Bangladesh has made impressive strides in health, education, and poverty reduction over the past few decades. For instance, since 1990, child morality fell by two-thirds. These gains were made possible because a vibrant, effective civil society, in particular, microfinance providers like Grameen Bank, BRAC, ASA Bangladesh, and the 138 other MFIs that reported to the Campaign last year.
Earlier this month, the government-appointed Grameen Bank Commission of Inquiry (this is the Commission meant to release recommendations as to the future of Grameen Bank) released its interim report, which concluded, among other recommendations, that the incumbent directors of the bank’s board should no longer hold office. These are the 9 women borrowers elected by the 8+ million women shareholders of the bank to represent their interests at the highest level.
In addition to the continued attacks on the independence of Grameen specifically, there are broader implications of a potential chilling effect on civil society writ large, which has been instrumental in improving health and fighting poverty.The women on the board of directors have not taken this audacious report lying down, however. They released a powerful response to specific accusations from the interim report (read the translated response).
Should we just watch from a distance while someone runs away with all the fish from our pond and do nothing about it? We cannot do that!…Nobody can cite a single example where an elected member took advantage of her position in the board. For the last 36 years we have been running the bank with utmost honesty.
Here are the main points from the Grameen Bank Commission of Inquiry’s interim report regarding the future of Grameen Bank:
- The incumbent directors (i.e., the nine elected women shareholders) of the Bank’s board should no longer hold office.
- The government must certify that all future board members reach certain requirements, including the completion of education equivalent to grade 7.
- Various accusations against the current board of directors, such as the board is not functioning properly and that the women board members have not participated in board meetings and discussions.
- Grameen Bank is legally a government bank, not a private bank, despite the borrowers owning 97% of the bank’s shares and government owning only the remaining 3%.
In addition to Grameen Bank, the Commission’s report also includes accusations against Grameenphone, an independent company that is part of the Grameen family of businesses. Grameenphone has the stated goal of providing affordable telephone service to the entire population of Bangladesh, and is the country’s largest cellular operator.
The Commission recommends the suspension of Grameenphone’s license and reports that Grameenphone owes Grameen Bank USD 750 million relating to its control of shares of the company.
The reasons behind the suspension of the license (related to the original MOU and, again, disputes over who controls company shares) as well as the reports of Grameenphone owing money to Grameen Bank had never surfaced before the report, despite annual audits conducted within both companies. Like the actions against Grameen Bank, the Commission’s recommendations move Grameenphone in the direction of government control over the company.
The effects of the Commission’s recommendations regarding the future of Grameen Bank and Grameephone could have lasting effects on antipoverty work, civil society space, and investment throughout Bangladesh.
Further, if the government continues to move in the direction of taking control of Grameenphone, it could threaten both current and future investment in Bangladeshi business, beyond just Grameenphone. Telenor, a Norwegian telecommunications company, is currently an investor in Grameenphone. Without assurance that private business is safe from government control, local and foreign investors will hesitate to send investments to Bangladesh, further hampering economic development.
And here is news coverage from Bangladesh:
- GB directors should quit: Recommends govt-formed commission on Grameen Bank
- GB set up firms beyond mandate
- 9 GB directors trash commission’s report
- Telenor worried over Grameen Bank row
Thank you to our colleagues at RESULTS for help with this summary.