Yesterday I went to Bristol with my good friend William (Bill) Murtagh, to hear Nobel Peace Prize winner, Mohammed Yunus speaking about microfinancing and the concept of Social Businesses. What an inspiring man! He held the audience entranced as he told his story of returning to Bangladesh in 1974 after the country had achieved independence.
He had been teaching Economics in America and thought he might be of some use to his native country. He reported feeling despondent, empty and useless when the country became engulfed by Famine. In the desperation which ensued, he noted many poor people falling victim to ruthless loan sharks. He carried out a private study and soon listed 42 victims. Upon questioning these people he found that the total of their loans amounted to a mere $27, less than a dollar a head, but they were being charged 1500% interest! He considered that this seemingly huge problem had a simple solution. He paid the $27 dollars, and immediately became an angel in their eyes. It seemed a small price to pay for the privilege, but he was more interested in resolving the entrenched problem of the peoples indebtedness to the loan sharks. It seemed to him that if you can make so many happy with so little, there should be more of it.
Yunus went to the Banks to raise the issue that the people were being ripped off by the loan sharks because the Banks would only lend money to those who already had money and collateral. He tried to persuade them to lend the very small amounts the poorest folk needed, but they would have none of it, since as well as being against their policy, they believed these peasants would not repay money lent to them. Yunus became Guarantor for their borrowings, and they did pay the money back. The Bank said it was just a fluke that they paid back, beginners luck, just that village. They refused to change their policies. In spite of the fact that he had no experience of running a bank, Yunus decided to start his own Bank which would be different from conventional Banks in tat it would be owned by the borrowers and would be mainly for people who had no money.
Today the Grameen bank has over 7 million borrowers, (mostly poor women) and 27,000 staff who go out to the people who need the Bank’s services. The people were encouraged and supported in starting small local businesses to sustain themselves. Building on this they were encouraged to form means of educating their children. Today they have more than 23,000 students in higher education. Yunus made the point that some of the children have grown up to become doctors, not because they were inherently more capable than their parents, but rather that they were given an opportunity. Yunus fiercely believes that it is Systems that create poverty. It is an artificial state.
He went on to explain that unlike most businesses, whose main objective is to maximise profit, a social business main purpose is to address a social need such as illiteracy, poverty, disease, rather than to make profit . The fact that there are what is known as Orphans’ diseases, was highlighted. These are illnesses for which there are cures, but these are not made available because people are too poor to be able to afford them.
One of the main points he made was that very small amounts of money can make a big difference to a lot of people. Unfortunately, the usual means, via Charities, uses 90% of the resources just raising the resources, and only 10% actually get to the people for whom it was intended. A lot of food for thought! I’d love to hear yours! Get more information here www.GrameenFoundation.org