Journal of Political Risk
By Anders Corr, Ph.D.
A few weeks ago Corr Analytics predicted a likely increase in Bangladesh unrest due to steps leading to the criminalization of the Islamist political party, Jamaat-e-Islami (canalyt.com).
With today’s arrest of a Jamaat-e-Islami party official, the predicted unrest materialized. A demonstration that clashed with police resulted in at least 61 injured. Demonstrators threw crude bombs at police, who responded with tear gas and rubber bullets. The Bangladesh Nationalist Party (BNP) — the main opposition in parliament — is now more closely allied with Jamaat-e-Islami. The BNP called for a General Strike on Thursday (Associated Press).
Given the extensive business interests and relatively strong alliance of Bangladesh with the West, it is paramount to maintain the country’s relative stability. Given the pro-Islamist outcomes of the Arab Spring events, it would not be advised to risk another such movement in Bangladesh. The US and other Western ambassadors to Bangladesh should encourage moderation of the Bangladesh Government with respect to Islamist political parties. Not doing so risks further increases in unrest, a less stable investment environment, and potential increases in Bangladesh-originated terrorism.
JPR Status: Commentary
The Economist Intelligence Unit produced an insightful and detailed report on global microfinance in 2012, available at http://www.eiu.com/Handlers/WhitepaperHandler.ashx?fi=EIU_MICROFINANCE_2012_WEB_1.pdf&mode=wp&campaignid=microscope2012.
Bangladesh, Philippines, and Nepal are covered, among many other countries. Philippines takes 4th place in overall microfinance business environment rankings. Bangladesh takes 41st place, and Nepal 44th. EIU ranked a total of only 55 countries, so Bangladesh and Nepal are near the bottom. Rates to borrowers are high. In Bangladesh a 27% rate cap decreases the quantity of loans available (inflation of 7-12% in 2012), and in Nepal, government subsidies have kept rates at a comparatively low 18-24% (inflation of 7-9% in 2012). In the Philippines, there are only 1 million micro-finance borrowers of 77 million total population (http://www.census.gov.ph/content/philippines-population-expected-reach-100-million-filipinos-14-years).
Given the high interest rates and limited penetration of microfinance, it is unlikely in its current manifestation to have a large effect on development or stability in Nepal, Bangladesh, or the Philippines.
The Bangladesh Parliament recently took a step moving the country closer to banning the main Islamic political party, Jamaat-e-Islami (Business Spectator). If successful, this move could increase unrest and terrorism in the country, with potential negative spillover effects in India.