Social Business Forum with Dr. Yunus
Tuesday, November 20, 2012
Posted by: Joe Libertelli
On September 28, 2012, the School of Law joined forces with the UDC Business School, the College of Agriculture, Urban Sustainability and Environmental Sciences, and others at the University to host an amazing and inspiring talk by 2006 Nobel Peace Prize winner Muhammed Yunus, founder of the Grameen Bank and world renown father of "micro-credit.” Dr. Yunus spoke to more than 500 students, staff, faculty, alumni and friends at the University Auditorium about micro-credit, its history, and its evolution into what he calls "social business,” which is a business enterprise created to solve a social problem as opposed to one designed to make money.
| Dean Broderick with Dr. Yunus|| Alumni Director Joe Libertelli with Dr. Yunus|
Dr. Yunus' purpose at UDC was to help kick off what he and we hope will become an annual Social Business Plan Contest for students throughout the mid-Atlantic region, as well as the creation of a support center and means of funding the winning plans.
In 1974, Dr. Yunus, an Economics professor, had an insight while on a field trip with his students. He saw that, simply due to a lack of affordable credit, a hard working woman he and his students met could not earn enough money to exit a cycle of working poverty. Taking matters into his own hands, Yunus loaned the woman a small sum at an extremely low interest rate, and soon loaned a number of others similarly small sums. Within nine years, he created a system of making these very small loans to circles of borrowers – ultimately working nearly entirely with women - that enable the recipients to work their way out of poverty. The Grameen Bank was formed.
According to the Grameen Bank website, "Against the advice of banks and government, Yunus carried on giving out 'micro-loans', and in 1983 formed the Grameen Bank, meaning 'village bank' founded on principles of trust and solidarity. In Bangladesh today, Grameen has 2,564 branches, with 19,800 staff serving 8.29 million borrowers in 81,367 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 97% are women and over 97% of the loans are paid back, a recovery rate higher than any other banking system. Grameen methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.”
In his talk, Dr. Yunus described how providing loans to the very poor led him to get to know the people and their problems intimately. Early on, he realized that their total lack of toilets – in fact, poor and middle class urinated and defecated in the streets; the women only after dark! - resulted in a huge amount of preventable disease. He began requiring the purchase of toilets on the part of all loan recipients, which he made possible by financing them over a period of several years. As more and more of these toilets were purchased, Yunus described being accosted by middle class men who complained to him that their wives were demanding toilets too!Soon a large and successful manufacturing and sales business was producing and selling enough toilets to have a significant impact in reducing communicable diseases.Soon thereafter, Yunus tackled night blindness among children - caused by a relatively small and reversible Vitamin A deficiency.By selling supplements at, in essence, his cost, he was able to self-fund a growing enterprise that virtually eliminated night blindness within several years.Over time, these self-sustaining businesses tackled cataracts in older people by creating clinics and making financing available, health care generally - at a cost of $3 per person per year, financed at less than a penny a day.He made education loans available, thus enabling hundreds of thousands of people to attend high school, college and graduate schools.He also worked on projects involving cell phones, enabling the entire nation to leap frog the expensive telephone grid system, and has, for the past 17 years, been selling roof-top solar photo-voltaic systems that has enabled people of moderate means to have affordable and clean power, enabling students to study at night, etc.Dr. Yunus estimated that while it took all 17 years to sell one million systems, it would take his company only three years to sell its second million.
Currently he is at work partnering with major multinationals in social business enterprises.For example, he is currently working with the French yogurt company, Dannon, to manufacture highly nutritious, very sweet and,hence attractive, ultra-low cost yogurt packages with which he hopes to all but eradicate childhood malnutrition in Bangladesh.
All of this has been achieved without anyone making a profit, but, importantly, without handing out products or services for free.Throughout Dr. Yunus' talk and since, I could not help seeing the commonality between his approach and the insight of our own Prof. Edgar Cahn, founder of Time Banking.Both social business and Time Banking reject the notion of hand-outs and instead require those in need to take action to help themselves.I'm sure Dr. Yunus would agree with Dr. Cahn's "No More Throwaway People" ethos and the need - for various reasons - to enlist the people in need themselves, whether by contributing their time in the case of Time Dollars, or contributing actual money, in the case of a social business, in return for that which they need.
Doctor Yunus was asked if he would return for the UDC Social Business Plan Contest and politely demurred.But I believe we could entice him back again to the School of Law for an exploration of how social business and Time Banking might work together to make the world a better place!