Banker of the Poor

Freethinker -

Come to think of it, they will form a great couple. East and West - an ideal recipe. Proactive. Focused. Result-Oriented. Driven.

Z

ZahraJ:
Thanks for sharing your views with the readers.
I wish you a happy new year also, better than the previous ones.
Mohammad Gill

Dear Mr. Gill - Happy New Year to you. I just got the book on ``Banker to the Poor``. It`s authored by Mr. Yunus. After watching Oprah Winfrey`s recent admirable effort in Africa, I strongly believe that Oprah and Mr. Yunus can join hands to make a significant difference in the way the current day and age world functions. No doubt their approach and strategy to eliminate poverty are quite different. Still, two great minds and souls working toward a common goal can cause miracle in this world.

Re: # 53
I am amazed at your crass post. Who has appointed you to start labeling people Muslims vs. Non-Muslims? With all due respect, no one in their sane mind would like zakaat deducted from their bank accounts. All conscientious muslims would prefer to give zakaat to the charity or poor of their liking. Just because someone disagrees with this automatic deduction policy of some chor and dakus does not mean that he or she is a non-muslim. This is 2007. At least, refine your approach towards the interactors you love so dearly.

#54 urstruly: it is heartening to read that the zakat fund is being used to give micro-loans, rather than mere stipends. Ishrat Hussein has been a strong advocate of microcredit loans, and as I recall wrote a book on the subject as well (although I have not read it). Therefore, I have no doubt that ishrat hussein played a key role in switching zakat funds towards microcredit - since I am quite certain that microcredit schemes did not pick up in any big way in pakistan until the late 1990`s, when zia was long gone.

My basic point I think you will agree with - that microloans are liberating for the poor, since it makes them economically independent. it is this spirit of new-found self-confidence that i saw in the eyes of the women borrowers in bangladesh that i found so inspiring and memorable. A stipend keeps the receiver dependant. This has been the big genius of Younus, and the great truth that he has ``discovered`` (or rather reminded us of): that poor people, given a chance, can prove as enterprising as bill gates.

Urstruly,

Arguably there is some validity to your viewpoint. That is, a system based on interest may eventually be used to exploit the needy. Conceivably, once this micro-credit system takes hold, traditional banks may acquire its controlling stakes. This will be followed by various fees and penalties being applied (disclosed beforehand in fine print, of course), slow ratcheting of interest rates, the president making $10 million annual salary … and the rest will be good old fashioned usury.

For example, the toys I see at “Toys R Us” seem to share one common theme: to cultivate the next generation of net users, Comcast subscribers, and Barbie-wanna-bes. Winnie-the-Pooh was a lot more fun before Disney acquired its copy-rights. Arguably small steps, taken over time, can potentially lead to significant shifts in the way people think.

Alternative viewpoint

A case may be made for the micro-credit system which is presently helping people while paying for itself. If people are able to derive some financial benefits from it, while being gainfully employed, that’s not so bad after all. Could such a system eventually lead to mass exploitation? Yes, it very well may. But that applies to pretty much every institution around us. And your Islam is no exception here.

+++++

My sense is that chowkies here may not necessarily have a problem with the content of your posts. It is your obsession with imposing Islam that scares them. As a result they view your “islamization of charity” as a hidden attempt to propagate a hateful ideology to those hungry enough to go to anyone who gives them a loaf of bread.

Fanatics cannot be reasoned with. You advocate compassion on one hand, and then go on to insist that an apostate, an adulterer should be killed. And that is probably exactly what you would do in order to appease your god if law of land was not holding you back. And this is part of the underlying problem here …

Such aspects of your Islam are bound to scare a person … who would justifiably see Islam as a dangerous ideology. Last thing this person wants is to let fanatics control the flow of money and decide who gets what, how much, and under what terms.

tahmad

The following is an article by Ishrat Hussain, published in 2005, the previous Governor of State Bank - see how he is taking credit for the schemes initiated by an Islamic dictator 20 years ago.

PAKISTAN’S ECONOMIC TURNAROUNDAN UNTOLD STORY

ISHRAT HUSAIN

Social Safety Nets

As part of Social Safety net programme, the government has launched
direct cash-transfer programmes for poor families through medical assistance,
and educational stipends from the Bait-ul-Maal (a public welfare programme).
The Food Support Programme covers 1.2 million of the poorest households with
monthly incomes of up to Rs.2,000 per family (US$35). A system of needstesting
has been adopted for the identification of beneficiaries by linking the
programme with the zakat system.


The zakat programme that targets widows, orphans and the disabled has
been strengthened. About two million beneficiaries received assistance from the
Zakat Fund, of which 0.5 million receive assistance on a regular basis. It is
envisaged that an additional 1.5 million will be added to the list of zakat
recipients through rehabilitation schemes, which will provide micro loans of
Rs.10,000 (US$160) to Rs.50,000 (US$800) each for starting up small
businesses. An allocation of Rs.5 billion (US$80 million) has been made for these
schemes in addition to the normal stipends to mustahqeen (the needy) out of
the Zakat Fund. It is estimated that zakat contributes 10-15 percent to the
government’s poverty reduction programme.


http://www.sbp.org.pk/about/speech/economic_management_policies/2005/Pakistan_Economic_Tunaround.pdf

Re: # 48

``No one touches my bank account without my permission.`

This is true. No one touches your account without your permission. Non-Muslims like yourself are exempt from zakaat deduction, but interestingly enough they poor ones can receive zakaat. In addition, shias are also exempt from the deduction of zakat, since they have a slightly different system of zakat collection. If you are a Muslim and you do not want zakaat deducted from your account, you can transfer it to a current account (checking account) from your savings or simply withdraw the money for couple of days at the start of Ramadan. There are several other ways that you can take exception from the deduction of zakaat. All these rules were established in zia era.

Re: # 49

Let me guess... and you have basis for your harrangue, right? Pahleez, I personally have witnessed deserved people being given out from zakaat fund. The closest example being our housemaid. I did not mention in my last post, but Zakaat education scholarships/stipends were also establsihed for poor students in higher education along with interest free loans in that era. I have classmates who have benefitted from this stipend as well.

There is no denying on mismanagement and low level corruption. But it does not mean that zakaat fund was squandered away like the national treasury. There are only two recorded instances when the sanctity of this sacred trust was violated. Once it was violated by your very own secular phuphi jaan, benazir in her second term, who paid off about 80-100 million rupees to Balochi sardars thugs (who used to be your ``progressive`` compatriots in good old soviet days as well); out of that a minimum of 20 millions were paid to Bugti alone. This was to pacify the balochi opposition to her government. The other recorded instance when large amount of money was transferred to pay off other expenses was during the early days of your roshan khyal secular phupha jaan Mushraf who diverted large funds to pay off salaries of public officials when sanctions were toughened against Paksiatn in the aftermath of nuclear tests and Mushraf`s martial law. Whereas what Benazir did was a crime against the state of Pakistan, but Musharaf can be exceused given the dire circumstances Pakistan was in. But never ever there has been any accusation against any moulvi that he squandered zakat money. I do not give a character certificate to moulvis, since sarkari moulvis are as much thuigs and haramzadas as the so called ``enlightened ones``, but what is right is right.

But above was just the digression. The point is that a viable practical system to help needy and poor exists and there is absolutely no reason to allow interest based financing to make money out of the misery of helpless.

in #49: That sentence in bold is also messed up. Here is how it should read: By aiming to make beneficiaries independant entrepreneurs, microcredit is a tool to break the very real chains of enslavement to which the poor in developing countries are tied. In this way, contrary to what urstruly seems to think, it is vastly superior to charity - even real charity, let alone a corrupt system like zakat in Pakistan - as a means to promote the welfare of the most vulnerable members of society.

in #49: That sentence in the last para should be ``You think that commerce makes it immoral? `` and not ``You think that commerce makes it unviable. ``

Urstruly: On what basis do you claim that zakat funds went to widows and orphans? While some stipends may have been given, where was the transparency and accountability to make sure the stipends were not made to maulvis and other thugs whom Zia is known to have promoted. The main orphanages which are subject to close oversight by donors that are run in Pakistan are not funded by zakat funds. Zakat funds were basically another crime committed by zia, since it meant taking away people`s savings (many of whom were indeed not wealthy) and putting them in the zakat fund that lay outside the budget control process - and thus was misused by zia to give maulvis the funds they used to buy pajeros and go romping around pakistan with their gunmen. The money was stolen from ordinary savers - the rich borrowed money with no intention of repaying the money and so ``qarzaa maaf`` became a huge scandal in pakistan.


Also - you need to understand that charity is the best way to enslave someone. What Younus stressed was the opposite of charity - namely, he stressed (and stresses still, as far as I know) commercial viability. You think that commerce makes it unviable. Think again. By making beneficiaries dependant on charity, rather than independant entrepreneurs, microcredit is a tool to break the very real chains of enslavement to which the poor in developing countries are tied.

Re: # 47

Isn’t it amazing that you need a dictator to introduce Islamic banking? No one touches my bank account without my permission.

Re: # 43

Yes you can go only this far....

but let me take you a little further with real facts and figures. In the mid `80s a sytem of zakat (mandatory alms) and Usher (manadatory alms on the income from agriculture) was introduced in Pakistan. These two are different entities and funds are managed separately, therefore, I will only elaborate on Zakaat. Zakaat is mandatory on all Muslims and it is 2.5% on the fixed assets and those liquid assets that remain fixed for one year. Almost every eligible Muslim in the world calculates this amount annually and helps his unfortunate relatives and people in the community. That happens world over. Zia government organized the effort and started deducting zakaat directly from the savings accounts of every bank annually. It is a 2.5% deduction. This deduction goes into a capital pool called Zakaat fund. In a country like Pakistan where there is poverty and savings are abysmal this pool stands on average at Rs. 60+ billion (with a `b`) at any given time. Hundereds of thousands of poor, needy, widows and old are given stipends out of this fund monthly ranging from Rs. 500 to Rs. 1000+. I know this is not much but it is something. There is mismanagement, there is corruption, and sometimes this money is disperesed on political basis; and yet this pool of funds has maintained itself for the past 20+ years.

Now imagine if this pool of capital is managed scientifically and with control and less corruption. If it is collected with more control and people trust that their alms would not end up in some haramkhor politician and government official`s pocket this pool of fund can bvecome 100 times its current size or even more. We can start not only a welfare system at par with Europeans, of our own; but also we can lend interest-free loans to the entreprenuers out of this fund.

So in short, money is not the problem; the problem is the will to do it. If you are a hypocrite, or you work for someone else`s agenda, and if you have just madening hatered for any thing Islamic not only you will not let this system established but you will try to fail it.

Our dream is that when we will establish Pakistan as a Welfare Islamic state, no one in Paksitan will sleep hungry and every Pakistani will have two pieces of clothes on his body and most of all he will have dignity that he is not lesser because he is poor because he will find God on his side. Inshallah.

94% of Grameen loans go to women. The impetus behind Grameen for Yunus was the crushing poverty in Bangladesh, more specifically women’ poverty. He didn’t open the bank for profits, but to help the poor. The model has been very successful not only in BD, but also in many other developing countries (with various permutations from Zaire to Philippines). If interest free lending can be worked out, fine, if not, then there is no need for going in circles arguing in favor of 7th century banking practices suitable for camels. Developing countries need innovative solutions to poverty alleviation, and not some stupid religious sermons.

#44 by Urstruly

Again I will point to the vital difference in the Muhammad Yunus model to the reason why he got the Nobel. It is because the project is completely commercially viable, but the borrowers themselves are equity holders as well who get a cash share after ploughing back much of profit in expansion. Grameen Group is now not only a bank but a cellphone/payphone company too.

On the other hand, the ones in Pakistan and elsewhere are just viable commercial ventures like any other and owned by professional retail bankers and financiers, with obviously `zero` altruistic motives. So you are right and wrong :-)

Re: # 42

Have you entertained the possibility that certain people might have vested interest in not letting interest-free lending becoming successful, like for example, making money?

Look, if micro-credit banking is not a welfare scheme then I fail to see the reason for this article; shouldn`t it be portrayed as just another business venture (which in fact it is). In that case there is no reason for the adulation that is being shed upon Dr. Yunus, and there was no reason for tahmad to feel exhilirated by lending money to a potential cow owner. The fact of the matter is that this business venture is being tactfully touted as a ``welfare elevating millions (I really doubt the millions figure) out of poverty``.

So if it really is a welfare scheme ``elevating millions above poverty`` then why can`t it be interest-free. Why can`t it be a government effort to lend small business loans to farmers and other entrepreuners interest free. If with 40% interest rate the number of non-defaulters is touted out to be 98% then with interest-free loans it would be 100% - common sense isn`t it?

I want micro-credit to be a public welfare scheme initiated by the governments interest-free lending. Can`t we just restrian ourselves from making money out of lending money to the miserable of miserable and just lend him the money because it is morally uplifting and right?