh, which is home to Grameen Bank, 2006 was a moment of triumph and euphoria. That year, Bangladesh joined the two other South Asian countries, India and Pakistan, that had Nobel Peace Prize winners. From the prime minister to the beggars on the street, everyone celebrated the Nobel Prize with festoons, balloons, songs, and speeches. The Nobel Prize had endowed this impoverished country of 160 million with new meaning and a position of equality with the more prosperous nations of the world. To Bangladeshis, their country was no longer a backward and undeveloped place, but a place that gave development ideas to the world. It was Muslim but modern; it was poor but rapidly developing.This even became a coming-­of-­age discourse in Bangladesh. In this chapter I examine the events that led to the downfall of Nobel laureate Yunus, the breakup of Grameen Bank, and Yunus’s antagonistic relationship 204 Lamia Karim with Prime Minister Sheikh Hasina of Bangladesh. I consider the alliances between political elites, the international development community, and nongovernmental organizations (NGOs); their reluctance to engage in any critique of microfinance as a panacea for poverty elimination; and the notion that Grameen Bank has benefitted poor rural women, even in the face of data to the contrary (Rahman 1999a; Muhammad 2007; Ahmad 2007; Karim 2008). In Bangladesh, a majority of the studies on microfinance are conducted by consultants hired by MFIs and development organizations, thereby narrowing the field of critical perspectives on the adverse effects of microfinance on women’s lives (Karim 2011, 163–83).Why have Grameen and its founder,Yunus, mesmerized so many people? The powerful metanarrative of microfinance, supported by thousands of anecdotal success stories associated with the bank’s lending program with poor women in Bangladesh (Yunus 1991; Todd 1996; Counts 1996, 2008; Bornstein 2005; Dowla and Barua 2006), has convinced millions around the world to believe in microfinance as a viable instrument for the social and economic betterment of the poor, particularly poor women. In analyzing the rise and fall of Yunus and Grameen (see Karim 2011a; Bateman 2014a), I have examined the Bangladeshi government’s controversial removal of Yunus as the director of Grameen in the wake of Tom Heinemann’s documentary The Micro Debt, the global response to the actions of the Bangladeshi government, and local Bangladeshi responses to the film and the government’s action, particularly those of intellectuals and feminists aligned with the NGO movement.1 Microfinance and NGOs in Bangladesh After the independence of Bangladesh from Pakistan in 1971, Western development organizations mobilized NGOs to provide services to rural people. Western bilateral and multilateral development organizations saw the NGO as a more effective and less corrupt organization than the fledging Bangladeshi state, and they diverted funds from the state to the NGO sector for rural development projects. In the neoliberal environment of the 1980s and 1990s, when state funds were shrinking in Western countries, development organizations began to scale back their aid packages and focus more on microcredit as a poverty-­ alleviation tool that could eventually become self-­ financing through the fees and interest charged to borrowers. From the late 1980s, microcredit took off as a viable alternative to direct aid with women as the key actors of economic social change.The The “Scandal” of Grameen 205 Grameen Bank model conceptualized poor women as potential entrepreneurs who needed small injections of cash to able to sell chickens, eggs, puffed rice, and so on in the rural economy (Yunus and Jolis 1998; Khandker 1998; Bornstein 2005...


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