Guest Articles

August 31

Alex Counts

Yunus Was Right — Credit is Indeed a Human Right, and Savings is Important Too: Why the Microfinance Sector Must Avoid the ‘Circular Firing Squad’ and Promote Multiple Approaches to Financial Inclusion

To paraphrase Ronald Reagan’s famous debate line, “There he goes again.”

I was saddened to read Jeff Ashe’s recent NextBillion article, “Yunus Was Wrong—Savings, Not Credit, is a Human Right: Here’s How the Financial Inclusion Sector Can Shift its Focus.” In the article, Ashe, an accomplished leader in the financial services for the poor movement, continues promoting his favored approach — self-help groups and village savings and loan associations — by bashing those who emphasize other, complementary strategies. He has been doing this for more than a decade, and I have never understood why such a giant in our field has adopted such a small-minded mentality in his efforts to affect social change.

Unfortunately, it is far too common for people promoting a social innovation or a social enterprise to do so at the expense of others that are making their own positive impact. Seeing the world through an “either/or, better/worse, good/bad” lens is usually much more limiting and much less constructive than more mature and constructive “both/and” approaches. Why doesn’t Jeff believe, as I do, that savings-led strategies are powerful and compelling enough to be promoted on their own, without denigrating any other model?

Yes, among Muhammad Yunus’ many bold, sweeping statements was his assertion that credit should be recognized as a human right. His point was that instead of waiting for governments to deliver them services — or for businesses to deliver them jobs — as a way of securing their human rights, the poor could and should be given the means to secure those rights through their own efforts. He initially emphasized credit, both in his public statements and his early work with Grameen Bank, and in doing so revealed a previously invisible market for loans amongst the world’s poor women.

Yet from day one, Grameen Bank offered savings and insurance products alongside credit — something that Jeff would have mentioned if he was trying to present a balanced and holistic view of his topic. While in the 1980s and early 1990s Yunus did emphasize microcredit, from the late-1990s on he focused more on microsavings. Indeed, his savings products became so popular that, for a time, Grameen Bank had tens of millions of dollars in excess savings beyond what they could lend out to their members.

In fact, it is difficult to imagine that the formerly invisible market for savings amongst the world’s poor would have been discovered by so many influential people had Yunus not opened their eyes to the unmet demand for credit first. (For more on the evolution of Yunus’ philosophy, check out the third edition of my book, “Small Loans, Big Dreams,” that came out in 2022, along with this excerpt, and this review by Beth Rhyne that was published by NextBillion.)

In light of the impact and evolution of Yunus’ work and views — and of the broader financial inclusion industry — it seems clear that all of the tools that can help the poor, and all the methodologies for delivering those tools, should be celebrated, supported and improved upon. Those tools include credit, savings, insurance, childhood and adult education, and much more. Can we agree to not pit one effective solution against another? Can we do our best to avoid the circular firing squad trap in the financial inclusion sector?

Last year, Scott MacMillan published an excellent biography of the late Sir Fazle Abed of BRAC (a book he also discussed on NextBillion). If you have not read it, I encourage you to do so. At one point, he describes the initial uproar within BRAC — an incredibly impressive and accomplished Bangladesh-based global development institution — when Yunus and Grameen Bank were announced as the co-recipients of the 2006 Nobel Peace Prize. Many BRAC team members felt they were equally deserving, but Abed put an end to that kind of response by simply saying that Yunus deserved the prize, full stop. His wise and generous words had their intended effect.

A few weeks later, I saw Abed at the 2006 Microcredit Summit Campaign meeting in Canada, and I noticed he seemed under the weather. Someone travelling with him mentioned to me that he would normally have cancelled the trip since he was unwell, but he went through with it so that people did not conclude that he had cancelled due to sour grapes about Yunus being honored. Rather, he travelled 8,000 miles with a bad cold to see his fellow Bangladeshi feted by a global gathering of microfinance leaders.

I fear it is too late for Jeff to get in touch with his inner Fazle Abed. Hopefully a new generation of changemakers — including those fortunate enough to take Jeff’s course at Columbia University — can and will do so.


Alex Counts is the author of Changing the World Without Losing Your Mind: Leadership Lessons from Three Decades of Social Entrepreneurship, an independent consultant, an adjunct Professor at Johns Hopkins University, and the founder of Grameen Foundation.

Photo credit: Tumisu via Pixabay.




Finance, Social Enterprise
financial inclusion, global development, human rights, lending, microfinance, poverty alleviation, savings