An audience with Nobel Peace Prize winner Muhammad Yunus
Muhammad Yunus, Nobel Peace Prize winner and founder of the Grameen Bank, recently spoke in Bristol, UK. medical students, Jienchi Dorward, Rob Hughes and Jonny Currie went along to hear what he had to say and report back below. Rhona
Muhammed Yunus courtesy of nobelprize.org
Muhammad Yunus, dressed in traditional Bangladeshi shirt and trousers, didn’t look like your average world famous banker. But then, his bank isn’t like your average world famous bank. Firstly, it focuses on providing a service to the poorest people in society. It doesn’t take collateral when it gives out loans. It doesn’t try to make a profit. And rather than starting in one of the world’s great financial centres, it was born in the small village of Jobra, Bangladesh.
In the 25 years since it started, the Grameen Bank has grown enormously, with over 7 million borrowers and sister projects in many other countries, including the United States. The Bank focuses on ‘micro-credit’ - providing small loans at small interest rates to people stuck in poverty. These small amounts can often provide the impetus and resources that people need to escape the poverty trap and generate some income of their own. It tries to encourage disadvantaged people to use entrepreneurial and business skills to better their situation, instead of relying on charity or high interest loans from profiteering loan sharks.
In his talk, Prof Yunus kept his audience captivated as he outlined how the Bank has grown, and some of the basic principles that underpin its success. His commitment to the cause of disadvantaged people was clear throughout, and his clear, principled thinking was an inspiration to us all. He spoke of how, as a young economics professor, he felt useless stuck teaching in universities while thousands died in surrounding villages during the terrible Bangladeshi Famine of 1974. Many people in these villages were trapped in a spiral of growing debt that forced them into ever deeper poverty. However, he was surprised to find that the amounts they owed were very small; often less than $1. One thing led to another, and from lending his own money he then found himself arranging bank loans, and then setting up the Grameen Bank. Using community links and targeting woman, the Bank boasts of repayment rates of 98% and many thousands of people being lifted from poverty.
The idea of micro-credit has since spread all over the world. The Grameen Bank has also been able to expand its field of operations; it now provides mobile phones and home solar-power kits to poor people in Bangladesh. These operations are on a not-for-profit basis, and any profits made are re-invested in the company, rather than going to shareholders. Prof Yunus expanded on this idea, calling it Social Business. He believes that poverty is a product of society, and that given the right conditions people can use their own inherent skills to escape the poverty trap without depending on charity. As Prof Yunus himself said, “a charity dollar can be used only once”, while social business can start a dynamic, self-reinforcing process that increases capital, allowing that $1 to be ‘spent’ over and over again, to the benefit of many. In contrast further charity dollars depend on fundraising and the whims and good will of donors.
He spoke at length of the failings of the world banking and business systems that ignore more than two thirds of the world’s population because they do not see a profit in providing services for them. Rather than looking at profit in monetary terms, he claimed that we should be looking at profit in social terms, and we should be making investments that lead to social profit (e.g. education, health, the environment).
Prof Yunus ideas seemed to make a lot of sense. By combining the positive aspects of business with a focus on social profit and justice, the Grameen Bank seems like a good model to follow. It would have been good to hear him speak of some of the problems that the Grameen Bank has faced and the dangers of introducing business ethics into social work. But he covered a lot of ground in 1 hour, and I’m sure more details can be found in his latest book, Creating a World Without Poverty. There is no doubting his charisma and passion though, and seeing how he lived his life and then hearing him urge us to take responsibility for making changes in the world was inspirational.
If you are interested in finding out more, try the Grameen Bank website (www.grameen-info.org/), or his book Creating a World Without Poverty. Another interesting read is The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits by CK Prahalad. It provides a slightly different perspective, but again highlights how poor people have been ignored for too long by big business, and stresses how business ideas could help them. Jienchi Dorward, Rob Hughes and Jonny Currie (jienchino@googlemail.com; jonny.currie@googlemail.com; hughes.rob@gmail.com)
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