Dr. Muhammad Yunus, economist, banker and Nobel Prize Winner, addressed a few hundred, mostly young, people in London about his inspirational and wildly successful project, the Grameen Bank. He is a very slow and thoughtful speaker, explaining complex financial theories with a calm simplicity of language.
He started by explaining the background of the bank--he noticed that loan sharks were controlling the lives of the villagers living close to the university campus. After interviewing them he found that 47 people were impoverished because they owed $27. The solution was so simple--he gave the money to them to pay back the loan sharks and became "an angel" to them and realised that he could make so many happy with so little--why not do more. The banks absolutely refused to loan poor people money so he offered himself as a guarantor. That was in 1974 and that "more" has now grown to $6.6bn in loans to 7.4 million borrowers, 98% of whom are women.
The bank offers student loans--21,000 students have gone on to higher education. Illiterate mothers have daughters who are doctors, and as Dr. Yunus says "the mothers could have been doctors too, society didn't give them a chance". They also started up a cell phone company to bring technology to rural areas. Loans were given to women to buy the phones and sell the service of the use of the phone. Initially the government questioned this, asking "who will they call?" and how illiterate women could use them. Yunus replied that there are only 10 numbers and they could "learn it in 10 minutes if it means bringing in money". Which they did.
His idea is social business: similar in every way to normal profit-making business except that the profits don't go to the investors. In economic/capitalist theory business must make money. Social business is about helping others. For example, the Bank has teamed up with French Danone Yoghurt to sell vitamin-enriched yoghurt in the villages. Danone agreed to run it as a social business and re-invest any profits back into the project.
Dr. Yunus says that we can no longer treat the planet as "a picnic spot for us". We are all victims of global warming but in Bangladesh it is a life and death, every day experience since 20% of the land is one metre below sea level and with a rising sea level the people's existence is threatened. He said that one can deal with the economy but can't change the ocean rising--that is in the hands of people around the world.
One questioner wondered how micro-finance could become more successful in other countries. Dr. Yunus said that one needs patience--don't assume that it won't work in different cultures. Part of the problem is that not all of the micro-financing projects are set up as social businesses--some are using them as money making businesses. The key is develop a self-sufficient, self-contained unit and keep repeating it. Another asked about his renewable energy company where they have provided 100,000 free solar panels already, with a goal of one million.
Dr. Yunus has a new book out "Creating a World Without Poverty: Social Business and the Future of Capitalism" aimed at the growing number of people who may be looking for another way to run the world's economic system in a fairer and more equitable way. :: Be the Change