Archive for March, 2011

The Arab Spring

I came across this term whilst reading the news recently. The Arab Spring – It sounded quaint and placid till I read what it meant – it is used to describe the revolt and armed intervention that is sweeping the Arab world. The term is meant to imply that akin to a caterpillar bursting out of its cocoon to become a beautiful butterfly, the Arab nations too are undergoing a transformation that will give birth to a better reality.

I think the term and its connotations are highly delusional.

The Arab world is blessed. It is sitting on an abundance of crude oil that makes it coveted by one and all. That same blessing is a curse as it makes the Arab world a target for others. A while ago Israel came under scrutiny for attacking a ship of peaceful protestors. Among Israel’s critics was Egypt. Now – several months on, everyone has forgotten the gross act of misconduct shown by the Israelis are the Arab world is thrown into turmoil … is this really an accident? A coincidence?

Israel is a country with the US, the UN and most of the western country’s at its beck and call. It acts without regard for the safety of its Arab neighbours and with wilful neglect of international laws and reprimands. It is a country that is very capable of sparking revolt and discontent in Egypt and watching it spread like wildfire to Libya Syria and Tunisia in the name of freedom.

What freedom? Removing Gaddafi or any other dictator will make no difference if the US and allied troops will continue their gunfire indiscriminately and set up base in these countries with the same flimsy excuse of peacekeeping that ruined Iraq in the not to distant past.

The governments of Egypt, Tunisia, Yemen, Egypt and Syria have long been a crumbling facade that burdened their own people. The Arab league was a joke and no help was forthcoming from the wealthy gulf region. The revolution was inevitable but was it really sparked by a street vendor being slapped by an armed guard at his apple cart? Or was this initiated at a much higher level to create a chaos only the US could come to save?

Yes Gaddafi is massacring his own people. Yes the Arab world is failing to intervene. Yes the western countries are suitably equipped to fight on behalf of the Libyan people. But then? What happens when Gaddafi is gone? Will the allied forces just get up and leave? We have seen the results in Iraq, nearly a decade on, there is much talk of leaving the Iraqis to self govern but the actions are far from matching those words. Allied troops will not leave the Libyans to enjoy their victory over Gaddafi. There will be no victory for the occupants of countries which go from the oppression of a dictator to the ‘care’ of the allied forces.

The US, France and the UK have sent in their best in an effort to ‘protect’ the Libyan people and yet the daily death toll is at a shocking high as the rebels seem to kill indiscriminately on the ground and the allied forces shoot indiscriminately from the air.

Where is the help for the woman captured at the border and raped to the point where her only option was to cry out in a hotel room full of Journalists? Where is the help for women and children fleeing their homes as gunfire rings out indiscriminately and they are caught in the crossfire. They are people like you and me. They didn’t ask for war. They didn’t ask for bloodshed. And they didn’t ask to go from Gaddafi to US occupation.

There is a new wave of Facebooking and tweeting revolutionists in the Arab countries. Men and women who know they have the potential to create and run a democratic and peaceful Islamic society without oppression, without dictatorship and without the US. Question is… will they ever get a chance?

As onlookers to a spate of wars and a continuous unrest resulting in waves of discontent, we can’t do much except cry out in protest at the injustice of hegemony and its effect on those who just want to live a normal life. And its hard not to draw comparisons to Palestine – a country that has been suffering this way for far too long with no end in sight.


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If ever there was a sport to get the people of the subcontinent worked up to a fever pitch, it would be Cricket. And if ever there were two countries with a temperamental and passionate history on and off the field, it would be Pakistan and India. The two are a potent mix set to clash in the semi finals of the 2011 World Cup, worth the watch no matter who you support.

Having a shared cultural and national history spanning over a century and having gone through a war, genocide, nuclear attacks, and numerous cultural and social events to reacquaint themselves with each other, Pakistan and India are the quintessential malfunctioning off again on again couple. Despite their differences, both these country’s have a passion for Cricket that borders on, nay surpasses, mania. Cricket is more than a religion for some – it is a way of life. A game they live breathe and practice every single day. Whether a child knows his alphabet or not, by the time he can comprehend, he knows Cricket, by the time he can walk, he can hold a bat and by the time he can run, he can bowl.

Such dedication to the game has seen both countries produce some of the finest players in Cricketing history. Whether it be Imran Khan’s class, Inzy’s batting flair, Sachin’s little master techniques or Afridi’s boom boom, both nations have consistently brought talent, flair and passion to the play. What both teams equally lack though,  is consistency. A combination of Australia’s golden years, match fixing allegations and poor captaincy has seen both teams steadily decline over the past few years. That’s not to say they play badly… No. Pakistani and Indian Cricket still give every other team a run for their money even on their worst days. But they are far from achieving their potential.

This World Cup has seen great bowling and captaincy from Afridi and sporadic flashes of brilliance from the Indian batting line-up, both teams have had close calls in their race to this most crucial of matches, and in my opinion they are both equally matched and the game depends purely on which team can pull together stronger on the day. Pakistan’s weakness is in it’s batting line-up and India’s is in it’s bowling. Cricket fans the world over will be on edge to see if each team can exploit the other’s respective weakness in a continuation of a rivalry that began in 1952.

India and Pakistan first met in a Cricketing match in Delhi. They were to play a four day test from 16 to 18 October 1952 but it took India only three days to reign victorious over Pakistan by a 70 run margin. India won the 5-match series 2-1 and held onto the title of victor for 26 years. TEN draws and 26 years later Pakistan won a match against India in the 1978-79 series. The two teams have played 59 test matches and 119 ODIs of which Pakistan has won 12 tests and 69 ODIs respectively. Both teams have made totals exceeding 600 against each other in a display of great talent and perseverance which proves their flair for the sport and justifies the excitement of their fans.

India and Pakistan last played each other in September 2009 at the ICC Trophy in South Africa, a match India lost by 54 runs. A loss which caused a furor back home, and resulted in the burning of effigies and threats to well-being players which were held up as idols only days before. No other Cricketing team lavishes rewards on their players like the Indian team and no other country faces more embarrassment from match-fixing accusations than Pakistan. Despite the rumours, the relegations and the risks – these two teams are sure put on a show that will eclipse anything the world cup has provided thus far. India and Pakistan will be meeting in Mohali for a match that is so eagerly anticipated it overshadows the impending match between New Zealand and Sri Lanka that precedes it and even the World cup finals that will subsequently take place.

If Pakistan wins, one wonders how they will make it out of India, and if they lose – will be let back into Pakistan by their fans.

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Disaster. The word is defined by merriam-webster as “a sudden calamitous event bringing great damage, loss, or destruction; broadly: a sudden or great misfortune or failure.” Somehow, in light of everything that has happened in the last three months, this is a major understatement. Disaster cannot even begin to encompass the tragedy, devastation and crushing blow humanity has endured from Nature in the first 90 days of 2011.

The more humans develop as a species and find ways to extend our longevity so we can enjoy the brevity of this world, the more outlandish and extreme the backlash from nature. Here are just some of the events that have befallen us this year and proven how toxic and unsustainable we have made our planet.

Date Type Location Comments
Jan 1 Earthquake Argentina Magnitude 6.9
Jan 1 Earthquake China Magnitude 5.2
Jan 2 Earthquake Chile Magnitude 7.1
Jan 2 Dead birds Arkansas More dead birds fall from the sky
Jan 2 Dead fish Arkansas River 100,000 dead fish in Arkansas near where 5,000 blackbirds dropped from sky
Jan 3 Yellow fever Uganda Uganda yellow fever outbreak kills more than 40
Jan 3 Earthquake Japan Tsunami Warning
Jan 3 Earthquake Iran Powerful quake hits southeast Iran
Jan 3 Earthquake Argentina Magnitude 7.0
Jan 3 Floods Australia Queensland flood crisis reaches new heights
Jan 4 Dead fish Brazil Millions of dead fish found in Maryland, Brazil and other parts of the world
Jan 5 Shift of magnetic north pole Tampa, USA Shift of Earth’s Magnetic North Pole Impacts Tampa Airport
Jan 6 Dead crabs England 40,000 crabs join slew of animal-death mysteries
Jan 6 Flood Brazil Floods leave at least 35 dead in Brazil
Jan 12 Earthquake California Magnitude 4.5
Jan 12 Tsunami Indonesia Huge Waves Destroy Homes in E Indonesia
Jan 12 Mudslides Rio de Janeiro Rains Kill 10, Leave 25,000 Homeless in S.Brazil
Jan 12 Floods Philippines Philippine floods kill 40 and affect one million people
Feb 6 Floods Sri Lanka One million hit by deadly Sri Lanka floods
Feb 7 Bushfires Western Australia WA bushfire destroys 59 homes, 28 damaged
Feb 21 Earthquake New Zealand Magnitude 6.3
Mar 11 Earthquake Japan Magnitude 8.9
Mar 16 Earthquake California Magnitude 3.5
Mar 17 Earthquake Vanuatu Magnitude 6.5

God doesn’t seem very pleased with us this year. And if our excess spending, uncaring attitude towards those less fortunate and penchant to go to war is anything to go by, we should be ashamed of ourselves too.

These disastrous events show that we humans despite all our self importance can be wiped like dust in a single swipe.  And it’s still only March.

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All I have are Fragments
Bits and pieces of who I was
Fragments of a memory I wish wasn’t real
Fragments I’ve been trying to piece together.

Wondering where I fit
In the shards that I have left
Those are things that belong in the past
But they will not stay

And I must dust them off and learn
To tell their story.


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With all the hype surrounding the Professor Yunus controversy and more and more details of corruption and abuse of the system emerging every day, my views on Microfinance, Grameen and Professor Yunus are being battered.

My book, Financial Empowerment Of Women In Bangladesh Through Microcredit, which comes out next month, is based on my thesis for which I spent several years studying and researching microfinance and Grameen Bank and other NGOs. At the onset of my research I had several questions:

  1. What is Microcredit?
  2. Do banks and NGOs in Bangladesh charge interest?
  3. If not then why do they call it interest?
  4. Can we advocate this method Islamically?
  5. Is it REALLY good for women?

Microcredit is the provision of small amounts of credit under a Microfinance scheme which encompasses the provision of financial services such as loans (microcredit), savings, insurance, and training to people living in poverty.

Grameen was initiated as a challenge to the conventional banking which rejected the poor by classifying them to be “not creditworthy”. As a result it rejected the basic methodology of the conventional banking and created its own methodology. The question is – is this methodology interest free? The simple answer could have been no. Everyone using and promoting Grameen uses the word interest without any qualms at all, but when I spoke to the director of microfinance at Grameen and BRAC in 2009 I found that things were not quite what they seemed.

Grameen and BRAC did not begin their microfinance systems with the intention of profit as conventional banks do, they intended to promote credit as a human right and help the poor to help themselves to overcome poverty. Microfinance organisations make it a priority to serve the particular needs of women, since 70% of those living in extreme poverty are female. Women are often excluded from education, the workplace, owning property and equal participation in politics. They produce one half of the world’s food, but own just one percent of its farmland. When women improve their circumstances, they also improve the lives of their children. By investing in nutrition and education, they help to create a better future for their children and their communities.

Grameen says that the most distinctive feature is that they do not base their loans on any collateral, or legally enforceable contracts. It is based on “trust”, not on legal procedures and system. The women borrowers form groups who encourage and support each other and become their moral and financial collateral. Reaching sustainability is a directional goal. The women must reach sustainability as soon as possible, so that they can expand their outreach without fund constraints and eventually repay their loans and become debt and poverty free.

In addition to microcredit, microfinance programs provide education and empowerment programs and tools to enable women to build and develop skills for their future. Grameen and other NGOs realise that an injection of money alone is not enough to substantially empower women.

Now that all sounds lovely.

But if they are being charged ridiculous amounts of interest is it possible?

While Bangladesh is a majority Muslim country, it doesn’t implement sharpish law. In all the Muslim countries of the world, even where shariah law is implemented, an interest free loan is not possible and where they are the method is so inefficient as to draw little attraction or sustainability. (As an aside tho Islamic banking is on the up and up in the middle east and south Asian countries and so effective that it has caught the eye of global western banks who are eager to implement and adopt Islamic methods in order to avoid reoccurrences of the GFC)

How does Islamic finance work? The overarching principle of Islamic finance is that all forms of interest are forbidden.  The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits between them.  Based on this simplistic definition, it is evident that Grameen seeks to share the risk of its borrowers and divides profits between them (the profit taken by the bank is reinvested into the bank so it’s not really a profit at all)

The main categories within Islamic finance are: Ijara, Ijara-wa-iqtina, Mudaraba, Murabaha and Musharaka.  Ijara is a leasing agreement whereby the bank buys an item for a customer and then leases it back over a specific period. Ijara-wa-Iqtina is a similar arrangement, except that the customer is able to buy the item at the end of the contract. Mudaraba offers specialist investment by a financial expert in which the bank and the customer shares any profits. Customers’ risks losing their money if the investment is unsuccessful, although the bank will not charge a handling fee unless it turns a profit.  Murabaha is a form of credit which enables customers to make a purchase without having to take out an interest bearing loan. The bank buys an item and then sells it on to the customer on a deferred basis.  Musharaka is a investment partnership in which profit sharing terms are agreed in advance, and losses are pegged to the amount invested.

Islamic finance forges a closer link between real economic activity that creates value and financial activity that facilitates it. Grameen does this by encouraging women to engage in labour that generates income and allowed them to become part of the economic field. Grameen also creates the framework of financial methods and that facilitates such income generating activities.

Islamic finance does not allow creating new risks to profit thereby. Grameen doesn’t approve proposals from women borrowers if there are risks involved or if they are not backed by the other women in the group.

Islamic finance is global and cosmopolitan. Having committed itself to a text accessable to all and Prophetic precedents available  easily, Islamic finance is open to any innovations that are in congruence with its fundamentals. It is not a closed system. It has no regional, ethnic or class affiliations. Same with Grameen.

The challenge lies not in conforming to a given set of rules but in realising the objectives of  the Shariah, and working towards them regardless of the obstacles.

The Government of Bangladesh has a fixed interest rate for government-run microcredit programmes at 11% at flat rate. It amounts to about 22% at declining basis.

“In comparison there are four interest rates for loans from Grameen Bank : 20% for income generating loans, 8% for housing loans, 5% for student loans, and 0% (interest-free) loans for Struggling Members (beggars). All interests are simple interest, calculated on declining balance method. This means, if a borrower takes an income-generating loan of say, Tk 1,000, and pays back the entire amount within a year in weekly instalments, she’ll pay a total amount of Tk 1,100, i.e. Tk 1,000 as principal, plus Tk 100 as interest for the year, equivalent to 10% flat rate.”

The above figures were taken from the Grameen website, in my own research and first hand investigations I have found that the interest rates are much higher BUT… the money that is taken in the name of interest is deposited into a deposit account for the woman borrower. So where is this ‘interest’ going? It is going into her piggy bank for a rainy day. When I asked NurJahan Begum why they used the word interest if it really wasn’t interest she said,

  1. Interest is a term widely used that is easy to define and understand
  2. Saying we were interest free would raise suspicion and align us to Muslims when we wanted to reach out to all audiences regardless of religion
  3. The money that a woman generates is wholly hers. A part of it repays her loan, a part of it is taken as bank charges and a part of it is deposited into her account.  If we didn’t label it interest and make it mandatory, the women would make excuses to withdraw or not deposit the cash at all into their account and come tragedies, weddings or natural disasters (which as you know are  regular occurrences) they would default and cause problems.

While there are flaws in this reasoning and while there have been cases of certain bank members charging interest and keeping the profit, in essence the methodology is proven to work and proven to be interest free. Grameen is not a conventional bank. It does not charge conventional interest.

In conventional banks charging interest does not stop unless specific exception is made to a particular defaulted loan. Interest charged on a loan can be multiple of the principal, depending on the length of the loan period. In Grameen Bank, under no circumstances total interest on a loan can exceed the amount of the loan, no matter how long the loan remains unrepaid. No interest is charged after the interest amount equals the principal.

In addition, Grameen pays a lot of attention to monitoring the education of the children (Grameen Bank routinely gives them scholarships and student loans), housing, sanitation, access to clean drinking water, and their coping capacity for meeting disasters and emergency situations. Grameen system helps the borrowers to build their own pension funds, and other types of savings.

So now that we know what Grameen does, can we support it Islamically?

My gut feeling was still yes till about a week ago. A rose is a rose by any other name. Grameen’s system in its original form was conceived to be interest free and to help the poor. Regardless of what it has become today due to the abuse inflicted upon it by its propagators, it was an Islamically and humanely encouraging concept. The Question now is.. will it ever be again? Up till now I advocated Grameen and its practices. Not anymore. It would need to go back to its roots and remain true to them, it would need to state its practices and fees and charges clearly without hiding under the general term of ‘interest’ if it is ever to regain the trust of its disillusioned supporters.

While there are many rumours (founded and unfounded) that women are targets of such schemes because they are easier to manipulate and control, that interest is high and debts are forcefully and sometimes violently extracted, that the programs and their founders are guilty of corruption, the truth remains that microfinance (which includes interest free microcredit) as a system is one which is capable of effectively alleviating world poverty through the empowerment of women and through them, their families and societies. If a concept is abused by man, the concept is not flawed, the man is. The concept should not be accused, the man should. This is something we should not forget in the wafts of controversy and corruptions riddled smoke that mars this topic.

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