Muhammad Yunus

Muhammad Yunus

Yunus Centre, Grameen Bank, Nobel Peace Laureate, Chittagong, Bangladesh

“Poverty in the world is an artificial creation. It does not belong to the human civilization.”  It all started with 27 Dollars. This was the amount of money Muhammad Yunus, professor at Chittagong University, lent to 42 poor villagers in Jobra, Bangladesh so they could repay their debt to local money  lenders and start small businesses. The small experiment had a large effect. The money was paid back. New loans soon followed. Life in Jobra changed. Inspired by this experience, Yunus founded the Grameen Bank to provide access to capital for the poorest in Bangladesh. The Grameen Bank, as a social business, became a great success and enabled a great number of people to get out of poverty. The microfinance business model soon spread from Bangladesh around the world. The Grameen Trust has supported other organisations to replicate their model. Apart from access to capital, the poor need many other services to work their way out of poverty: health and education, clean water, good food and access to electricity, among others. Grameen has constantly been devising new social business solutions dedicated to address these issues. Grameen has also created an entirely new business model that contrasts strongly with traditional profit-maximizing models. It is known as “Grameen Social Business”. This new model utilizes traditional business know-how in combination with the goal to solve a critical social issue. In other words, instead of being self-focused the Grameen Social Business is all about others. Yunus has already proven the effectiveness of this new type of business: a clear focus on eradicating extreme poverty combined with a condition of economic sustainability has created numerous models with incredible growth potential. For his efforts to end the economic and social struggle of millions, Yunus has been awarded the Nobel Peace Prize in 2006.

Breaking the Wall of Poverty. How Social Business Allows a Future for Human Kind, That Is Sustainable And Joyful.


November 9th, 1989, this was a great moment for the entire world. Thank you, thank you very much. First of all, I am not a mathematician. I am usually introduced as a banker, and people kind of get shocked. Who is going to listen to a banker- these days at least- don’t want to listen. But, I come a very different kind of background. I was not trained as a banker, and I never dreamt to be a banker. Circumstances pushed me to doing something, which initially looked like banking, and gradually became a banking of a different nature. What I did in one village in Bangladesh, because of the circumstances of the loan sharks, I was trying to protect the people in the village from the loan shark. I started lending them the money myself. It was a small amount of money- just a tiny little. It really made the people happy; so I tried to arrange the banks to do the job, lend the money. The banks said, “No, it cannot be done; it is not the bank’s job to lend money to the poor people.” After a long struggle, I offered myself as a guaranteer. I said, “Ok, I will be the guaranteer; I will sign your papers. You give the money, and I take the risk.” That was the beginning in 1976, and that later on became successful and created a bank out of it: Grameen Bank or the Village Bank, and continue to do. Today we do all over Bangladesh. We have about eight million borrowers- 97% of them are women. Usually they take loans, about $30, $40 in beginning; gradually they increase their loan size after they become confident. They can do business; they can do some income generation. Today we lend out over $100 million a month, loan averaging about $200. Repairment is 98%, 99%. If people ask me, “How did you do that? How did you figure out to this kind of business?” I said, “Well, it was very simple for me.” I don’t know anything about banking. So, whenever I faced the situation where I need a rule in discipline, a procedure, I look at the conventional bank, and what they do within a situation like that. Once I learn about it, I just do the reverse- and it works! That is what the Grameen bank is! (Applause and laughter in audience) Conventional banks go to the rich; I go to the poor. Conventional banks love the city centres; I go to the remote villages. We don’t work in the city at all. Conventional banks like to lend money to men. We go to women. (Applause in audience) So, your theory of probability finds out how it works. They want collateral; conventional banks need a lot of something concrete to lend you money against that particular property. We said, “No collateral”, because we are working for the poor; they have nothing to offer, so no collateral, no guarantee. That is fun, because then we don’t need any lawyers. (Applause and laughter in audience) So we don’t have any lawyers in our bank. We have 8 million borrowers; we deal with 100 million dollars a month. No lawyers, no papers, and it works- 98%, 99%. So, people get puzzled. “What do you do? We have all this collateral, lawyers, we do this banking, and they are collapsing. Yours seems to work.” I said, “This is not only working in Bangladesh, this works all over the world- everywhere, even New York City. We have done a program called Grameen America, and lend money to the absolutely lowest income people in the neighbourhood, 99.3% repayment; that is what Grameen is all about briefly. Then along the way we got involved with many tiny details of their life, poor people’s lives: health care, education for children, and so on. I am skipping all of this, but along the way, seeing all these things, and taking some action about it, we became more and more bold. We wanted to create businesses out of it. Every time I see a problem, a social problem, I create a business out of it, like I did at the Grameen bank. I did the other thing, in terms of telephone service, renewable energy, of information technology, and so on. We have created more than three dozen of such companies. Then people say, “You must be a very rich man, because you have so many companies.” I couldn’t figure out why they call me rich man, because I am not. Then I realised, I don’t own any of these companies, because that is what they are thinking that maybe I own these. I don’t. Why did I create those companies? I explained to you: because I saw a problem, I wanted to solve it. I was pretty much successful, or mildly successful, or whatever it is, but it works. Some of the companies that I built are nationwide companies like the Grameenphone, which is a mobile phone company- when there is not mobile phone in the country. We created it in 1997. Today it is the largest mobile phone company in the country. As a matter of fact, it is the largest company in the country- the largest tax paying corporate body in the country. So, you could imagine the size of the operation that we have. The total number of cell phone in Bangladesh now exceeded 50 million with a population of 150 million. So you can see how penetration went in. Then it dawned on me, the structure, the economical structure that we built, is missing something. That is what I am adding. All the things that we do in business is all about making money. If you are in business, you are making money, because the books say that is what you are supposed to do. We are trained to think that way, and we behave that way. We go into business, make money; if we are not in business, we invest money in the business so that I can make money more. That is a kind of funny thing, because human beings are not one-dimensional beings, but business makes you so. So, economical theory kind of misinterpreted human beings. It took the multi-dimensional human being, kind of filtered out everything else, kept only the one dimension, which is kind of self centric, so self-centric human being operating the whole world. Of course it creates problems. Maybe the cause of the problem is the fundamental flaw in the way the perception of the human being within the economic system. So I said, why don’t we use other dimensions like selflessness? Human beings are self-centred, selfish, and at the same time they are selfless- every single human being; there is no exception to it. Why can’t we create a business on the basis of that selflessness? Like the first business, which is self-centric: everything is for me; nothing is for others. I make sure that I get everything, and I feel very happy when I get everything. The second business that I am proposing: everything is for others, nothing for me. Can there be business like that? People say, “Oh, it is impossible; people are not crazy like that.” I said, “I don’t think so. People are crazier than that. They give away their money. Some give away thousands of dollars, some millions of dollars, and some give you billions of dollars.  So what is wrong with investing some money in selfless investments for a cause?” I am calling it social business to describe what this business is. This is a non-loss, non-dividend company for a cause. It is a cause-driven company. Anyways, it is very difficult for people to accept it right away. So, I started creating those. Already I created some, but more specifically, now for this bill, I started creating a company. Still, people are not paying attention, because it happens way out there in Bangladesh. Who cares what happens in Bangladesh? Accidently, I had an opportunity to talk to someone who is a chairman of a big company, Danone. So, I told him, “Why don’t we create a company called Grameen Danone company in Bangladesh. It will be a social business.” He said, “What is a social business?” I explained to him that you invest this money for a cause; you will get your investment money back, but not a single penny more than that, because the entire tank is a selfless investment. So, there you concentrate on whether you are achieving the goal that you set for yourself, which must be a social goal, must be solving a problem in the society. He said, “I agree”. Then we discussed later on what the company would be like. So, we created this company who produces yogurt. Danone is famous for yogurt, so I said, “Lets do their yogurt thing.” This would be a special kind of yogurt. Bangladesh has 150 million people, but half of the population is under the age of 20- very young population: millions and millions of children. Children are very malnourished. 46% of Bangladesh population are malnourished. Bangladesh children are malnourished. Most of them are severely malnourished. That is our cause- of this company. So what we did is produce this yogurt with all the micronutrients, which are missing in the children: vitamin, iron, zinc, iodine, and put it in there. Danone’s magic is: it doesn’t taste like medicine. It is very delicious. They put their technology into it, and children love it. We made it very cheap, because once you are in social business, you distance with many things. You don’t need a fancy container anymore; you are not trying to catch people and divert attention from other companies- nothing. So, it goes down; you don’t need a big marketing splash- here we come- we don’t have to do that, so you save a lot of money there. So, it becomes very cheap; we sell it, and if a child eats two cups of this yogurt a week, and continues for eight or nine months, the child regains all the micronutrients, which are missing, and becomes a very healthy and playful child. Parents love it, everybody loves it, and we love it. The more children we see coming out of malnutrition, the more excited we get in the company. If this yogurt company was a moneymaking, profit-making company, we would be asking the manager or the CEO as the end of the year, “How much money did we make this year?” He will give you an exciting report: “We made good money, good return; we will give you a good dividend.” Not in the case of social business. In the case of social business, we will be asking our CEO, “How many children got out of malnutrition this year?” That was the purpose of the company. You have to show us that children are getting out of malnutrition, and ask, “How many children will get out of malnutrition next year? What is our plan?” This social business has to be self-sustaining- number one condition. At the same time it will be solving a problem. In the process we create a lot of other such social business companies like one we created with Veolia, a water company, because Bangladesh has a severe water problem. Our water is arsenic contaminated. Millions of people drink poison everyday- no solution. It is getting worse and worse. So, we created this small, tiny, little company in a village to serve about 100,000 population, as a trial, to build a prototype, and produce yogurt, Veolia- quality standard, world standard water, and make it very cheap. It costs about 2.5 cents per ten litres. People can afford it, can drink it; they don’t have to drink the other one. This is another social business. We just started work with the BSF; we created BSF Grameen Company to produce mosquito net as a social business. Then now we are discussing, almost finalised, a signed contract with Adidas, shoe company, in Germany. The reason we did that is first, they were becoming interested to have a social business idea with us. The CEO, while visiting him in his office; he invited me. He said, “What kind of social business can we do? We are interested.” I said, “Well, you are a shoe company, let me see.” (Laughter). As well, you have to figure it out quickly. I said, “Why don’t you start like this. You start with some mission statement. Let me suggest a mission statement: Nobody in the world should go without shoes. This is number one statement. Second statement would be: As a shoe company, it is our responsibility to make sure, even the poorest person, we produce shoes for even the poorest person at an affordable price.” How does it sound? He looked at me- “Sounds very good.” I said, “If it sounds very good, then work on it.” I said, “What is that we should do then? Try to build shoes- to make shoes for the poorest people at an affordable price.” He said, “What would be that price?” I said, “Well, maybe how about under one Euro, with your brand name on top of it, and guarantee the quality, etc.” He said, “Do I have time to think?” (Laughter) I said, “You take your time.” So he spent a half a day with these senior colleagues seriously discussing this issue. At lunchtime he said, “I think we have come to a conclusion.” I said I would like to hear. They said, “We will do it.” They are now working on it. It is a beautiful design emerging, and they are very excited, and they are hoping to launch it in July next year during the World Cup Final of the Football. This would be a good occasion. So, we are looking forward to it. The reason I am talking about shoe is not because of comfort; shoe is a big healthcare issue. Many of the diseases in Bangladesh and in many countries, comes through skin of your feet; if you are barefoot, particularly parasitic diseases. If you see children in Bangladesh and in other countries, you see bloated stomach; they are just carrying millions of parasites inside. What are you feeding? You are feeding those parasites, and they are skinny like anything. If they have enjoyable footwear, they wont have to suffer from this. There are a variety of these things that can happen- social businesses. Somebody asked me, “What kind of social business can we have in Germany?” I said, “There are so many things you can do; figure out what is your problem. It is, after all, a cause-driven; you have to find a cause for us, and then we build a company.” One of them is welfare system. I said, “Why don’t they create a social business to get five people out of welfare? That would be a social business. If you can find out a way to get five people out of welfare system, you found the trick how to get five million people out of welfare. This would be a fantastic thing to happen.” You can do enormous things. It is all about creativity. You can have, instead of one business world, if we created two business worlds- I am not harming anybody; I am not saying, “Stop everybody, only do these things.” All human beings can do both things. That is the beauty of it. Instead of having one stock market, where we all go to make money, this is about money making. If we accept the social business in our structure, then we will create another stock market, which will be the social stock market, where we go to find out which business is helping the poor, which business is changing the climate situation as a social business. We invest, and it is done. Thank you very much.