Bangladeshi banker to the poor turns the tables on the West 

Vancouver Sun
March 15, 2008   by Don Cayo

It's a shop-worn cliché at best -- the white man trekking off to distant corners of the world to enlighten or enrich. The rich world's better aid and development agencies well know the best help is often to be found far from head office, and the best ideas are apt to come from staff who are plugged into the places and the cultures where they work.

But who better to turn such a dated view completely on its ear than Muhammad Yunus, the Nobel-prize-winning economist. 

Yunus came to Vancouver for an honourary doctorate, presented to him on Friday by UBC.But the wily Bangladeshi banker -- the founder of the famed Grameen group of companies, which bring loans and other low-cost financial services to more than seven million of his nation's poor -- also brought some soap to sell. He's not only promoting a new book, but also some ideas that are not-so-new in his country but are largely untried in ours.And so, in a neat reversal of the cliché, he can be seen to be trekking off from his world to ours to help save us.

I approach Yunus's book, Creating a World Without Poverty: Social Business and the Future of Capitalism, with a degree of skepticism. It's very upbeat -- a little too much so, for my taste -- in its belief that a new kind of business can banish poverty.

He envisions a vast array of enterprises motivated not by profit -- though they'd have to make enough to cover costs and fund any expansion -- but by social good. This could be manifest either by making money for poor people, by making the world a better place, or by some combination of the two.

I've no doubt that such an approach can work. There's no better proof than Yunus's Grameen Bank itself. Starting with hip-pocket loans of just $27 US in total to 42 poor families in the mid-1970s, it has grown to a huge, showcase institution. And it stands on its own two feet. Despite its massive rate of expansion, it hasn't accepted any support from donors since 1994.

I've also seen first-hand how other financially savvy groups -- Mennonite Economic Development Associates and the Aga Khan Development Network, to mention just two that I've written about in depth -- put business tools to work in several other parts of the world.

My skepticism is rooted, then, not in the belief that it can't work, but in my doubts that it will ever be as widespread a tool as Yunus envisions. I just don't see the incentives that not only make business work, but also make it a ubiquitous feature of life in almost every society.

ndeed, micro-credit, which is such an outstanding success in Bangladesh and some other parts of Asia, is less so in other poor parts of the world. While Grameen and its biggest competitors measure their success in the millions of clients served, the numbers for the biggest micro-lenders in sub-Saharan Africa, for example, are merely in the tens of thousands.

And here in Canada, where I've been aware of micro-lending attempts for at least a decade, the numbers are still minuscule. I'm not saying they can't be built beyond what they are, but they'll never mushroom.

Be that as it may, Yunus still has some things to say that Canadians need to hear.


He met Friday, for example, with several first nations leaders -- representatives of a segment of society that is, for the most part, woefully served by existing financial institutions. We can use all the advice we can get on how to do a better job of reaching this group of Canadians.

And I winced at the description in his book of an American woman being gouged by the payday-loan and cheque-cashing industry. We have an awful lot of people in this country, too, who have no better alternatives for basic financial transactions.

So I don't see Yunus's social business ethic sweeping the world -- and, especially, not this part of it -- the way profit-making businesses have.

But I do see an important role for his approach in some significant niches that have been left ill-served or even unserved. So I'm glad he made the trek.

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© The Vancouver Sun 2008



Yunus clearly respects the discipline of the market. But in many of the social businesses he espouses, the bottom line simply won't reflect profit or loss, the one thing in businesses rely on to keep score. Rather it will be a less tangible assessment of public good -- much the same kind of "product" that charities strive to produce today. This kind of product can and no doubt will attract some investors and some very good staff. But I doubt -- though I wouldn't mind being wrong -- that it will ever develop into a worldwide force.

Source: http://www.canada.com/vancouversun/news/business/story.html?id=0cd3ee65-c1ef-4964-94db-cdace400356b&k=18057