Interview of Muhammad Yunus with The Kathmandu Post, December 2012

All the institutions and policies support the rich

Muhammad Yunus hardly needs an introduction. Known the world over as the founder of microcredit, he won the 2006 Nobel Peace Prize together with the Grameen Bank “for their efforts to create economic and social development from below.” Yunus was in Kathmandu recently to launch a social business. The Post’s Gyanu Adhikari caught up with Yunus to discuss microcredit and some politics. Excerpts:

What brings you to Kathmandu?

I came to launch a social business fund. I’m interested in what I call social businesses: business to solve problems, rather than make money. Today, all over the world, in a capitalist system, business is profit centred—everyone is rushing to make money. People are becoming addicted to money.

Are you talking about non-profit business?

It’s for-profit. Company makes profit, but the owners don’t want to take that profit. It’s recycled in the business itself. There is no intention of benefitting personally from it, and the business is focused on the people that you’re working for. So it applies everywhere. Today, social businesses have grown in Bangladesh, India, Germany, Japan and Brazil.

Could you give us an example of what kind of product or services you can sell through social business?

For example, we created one social business in Bangladesh to sell solar home systems because we don’t have electricity in the villages.

Seems like it could be applied to Nepal as well?

When you do it in one country, it applies everywhere. That’s a common thing. All problems of the world are the same, whether you’re talking about the US, Bangladesh, or Nepal.

But in the US, if there is no electricity in a particular place, the government takes the electric grid system to that place. Do you think in places like Nepal and Bagladesh we should aim to take the grid to villages rather than trying to come up with micro-solutions?

We’re not opposing taking the grid to the village, but since electricity doesn’t exist everywhere, if you say, it’ll come someday, my life would be over. So I want a solution now. When you talk about a national grid bringing electricity, you’re talking about fossil-fuel based electricity. If I can bring renewable energy, it’s helpful for the climate. So I’m doing service to the climate. Maybe Kathmandu should change, and go back to solar rather than this.

You won the Nobel prize for your innovations on microcredit. Could you tell us what are the pros and cons of microcredit?

First, the financial system doesn’t work for the poor. They can’t go to a bank and take a loan. That system is created for the people who already have lots of money. We needed a system which works for the poor. With microcredit, they can borrow and start a business. Also, it creates self employment. I can’t find a job, so I create my own job. I start a little business, and it generates employment. It works wonderfully for the women, because it means she doesn’t have to go to the factory. She doesn’t have to go to the city, which is very difficult for her. She stays home and starts a business like raising chickens, doing embroidery she can sell. And it empowers the women too. These are the positive aspects. The missing aspect is that the governments are still not taking microcredit seriously by setting up proper regulations. People sometimes misuse the concept of microcredit for making money for themselves. 

Are big banks interested in microcredit?

Big banks and conventional banks are not really interested in that. They sometimes say a few words about it, but don’t provide service to the poor. A poor person cannot go to a bank in Nepal and get a loan.

How often do the microcredit businesses graduate to macro businesses?

It depends on what you mean by macro. If you’re talking about a few million rupees, no, they’ll never get to that size. They’re just starting with a couple of thousands. Ten thousand is a big number for them. Fifty thousand is fantastic progress for them. That’s about it. For the poor, these are big numbers, but for the rich people, it’s still a tiny number.

Do you think microcredit is a permanent solution to social inequality?

Social equality is a much bigger issue because all the institutions and policies support the rich. The rich take most advantages; their speed of moving up is faster than the speed of moving from poverty to non-poverty. For the poor, their capacities are slow, their speed is slow and the facilities are slow. As long as the poor’s speed is slow and the rich’s speed is high, the gap between the two will increase. Two things: I don’t want you to stop the speed at the top, because that’s needed for the whole economy. But why can’t we multiply the speed of the poor several times so that they can get out of poverty. The gap between the rich and the poor shouldn’t widen. For this, you need lots of things: technology, institutions, social businesses etc.

Changing tracks, you were active in politics at some point in your life. Do you think this kind of micro-solution makes people more apolitical as they provide a solution that can sustain the poor, but never really makes the society more equal? Is it an anti-politics machine as some academics have charged?

Why do people become interested in politics? You have to find that cause. I’m interested in politics because I want the government to do something. The more progress I make, the more I become aware that I have the capacity, and I become more involved. But when you are very poor, you tend it think it’s your fate to be poor. But the more education and money you give, the more aware they become. To say, you have more money, you become more relaxed is not true. If I make an income, my children will be better off.
They will go to school and become educated. And they will start asking themselves — why am I doing this? So to say that microcredit makes people complacent politically, to me, doesn’t sound right. The more I become active, the more I know that I can do more.  For example, if there’s no electricity, I see that if the government gave me electricity I could run my shop much better.

Have you considered continuing with politics?

Yes, but under very different circumstances. Remember, Bangladesh had a terrible time in 2007 and 2008 because we had a caretaker government supported by the army.  All the politicians were in jail and the parties were dysfunctional because the leaders were in jail. On top of that, elections were about to take place, and people were saying what kind of situation is this? If there are no parties what could the people really do in elections? The party is an institution. If you create it and people trust you, they’ll vote for that party.  So after a lot of pressure — because I’m not interested in politics — I said yes, because people were accusing that I was not paying attention to their problems.

In Nepal these days, there’re discussions about a ‘neutral’ prime minister because the parties cannot agree on a candidate from among themselves to run the government. Is it a good idea?

It could be an interim thing.  In Bangladesh, it was for 90 days. The whole purpose was to hold fair elections, because we could not trust the politicians to hold elections. But to say that a government should be headed by a non-political person or a Supreme Court justice is not a good idea. You need a political person to run the country.

Why is it not a good idea?

Because a judge is not trained to be a political person, who has a lots of connections. A justice by nature is an isolated person; he doesn’t know what’s happening in the country. So he’s surrounded by his immediate staff, and whatever they say, he has to believe in it. You have to have a political process and a political person to head the government.

On a regional level, the South Asian countries have been very reluctant to increase co-operation. Why is that?

I know. I was complaining about that in the Saarc, which is in deep hibernation, for the simple reason that nobody is interested in it. We have an enormous opportunity for Saarc to get together, and solve our problems together.

It seems that the Saarc countries have a lot of the same issues, for example, those related to discrimination against women and Dalits. But why is there so little political will to work together?

Because our politics is always about creating divisions.  You breed the divisiveness inside the country as well. Where we are living in harmony, suddenly we create religious problems and regional problems such as north versus south etc. We’re very good at fanning out divisions. We’re not good at looking at creating harmony and unity.

How do you go from this to building trust?

That’s the kind of political force we have to create. We start looking for the bigger picture. We’re always looking at today and tomorrow, and not beyond. Bangladesh has so many fights over nothing.

The smaller the stakes, the bigger the fights.

Right (laughs). That’s very unfortunate.

Posted on: 2012-12-31 Former Big Issue seller now star man at ethical sandwich shop

A FORMER Big Issue vendor who sold the magazine outside a city centre sandwich shop has now become its star employee.

Four months ago Peter Hart, 22, could regularly be found at his pitch outside the newly-opened Social Bite on Rose Street. The cafe and takeaway, owned by Scottish Business Awards organiser Josh Littlejohn, is a socially-conscious enterprise that gives all its profits to charity.

When the staff began giving him free sandwiches at the end of the day, Peter offered to do any odd jobs that needed taken care of in return. And when a full-time position as a kitchen porter opened up, he was thrilled to be offered a chance to officially join the team.

Peter, who now lives in Wester Hailes, told the Evening News: “I can’t stress enough how grateful I am to Josh and to Alice Thompson, the manager of the shop, because I wouldn’t be here without them. The world really would be a better place if there were more people like them – no-one ever gave me a chance before they came along.

“I’ve been in care since I was three and once I turned 16 I broke all ties with the system and moved down to Southampton, where I was working odd jobs and living between a lot of different places, with no real support from anywhere. I ended up going to jail for possession and served 15 months.

“While I was inside I decided to make the best of my time so I got my level one certificate in food hygiene, and also 
got qualifications in painting and decorating, brick-laying, customer service and business. When I was released I moved back up to Scotland and came to Edinburgh about two years ago, and for most of the time I was basically homeless again, couch-surfing between friends’ places when I could. I was recently reunited with my birth parents and that’s who I’m staying with now.”

Last week Peter presented the shop’s first donation of £1000 to homeless charity Shelter Scotland.

He added: “It felt so good knowing that the money would go towards helping people who are in a similar situation to the one I was in so recently. I think that’s one of the reasons I enjoy this job so much – I get paid a good wage and the work I do helps people here and people on the other side of the world. It really is another incentive to get out of bed in the morning.”

Josh, 26, added: “Peter is one of our most reliable team members, he’s first to arrive in the morning and last to leave at night. One of the best things about it is what it has done for his self-esteem. We’ve all noticed recently how much more comfortable he seems in his own skin. He would once have been a recipient of charity, but now that’s been completely turned on its head and he is the one helping others.”

Director of Shelter Scotland Graeme Brown, who accepted the cheque, said: “We are grateful to Pete and his colleagues for choosing to raise valuable funds for Shelter Scotland. Support and generosity like this enable us to offer vital services to those experiencing homelessness and housing problems.

“Pete’s story shows that with the right help and support homeless people can get back on their feet and help not only themselves but many others. Every penny of the money raised will go towards helping people just like Pete.”

‘Social entrepreneur’

Josh Littlejohn, the driving force behind Social Bite, is probably better known around the Capital as the organiser of the Scottish Business Awards. After hearing about the Nobel Prize-winning work done by Bangladeshi banker Professor Muhammad Yunus, he made social business the major theme of the 2012 awards, inviting anti-poverty campaigner Bob Geldof to speak to the assembled heads of industry. Social business, as defined by Professor Yunus, is a non-loss, non-dividend company. Speaking before the event in February, Josh said: “It is a chance for businesses and entrepreneurs to realise that 
together they are the most powerful force for social change we have.

Magazine thrilled by Peter’s success

THE Big Issue is a publishing phenomenon that has helped homeless people across Scotland regain control over their lives.

Today delighted bosses at the charity applauded Peter’s case as an excellent example of their self-help ethos.

Hearing of Peter’s new position, a spokesperson from the magazine said: “We’re always delighted to hear a vendor has moved on to secure employment, particularly at Christmas time. Up and down the country Big Issue vendors daily make connections with local businesses – a valuable working skill that should not be underestimated.

“Sadly, opportunities like this are few and far between and the Big Issue is witnessing an increasing number of people taking up the opportunity that selling the magazine provides.”

Published on Thursday 13 December 2012

Huffington Post: Bangladesh Hits 1 Million Solar Home Systems

A few months back Nancy Wimmer told us about Bangladesh's solar success. In one of the poorest countries on earth a renewable energy company, Grameen Shakti, is busy installing nearly 1,000 solar home systems each day. It turns out all that small solar has achieved something quite big. In November Grameen Shakti hit 1 Million Solar Home Systems (SHS) installed. The company's milestone reinforces a lesson that is increasingly clear. Whether it's Germany, the US, or even China distributed solar installations are driving the solar revolution.

The Bangladesh story however, is particularly exciting because Grameen has singlehandedly shattered the energy 'axioms' on which the international policy community has relied for decades: Renewable energy is too expensive: Wrong. Even if solar makes sense the poor can't afford it or they won't pay: Wrong. The grid will come regardless so off grid, decentralized energy is a waste of time, money, and effort: Wrong, wrong, wrong. What Bangladesh does prove is that Carl Pope is right: deploying solar makes the most sense for off-grid areas where the economics are compelling and the need is great.

That's what makes the next phase of the solar revolution even more exciting. That's because today we are talking about 1 million solar home systems in Bihar, but tomorrow we could easily be talking about tens of millions in either Bihar or Uttar Pradesh, Indian states that have off-grid populations larger than most European nations.

But why would either of these states be able to replicate such an awe inspiring feat? Because they have the exact same ingredients for success: a robust rural banking sector (Micro Finance through Grameen Shakti for Bangladesh, State Banks for India), a demonstrated need (large numbers of un-electrified people), and policy support (World Bank finance for Bangladesh, Chief Ministers whose political futures are increasingly reliant on clean energy access in India). The last ingredient being reliant on policymakers understanding that energy's presence, not price, changes lives.

In fact the next phase is already here; A distributed clean energy revolution is brewing in Bihar and the next distributed solar hotbed is developing in UP. While billions are squandered on a failed grid extension approach that is destroying the climate, and displacing local communities, the political leaders of these states, responsible for hundreds of millions of un-electrified people, are getting very serious about off grid, decentralized clean energy solutions.

So here's our policy lesson in a nutshell: Bangladesh is the world's demonstration case for an off-grid clean energy access plan that delivers. Bihar and UP are the next phase that will take this approach to scale. Maybe, just maybe, 1.3 Billion people later, the message, small solar is big, will finally sink in.

Posted on 12/17/2012

An Interview of Muhammad Yunus with Harvard Business Review, December 2012

Life's Work: Muhammad Yunus

An Interview with Muhammad Yunus by Alison Beard


Muhammad Yunus won a Nobel Peace Prize for spreading the concept of microcredit—tiny loans to help poor people start businesses—via his Bangladesh-based Grameen Bank. He resigned as CEO of that organization last year, at age 70, due to pressure from the Bangladeshi government, but he remains active in Grameen ventures elsewhere in the world. Interviewed by Alison Beard

HBR: There was a lot of controversy over your retirement. It was reported that the Bangladeshi government, which owns 3% of Grameen Bank, forced your hand.

Yunus: Look, when I was 60, I submitted my resignation. “Why do you want to retire?” the board asked. “Is the work becoming too heavy on you? Do you want to do something else? If you’re enjoying your work and we enjoy you, why don’t you continue?” So I said OK. When I turned 70, I did the same thing. I said, “I think I should go.” They said, “You cannot.” Staff members all over the country were writing me letters saying, “Don’t leave. This will bring a panic.” So again I couldn’t leave. But I wrote a letter by my own hand and took it to the finance minister and said, “I’m trying to retire as CEO, so why doesn’t the government appoint me as chairman? This way I can continue in a nonexecutive position and the position of CEO can go to a new person, without disrupting the whole motion of the bank.” Then last year the [government] authority asked for my resignation, saying I was illegally holding on to the position of CEO; I should have retired 10 years before at the age mandated by government bank rules. I contested in the high court, but the court did not accept my case. So I resigned.

But my personal position is not important. The important thing is to protect the rights of the women who own 97% of the shares of this bank. The law gives them the right to hire and fire the CEO and decide the age and the terms of his appointment. This is an organization that serves 8.3 million families; that’s around 40 million people—a quarter of the population of Bangladesh. It is run very well, and it won the Nobel Peace Prize. I just want to see that success continue.

But isn’t it in jeopardy now since the government is investigating Grameen Bank and seems to desire more control over its leadership? For example, its own political appointee, the bank chairman, will now appoint a selection committee to decide on your successor rather than the elected board. How do you feel about that?

It has fundamentally damaged the very essence of Grameen Bank. With this change, the government has practically taken over management, and this will set in motion the end of the bank. This is a disaster. A self-governing entity that has empowered poor women and earned global admiration will now be converted into a poorly managed and corrupt government bank. What a tragic end.

Do you regret staying on so long and not grooming any obvious successors?

No. There is no reason to regret. Grameen Bank is a hierarchical company. There’s a managing director—that is, a CEO—and the deputy CEO, and the general manager. Since I left the bank 15 months ago, two new acting CEOs have been in the top job, and the government has made frequent comments that the bank is managed better now than before. It seems I groomed not only one able successor but a line of them. The government says it will do an international search to recruit the new CEO, but it would be shameful for a Nobel-winning organization born from the initiative of a local person, institutionalized by local staff, operating only within the borders of one country to have a CEO who might not have roots in Bangladesh and who might not communicate well with the bank owners. Would such a person be a better successor than the ones I left behind?

Microfinance has also come under fire in recent years. How do you maintain quality control as your organization and your ideas spread?

The problem is not microcredit. It’s using the idea for the wrong purposes. Some programs in India treated microcredit as an opportunity to make money. They blew it up and went to the stock market to float IPOs and so on. And that created all the tension. Now in some places even the loan sharks call their services microcredit. But we have no problem at Grameen Bank in Bangladesh, because microcredit has remained mission-driven. We want to help poor people. We don’t see them as an object for making money.

How do you make sure all your people are adhering to the mission?

We have 2,600 branches at Grameen Bank. Each one is almost autonomous. But our goals are very clearly stated, and we monitor whether the branches are meeting them through something called Five Star. Each employee is supposed to look after 600 borrowers. If you get 100% repayment from those borrowers, you get a star. If the whole branch achieves 100%, then everyone in the branch gets a star. If you do it for the whole year, you get another star. If your branch is profitable, you get a fourth star. And if the children of the borrowers in your branch are all in school—every single child—you get the fifth star. These are stars you can wear on your chest, like in the military. So you go to work, and you see the star achievement.

What qualities do you look for in Grameen employees?

In the beginning, we were very small, so we were picky. We were trying to get the best possible staff. Now that we’re hiring so many people, we’re not looking for the ideal. There will be qualitative differences in the people we hire, but it’s OK. Bring them in, and let them go through the process. We take many kinds of people, and the system turns them into ideal people.

Grameen Bank started out as a field research project. Why is getting out into the field so important?

When I was doing my PhD and then teaching, I developed a bird’s-eye view. I could see a very wide spectrum of things, almost the whole world. But I was seeing only the outline of things and filling them in, like a child coloring in a box, by making up stories about how people behave. Then, working in the village, door-to-door, person-to-person, I got a worm’s-eye view. I saw things at very close range—all the details, what really happens inside. And that’s more important, because I could then clearly see what the problem was and try to solve it—to start with a tiny little problem, and feel energized by it.

How do you zoom out again?

I don’t. I look just at one plot, not the whole plantation. I do the plot and it works, so I do the next plot the same way. You start with 100 people and then move to the next 100 people, and eventually you see you can simultaneously add 100 people here, another 100 people there and there. You’re adding up to a bigger scale at a gradual speed. Then you have to monitor and start linking the structure and so on. But you’re not designing at the outset for a million people, starting with a megastructure. You’re moving step by step.

Still, you’re also known for setting huge goals. Why do you do that?

I believe that if you put all the creative power of human beings on one side and all the problems of the world on the other, and put them into a battle, human creative power will always win. It’s just that we don’t use our creative power to address problems; we use it to make money. We have created a system of money-chasing entities, rather than problem-solving entities. So how do we break from this? Social business. Create companies that are devoted to solving a tiny slice of our problems and that operate with the efficiency of business—but whose investors don’t expect any dividend. Making money is a happiness. Making other people happy is also a happiness. So why don’t we do both and maximize our happiness?

Should every company be a social business, or have a part of it that’s a social business?

Every company is a legal personality, so just as every person can do both, every company can do both. It’s a choice, whether it’s exclusively one or the other, or mixed in various proportions: 80/20 or 20/80. I’m not opposed to money-making. But why don’t you create a tiny little social business on the side to take five people out of the welfare system, or provide health care or technology to a group without it, or create a business to employ juvenile delinquents? Whatever you feel comfortable with.

In the joint ventures you’ve done with big corporations, what are some of the obstacles you’ve faced?

I have more excitements than problems. But there was one interesting problem with Danone that became a classic case. We had a 50-50 joint venture agreement: Grameen would give €500,000, and so would Danone. Grameen had no problem. But Danone couldn’t provide its half. Weeks went by, and they could not. Months went by; they could not. Finally, they explained. Their lawyers were objecting, saying that the money belonged to the shareholders and therefore couldn’t be used to invest in a company that would not pay them a dividend. But then Danone came up with a solution. It sent out a letter to all the shareholders before the annual general meeting saying: We want to start a company in Bangladesh that will tackle the problem of malnourished children. If you want to use part of your dividend to invest in this company, please sign up and tell us what percentage you want to put in. Around 97% or 98% of the shareholders signed up, and Danone ended up with €35 million. So there was a problem, and there was a solution.

How hands-on is your role in Grameen’s joint ventures?

I’m only one person. Most of the time, I’m not contributing personally in the design of the products. But I’m a catalyst for bringing people together, focusing on objectives, reminding everyone what we want. For example, in the Danone case, they first showed me a plastic container for yogurt. I said, “In social business, plastic is not allowed. We want biodegradable material.” The Danone guys said, “We use plastic all over the world.” And I said, “All over the world you’re a profit maker. Here you’re a social business.” They were unhappy, but they started looking for a solution. After four months, they came back with a new container made of cornstarch. “Can I eat it?” I asked. “Because why should poor people spend money on something they have to throw away? Why can’t you put nutrition in the cup?” So they worked very hard to make an edible cup. These big companies have enormous creative power. But unless you ask, you’ll never get an answer.

You have such a wide network of supporters. How do you go about building those relationships and lobbying for your ideas?

I don’t lobby for support. People become supporters because it matches their own wishes and desires to help the poor.

Fully 97% of Grameen’s loans are to women. Are women better businesspeople than men?

Women used to hold less than 1% of bank loans in Bangladesh. So when I created Grameen, I wanted to make sure that half of the borrowers were women. When we approached them, they said, “I don’t know what to do with money. I’m afraid of money. Give it to my husband.” And I thought, “This is not the voice of the woman. This is the voice of history, of the system, which created fear in their minds.” It took us six years to finally achieve the goal of 50/50. Then we saw that the women borrowers brought so much more benefit to their families. Women want to build up something for the future with their money. Men want to spend it enjoying themselves. So we changed our policy to focus on women.

Grameen works across the world now. What cultural differences have you seen?

We have a bank in New York City now—9,000 borrowers, an average loan of $1,500, repayment rate over 99%—and it’s doing exactly the same things we do in Bangladesh. There is no cultural variation. We focus on what Grameen is: tiny loans to poor women.

Do you think you’ll ever fully retire?

I don’t think any human being wants to retire as long as they enjoy the life. And I’m enjoying the life.


Source: Harvard Business Review
Publication date: Dec 01, 2012. Prod. #: R1212M-PDF-ENG tellyseries