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Muhammad Yunus: The Grameen Bank and abolishing poverty |
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Mar 22 2010 |
 Professor Muhammad Yunus established the Grameen Bank in Bangladesh in 1983, fuelled by the belief that credit is a fundamental human right.
Beginning with a loan of $27 to a group of impoverished women in Bangladesh, Yunus went on to setup the Grameen Bank lifting millions out of poverty by disbursing $6.6bn in millions of tiny loans to the poor. This simple idea has grown into an international movement - replicas of the Grameen Bank model operate in more than 100 countries worldwide.
In 2006 Professor Yunus and the Grameen Bank were awarded the Nobel Peace Prize. In this Melbourne Conversations talk, Yunus talks about the conception and growth of the Grameen Bank and posits his belief that the world can put an end to poverty within this generation through channelling the market forces of capitalism.
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Social business a silver lining, says Yunus |
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Mar 18 2010 |
Star Business Report
Nobel laureate Muhammad Yunus says social business is the best tool to address social needs and create much-needed employment.
“I see many exciting opportunities, mainly employment, in social businesses,” Yunus told a workshop on creating awareness among university students on social business at Yunus Centre in Mirpur yesterday.
The microcredit pioneer criticised economists for not including social business in their theories.
“Social consciousness-driven theory is totally missing in economics. A profit maximisation attitude cannot solve the problems,” he said. “The entire economic theory is based on selfishness.”
Yunus said profit-making business cannot create employment, but social businesses can.
Yunus told the students that every individual could do social business and fund arrangement would be no problem.
Encouraging the students, he said: “If you can solve the problems of five people, you hit the jackpot."
The Nobel laureate has said the government alone cannot solve all public problems because it is a slow-moving machine and not innovative. “Individuals are far more dynamic and innovative."
Yunus said Grameen Bank has created a series of social business enterprises to support the poor with nutrition, health and education services.
Some 60 students from home and abroad participated in the workshop. Lamiya Morshed, executive director of Yunus Centre, also spoke.
Yunus Centre, the hub of Grameen's social business, has organised the workshop, 'the second Yunus Centre Forum'.
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Yunus calls for standardised interest rate |
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Mar 18 2010 |
Staff Correspondent (The Daily Star)
Nobel peace prize winner Prof Muhammad Yunus speaks at the concluding ceremony of an international conference on microcredit at Hotel Sonargaon in Dhaka yesterday.
Photo: Star
Staff Correspondent
Nobel Laureate Prof Muhammad Yunus yesterday called on the microcredit regulator to come up with standardised interest rates for microfinance institutions to clear suspicion and establish transparency.
"It's a sensitive point in Bangladesh and everywhere else. I think it will be a great service by the Microcredit Regulatory Authority if they can fix the interest rate," he said at the closing of an international conference on microcredit organised by MRA at Sonargaon Hotel. Prime Minister's Adviser on Economic Affairs Mashiur Rahman and founder and Chairperson of BRAC Sir Fazle Hasan Abed also spoke at the programme attended by about 50 participants from 20 countries.
Yunus, the campaigner of microcredit, made the call as different quarters including policymakers, questioned transparency in interest rates charged by the microfinance institutions.
Despite MFIs' claims of charging 12-15 percent (flat) interest, there are criticisms that annual effective interest rate would be, according to an MRA publication, "at least double or more of this reported figure depending on the number of installments, grace period, other terms and conditions such as compulsory savings, upfront cut, processing fees, etc".
Yunus said it's good to tell everybody that this is the interest rate. "But to hide under many different ways would always generate tension, suspicion and so on."
"So this is one basic thing, I think, MRA's contribution would be to come up with the standardised interest rate," said the advocate of microloans, which is believed to be a tool of poverty alleviation.
Prof Yunus also put emphasis on transparency of the interest rate issue and placed a list of dos and don'ts for MRA.
The list includes giving a definition of microcredit to stop the use of "microcredit" by those he said are "loan sharks" and consumer goods sellers to sell their products.
The man with vision also came up with the idea of introducing insurance schemes into microfinance programme to protect the poor from disasters, and provide support to elderly poor women in helplessness.
Yunus also focused incorporating technologies such as mobile phone into microcredit sector to transfer money to the poor.
Another point, he shared, is how to make better the lives of the children of poor borrowers in freeing them from the old cycle of poverty, sickness and, above all, uncertainty.
"We can do that. We have the capacity nobody else has--as much capacity as microcredit has right now in changing the second generation. This is almost an exciting frontier that we have to work with."
He said Bangladesh being the most matured country in microfinance operations has a very special role to show the rest of the world about what it can do with microcredit.
"This is one area where Bangladesh is the leader of the world. So, that leadership role needs to be maintained not for the pride of it but for the sake of the people who are looking forward to receiving the services in other countries," he said.
Yunus said microcredit has to prove that it's a sound banking and there is nothing fishy about it.
"So this is the kind of challenge we all have to take… to strengthen it rather than the kind of creating confusion."
Sir Fazle Hasan Abed said microfinance has contributed to poverty alleviation in Bangladesh.
He also sought MRA intervention to recognise some large microfinance institutions with the microfinance banking licences.
"There is an opportunity to recognise large microfinance institutions as microfinance banks," he observed.
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Wondrous vision of capitalism with a conscience |
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Mar 16 2010 |
Peter Hartcher
Muhummad Yunus has already produced one great breakthrough. He transformed the concept of aid by pioneering micro-lending, tiny loans as small as $20 to poor villagers, and has lifted many millions out of poverty as a result. He won the 2006 Nobel Peace Prize in recognition.
Now he is pressing for a second. This time he's looking to transform nothing less than capitalism itself. Not in any destructive way: "I am not asking that we sacrifice part of capitalism," Yunus said during a visit to Australia last week. "I am asking that we add another part."
And that is? Its essence, I think. Yunus wants to give capitalism a soul.
That's not what he calls it. He talks about something he calls the "social business". It's a business in every sense, but with two differences - it's set up to address a social problem, and its investors get back their initial capital but no more. Earnings are reinvested in the business.
It's not a charity. It's not an NGO. Charities and NGOs spend half their time and energy raising funds just to keep running.
The social business starts with all the subscribed capital it should need. And it's not a Trojan horse for government subsidies. The social business must be self-sustaining. It's not just a concept. His Grameen group has launched four and he was in Australia to urge many more. So far, his social businesses have all been joint ventures with major corporations. Grameen joined with the French food multinational Danone to found Grameen-Danone in 2006, selling high-nutrition yoghurt to poor kids in Bangladesh for about 10¢ a serve.
Similarly, Grameen-Adidas sells shoes for $1 as a way of preventing all manner of foot disease in Bangladesh. Grameen-Veolia sells affordable drinking water, and BSF-Grameen sells cheap impregnated mosquito nets to prevent malaria.
"This is just the beginning," says Yunus. "Whatever the problem is, you can create a social business to solve it. You have a choice - if there is a problem, you can grumble about it, or you can complain to the government to do something about it, or you can start a social business and deal with it."
As Yunus wrote in his book Creating a World Without Poverty: "It is tempting to simply dump our world's social problems into the lap of government and say 'here, fix this.' But if this approach were effective, the problems would have been solved long ago."
Need to create jobs? Want to develop more renewable energy? You can design a social business to do something about it, says Yunus.
"I have just been in Japan where everyone is talking about the problem of suicides, 100 a day. Here everyone talks about the problem of the indigenous people's life expectancy. Well, you can create a social business to solve it."
But why would investors put money into a venture that promises to return no more money than they started with?
Because conventional corporations are an outgrowth of only one aspect of the human being, he argues: "The part they appeal to is selfishness. But humans also have a selfless part, and social business is an expression of that part. The two only make sense together.
"I can make my mark in the world, not just money. At the end of my life, has it been worth living? At the moment, you spend your life stacking up money and goodbye. And that's it?"
Yunus, dubbed the "banker to the poor" for his micro-lending breakthrough, believes the social business brings material help to the poor countries but also spiritual purpose to the rich.
At the global level, Yunus challenges the single-purpose corporation-led globalisation. There are entire sections of the global economy "that ignore the poor, writing off half the world's population'', he argues in his book. "Instead, businesses in these sectors focus on selling luxury items to people who don't need them, because that's where the biggest profits are.
"I believe in free markets as sources of inspiration and freedom for all, not as architects of decadence for a small elite."
But while Yunus encourages companies to discover their souls, he doesn't think that the future of the social business depends on corporate goodwill alone: "Anybody can start a social business. You don't need a mega corporation. Some retired people have lots of skill and experience and many of them can create a social business."
Dr Yunus demands to know how parents in the developed countries expect to inspire their children: "In the rich countries, young people wonder what the purpose is. Their parents have made money, the houses are there, the cars are there, all manner of gadgets are there - 'so what should I do with my life?'
"You might be a big CEO … But at the moment you sit down to breakfast with your 17-year-old daughter or your 21-year-old son and you have hardly anything to talk to each other about.
"But the moment you start to talk about starting a social business, the moment you ask what social problem you're going to solve - then, then you are talking about a new world, and you suddenly have something to talk to each other about. Young people are really inspired by this idea."
That's certainly true in Australia, according to Cheryl Kernot, the former Australian Democrats leader who these days teaches social entrepreneurship at four business schools across Australia. "All the courses are full, and it's the students who are driving it," she says.
Australia already has a nascent social business sector. Prominent is Social Ventures Australia, headed by Michael Traill. He cites the standout example of ABC Goodstart, the new company formed to take over part of the failed ABC Learning childcare business. It will have an annual turnover of $600 million from 678 centres, but it's designed not to make money but to provide affordable, quality childcare.
And there are others but, overall, Traill describes the size of the genuine social business sector in Australia as "bugger all'', with just a few tens of millions of dollars in funding. And vast potential.
Dr Yunus says that modern capitalism "has squeezed out the spiritual part of ourselves''. The social business is his mechanism to make room to bring it back.
Peter Hartcher is the international editor.
Wondrous vision of capitalism with a conscience |
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Yunus, Abed make joint call for better life |
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Mar 14 2010 |
Star Business Report
Nobel laureate Muhammad Yunus and Sir Fazle Hasan Abed yesterday made a clarion call from the same dais for the present and future generations to come forward to work for a better life of people.
Yunus joined a reception accorded to Sir Abed on his knighthood, by the National Association for Resource Improvement (NARI) at Gulshan Club in Dhaka.
The two pioneering development campaigners dwelt on various issues relating to poverty alleviation.
These included among other things child and maternal health, improvement in education at all levels and attainment of gender equality, especially in economic arenas.
“Our liberation war has given a big push to our national urge for a change in life. One of its examples is Brac and Abed,” said Muhammad Yunus, who has been able to make microfinance a global agenda to cut poverty.
He pointed out that zeal in Abed helped him overcome all odds and so he had been able to help people in their fight for coming out of the clutches of poverty. Abed, who recently gained knighthood for his contribution to betterment of the poor, has made an organisation like Brac an imitable mission for many others to get new methods and approaches for development, the Nobel laureate said.
“The success of Abed will inspire people. He has shown us the spirit that calls for work for changes and improvement of the society under any circumstances,” said Yunus.
Abed, founder and chairperson of Brac, the world's largest nongovernmental organisation, said he works on improving lives of people by intervening in the areas of education, child and maternal health.
He called upon the youth to carry forward the campaigns and works for changes for betterment of the lives of people, especially unserved and marginalised sections of the society.
“Now time has come for the next generation to take over from us,” Abed said.
Stressing gender equality, the Brac founder said:
“We have marked progress in attaining gender equality in education, but we have not done much in achieving economic equality.”
He said economic equality between men and women is important to make the society happier.
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