Sunday, October 20, 2019

Yunus’ micro-credit provider Grameen Foundation Scotland collapses

  • News Desk,
    Published: 2018-12-23 22:26:41 BdST

Muhammad Yunus. File Photo

Muhmmad Yunus’ Scottish micro-finance provider - Grameen Foundation Scotland – has collapsed under debts.

A provisional liquidator was appointed to the Scottish charity, which provided small business loans in deprived communities, after its debts became "insurmountable", the BBC reports.

The Glasgow-based foundation's cash flow dried up after some of its customers fell into arrears, according to the report published last Thursday.

The initiative was inspired by the Grameen system in Bangladesh, which was created among others by Nobel Peace Prize winner Yunus.

Yunus was one of six directors of the foundation, which traded as Grameen in the UK, until crashed out of business.

Provisional liquidator Brian Milne, from business advisers French Duncan LLP, said the business had now closed with the loss of all four jobs, according to the BBC.

Grameen Foundation Scotland was based at Glasgow Caledonian University. It offered small loans to people unable to access mainstream financial services.

Its stated goal was "to improve the economic situation of the most financially disadvantaged in the UK, initially in the west of Scotland, on a sustainable basis".

Launched in 2012, it provided loans to about 1,000 people.

"The Grameen Scotland Foundation is unable to continue trading as its debts have become insurmountable,” the BBC quoted Milne as saying.

"Creditors are due around £300,000 and the main reason for the financial collapse is that a number of the foundation's customer have fallen into arrears which has had a detrimental effect on the company's cash flow.

"The directors petitioned for liquidation as the company is insolvent," Milne added, according to the report.

Opinions are divided as to whether micro-credit can bring peace despite high interests and inconsistent instalments.

Many, including Prime Minister Sheikh Hasina, describe Yunus as a 'usurer' as well as a 'blood sucker', a widely used reference to centuries-old tradition of money-lending in rural Bangladesh.

Bangladesh Bank sacked him as managing director of the Grameen Bank, with which he had shared the Nobel Peace Prize, in 2011 on the grounds that he had crossed the official age limit. Yunus had challenged his dismissal in the top court but lost.