Prof Yunus calls to redesign economy to redesign world – Exclusive Interview

Published on 07/03/2016
Source: http://news.kuwaittimes.net

KUWAIT: In an exclusive interview with Kuwait Times prior to his arrival in Kuwait, Dr Muhammad Yunus discusses his views on the global economy and the growth of microfinance in the Middle East. Some excerpts:

KUWAIT TIMES: You will be speaking at the Kuwait Chamber of Commerce on redesigning economics to redesign the world. What do you mean by this?

Professor Yunus: One of the issues I keep raising is that the problems we have created around the world for human beings are not accidental. This is by design. Not that we wanted to make this happen, but somehow these kinds of negative results came out of it – there are many positive results but there are negative results also built into the system. If you want to avoid and remove the flaws or the negative results of the current economic system, the point I have been promoting is that we have to look back to the thinking process, the conceptual framework, the entire economic thinking and entire economic system to find out the causes of the problems and remove the flaws.

For the present design or current economic system, you get the same old results – you create poverty, unemployment, health hazards and danger for the world, carbonization of the economy, and wealth concentration in a few hands. All these things are built into the current economic system. You can rethink it piece by piece but this does not solve the problem because it will come back soon unless you change the system which created it.

So, we need a redesigning process and once you redesign the process, the problems created in the past can be avoided or eliminated, and we can have a much better world than before. It is almost like building a road that leads you to a destination which is a good one, but on the way we have created problems by using this road, and if you keep on using the same road, you will just perpetuate the same problems that we have. In order to avoid these problems, we have to build a new road. We have to redesign the road in a way that those problems do not occur again and we can achieve the goals we wanted to achieve. The destination we have defined can be reached without creating a problem. This is what I have been saying – to redesign the economy to redesign the world – and this is what we will be talking today at the chamber of commerce.

KUWAIT TIMES: Microfinance has created much debate today on whether it works. How would you describe the state of this field?

Professor Yunus: You have to admit that access to capital or credit is very important. If you look at the world today, I would say probably two-thirds of the world’s population does not have access to financial services. That is the first thing that we should take care of. Money begets money. If you do not have it, you wait around to be hired by somebody and are at the mercy of others. If you have money in your hand, you desperately try to make the best use of it and move ahead. And this generates income for yourself.

I strongly believe that all human beings are very creative – full of potential, full of energy. Money allows them to express this. And if you are successful, you can make more money. You can expand your capacity, reach the next level of capacity, and so on.

If you remember long before the crisis of 2008, when financial institutions were crumbling all over the world, many of us had been saying that we need to redesign the financial system which only serves the top one-third of the world – two-thirds are left out. Microcredit has shown how you can reach out to people that conventional banking cannot. It has demonstrated that it’s a doable proposition.

When we designed microcredit, the purpose was to help people get out of poverty, but some people moved away from that motivation. Grameen is still the same. It reaches out to the poorest – the women – and has demonstrated that despite disasters, it can work.

KUWAIT TIMES: Microfinance is struggling to find its feet in the Middle East. Various reports say that institutional structures, poor regulations and a general backwardness of the financial system are hampering microfinance’s growth in the MENA region. Where do you see the role of respective countries to make microfinance a success?

Professor Yunus: We will be discussing these issues in the upcoming Microcredit Summit in Dubai in two weeks with MENA country representatives. Slowly, microcredit is taking root. Yes, microfinance has blossomed in recent years across parts of Asia and South America, but its start in the Middle East and North Africa hasn’t been as auspicious.

It is good that microfinance institutions have existed in the Middle East since the 1990s and they quickly made strides in countries like Egypt and Morocco, where large, relatively poor populations and pent-up demand for financing fed into its growth. But by the late 2000s, things stagnated. It seems to me that most of the financing firepower has become concentrated in the hands of a few players. We will discuss these issues at the summit, but I must attest that every country and region is different. I am hopeful that it takes good shape in the Middle East and MENA region.

Initially, there was confusion between microcredit and commercial banking, but now people understand these concepts. But there must be a policy in place to put microcredit to work, meaning that there must be a legal framework. There are banking laws in every country including countries in the Middle East, but banking laws are not suitable for microfinance to work properly. The existing banking law is framed for rich people. So you need to create a system or bank where poor people can have access to credit without collateral. There are nine such banks in the Middle East and I hope Kuwait will set up a bank for the poor in the future.

KUWAIT TIMES: You came up with an idea of social business, which you say is a kind of New Capitalism. Please describe this idea to us and explain how you reached it?

Professor Yunus: Social business is a cause-driven business where the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point. The purpose of the investment is purely to achieve one or more social objectives through the operation of the company, and no personal gain is desired by the investors. The company must cover all costs and make a profit, and at the same time achieve the social objective, such as healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc in a businesslike way.

I have been proposing and practicing a new kind of business which is based on selflessness, replacing the selfishness of human beings. This type of business runs parallel to the selfishness-driven business that rules the world. Conventional business is personal profit-seeking business. The new business, which I am proposing, is personal profit-forsaking business. It is a for-profit business, but not personal profits. I call it social business – a non-dividend company to solve human problems. The owner can take back his investment money, but nothing beyond that. After getting the investment money back, all profit is ploughed back into the business to make it better and bigger. It stands between charity and conventional business. It is designed with the objectives of charity and carried out with the methodology of business, but delinked from personal profit-taking.

Charity is a great concept to help people, and has been in use since time immemorial. But it is not sustainable. Charity money goes out, does a wonderful job, but does not come back. Social business money gets the job done and then it comes back. As a result, this money can be reused endlessly. It creates independent, self-sustaining enterprises, which have their own lives. These enterprises become self-fueled entities.

The capitalist system is justified on the assumption that making money is the sole source of happiness. The more money you make, the happier you are. Money is an incentive, no doubt, but it is not the only incentive for human beings. Making money is happiness; but I feel making the world happy is super-happiness. The capitalist system is about freedom to choose. But when it comes to looking for happiness, it gives no choice. By introducing social business to make the world happy, we give people another choice. Now they can choose.

Business schools today train young people to become business-warriors to capture market and money. They are not given any social mission. If we accept the concept of social business, business schools will be required to produce another category of graduates equipping them to become social problem-fighters to bring an end to social problems through social businesses. We would need to create social stock markets to attract investors who would like to invest in problem-solving enterprises, without having any intention of making personal profits.

The impact of the business on people or environment, rather than the amount of profit made in a given period, measures the success of social business. Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goals.

Note: Dr Bhuiyan is a professor at Kuwait University
By Dr Serajul I Bhuiyan

Nobel Prize Winner Thinks No One Should Ever Retire

July 29, 2015 4:19 PM ET

Nobel Laureate Muhammad Yunus, who just turned 75, thinks of credit as a human right.
Ben de la Cruz/NPR


Muhammad Yunus just had a milestone birthday. On June 28, he turned 75. It's a big moment for a man who's had many big moments in his life — most notably the 2006 Nobel Peace Prize for founding Grameen Bank, which loans small sums, aka "microcredit," to the poor, mainly women, so they can start their own businesses.

Yunus stopped by NPR last week — he was in Washington, D.C., for a conference — wearing the long, open-necked "kurta" shirt of his native Bangladesh. "[A tie] looks funny on me," he joked.

He spoke with us about how to spend senior years (spoiler alert: he's anti-retirement) and why he thinks small loans can make a huge difference in the lives of the poor.

You're at an age when many people are retired. But you're still a busy man. Even though you no longer run the Grameen Bank, you're chairman of the Yunus Centre, which promotes businesses that aim to solve the world's problems, and you're speaking on panels.

The word 'retirement' is a very harmful word because it tells you that you have no more use left in you. You retire a ship, you have no use for it, you just put it in mothballs.

A human being is not something you can mothball.

Are you enjoying your older years?

For the first [stage of your life, you are] busy growing up, getting married, raising children, working, always trying to fill responsibilities, always under pressure. Now in the second stage, for the first time, I am free. I do whatever I want to do. I want to make my dreams and wishes true. And I do whatever I enjoy.

What about discounts for senior citizens. Are you pro or con?

I am as good as anyone else. Why should I have a discount? You are treating me differently.

You won the Nobel Prize for the many small loans that your bank gives to poor people. That was a revolutionary idea.

The banking system is designed for rich people. So you don't have any room for the poor people to get in there. The welfare system throws them a few crumbs, but that's it.

Credit is a human right. You have the right to food, shelter, to work. You can create your own work with the money you get.

I can only imagine how intimidating it would be for a poor person to walk into a big bank and ask for a loan.

Going into a bank should be just like when you shop. You don't need courage to buy groceries.

And someone can borrow money from the bank you founded, Grameen Bank, without any collateral?

In microcredit, we are not asking for any collateral. Anybody's entitled. We're not asking what you've got. We're asking what you need.

What would a woman in Bangladesh ask for?

She'll say, I'll think, about $30. She cannot even imagine $100.

And most loans are ... ?

Something like $100 or $150.

The idea is the money will go to start a business.

You have to have a business idea. For example, in Bangladesh, a lot of women propose agriculture-related business: growing something, selling something, producing something.

The bank also has a U.S. offshoot — Grameen America. Are you surprised by the kinds of businesses American women are starting up?

In Bangladesh, our women don't do hairdressing for money; they do the hair for each other. But in the United States, this is a business, so they set up in a shop to do the hairdressing. That surprised me. Dog walking is not a business in Bangladesh. Here [in the U.S.] it's a business. In Bangladesh, you laugh [at the thought] that you can make money by dog walking.

Your bank has accomplished a lot, with 8.4 million loan customers. Yet you and the bank have come in for criticism: The bank doesn't follow government rules and regulations; the bank receives foreign funding.

Do I have this envelope with me so I don't have to answer all these questions? [Yunus hands me a 31-page pamphlet titled "Questions by critics on Grameen Bank and the facts." The answers in the pamphlet can be found on his website.]

Source: http://www.npr.org/sections/goatsandsoda/2015/07/29/425631946/nobel-prize-winner-thinks-no-one-should-ever-retire

National Microfinance Conference 2009 in New Delhi

Professor Muhammad Yunus, founder and managing director of Grameen Bank, has been a great inspiration to the entire microfinance community. Microfinance Focus congratulates Dr Yunus and takes the opportunity to republish an exclusive interview that Dr. Yunus had given to it on March 30 on the sidelines of the Sa-Dhan's National Microfinance Conference 2009 in New Delhi. It is a show piece of Dr yunus's views on microfinance that will have an enduring impact on the community forever:

MF FOCUS: Microfinance is an established and recognized instrument to fight poverty today. Many people are confident and hope that poverty can be eliminated through it. Isn't it too simple just to rely on microfinance?

Dr. Yunus: You don't have to. Nobody is forcing you to do that. If somebody wants to do Microcredit, fine. I wouldn't say this is something everybody should have. Nobody says it is the only solution. Human beings are very multi-dimensional. Microfinance is one of the many, many things.

MF FOCUS: Social business is an additional way. Do you identify enough potential for social business to make a real difference, globally?

Dr. Yunus: Yes of course. Definitely it is a global and not a local issue. There are two kinds of businesses: One is business to make money, the other business is to change the world. This one is with the intention of changing the world and not to have any personal gain from that. It is all dedicated to make a difference. It is addressing a social issue, to resolve it. You can do that.

MF FOCUS: What are the factors that make social businesses successful?

Dr. Yunus: A good business plan, good ideas and use the creativity in the most creative way.

MF FOCUS: Microfinance as well as Social businesses have to be highly efficient. How is it possible to maintain or re-introduce the social mission back into microfinance?

Dr. Yunus: Whenever something gets popular, actually catches attention, there are people who take advantage of that and misuse it. It happens in everything. When Big brands are popular, it gets imitated by fake ones. Same thing happens with microcredit. People name it microcredit but in fact it is not microcredit. It is something completely different.

People have to be made aware of what is microcredit and why it is important to stick to the real microcredit and not the one which has a different motivation. But while you are looking at the microcredit itself, even good people may have wrong ideas, which makes them shift away from the whole idea, the mission. We have to be very careful and remind ourselves, what is our mission. That is why we have meetings (Sa-dhan conference) like this, to rediscover your mission and then re-adjust your work to the mission.

MF FOCUS: To build an enabling environment for social entrepreneurs, what should governments do and what regulations do you

count as important?

Dr. Yunus: It is very important. Very Important! Regulation is very important but at the same time regulation can be stifling, destroy the whole business by over-regulating and making it impossible to function. It is like a mother and a child. You know how you have to change your child to do the right things. At the same time you should not control your children so that it loses all its initative. It is like becoming a prisoner in the hands of the mother. Regulation should be promotional, a Cheerleader. At the same time make sure you do the right thing, that you don't drift away from the real principles. It is a tough job in the sense you have to balance both how to encourage, and at the same time how to restrain.

MF FOCUS: Due to the financial and economic crisis, development funds were cut by the North (developed countries). Where do you see the responsibilty of rich countries in fighting poverty? Where should they act?

Dr. Yunus: See the Southern countries didn't create the crisis, they are the victims of the crisis.It is only one country which created the crisis and it has spread all over. Those who were involved in creating this crisis also have a moral responsibility to make sure that the victims are supported . There are lot of people sufferring, that has to be taken care of. Now they are busy of making bailout packages and all the support. And i am saying At least 10 % of all bailout packages every where should be earmarkerd for victims in the Third World. These things have to be built in the system.

MF FOCUS: Apart from poverty there are many topics, which can be solved or bargained only at an international level, Climate

Change for example. Nicholas Stern is convinced, we have to solve both topics together: Poverty and Climate Change.

Dr. Yunus: Well, financial crisis is the latest crisis. 2008 had the food crisis, which is still there. Simply front pages have been taken over by financial crisis and have pushed away all discussion about the food crisis. 2008 was also the year of energy crisis - the oil prices shot up to the sky. It didn't disappear, it is lying low for a while. And also this is perpetuating environmental crisis. All these crises have their roots in the same thing.

These are not separate crises. You have to adjust the root causes than adjusting all of them. The root causes are the wrong structure, the capitalism structure that we have. We have to redesign the structure we are operating in, which is wrong and unsustainable lifestyle. We have to take the hard decision! We and each one of us must take a decision on this planet. And also we should inculcate among our children a simple way of living. We should not live in a way, that it harms another person. Once you take this decision, everything will be solved. We have no right to live a life which is harming anybody else. It is like traffic laws. You can't have a car and knock everybody off the road. There's a rule that you have to drive safely, so that you don't harm anybody. Same thing is for living on this planet. We are sharing with each other.

MF FOCUS: Grameen Bank has moved to Grameen II methodology, but still Grameen replicators in India follow the Grameen I model. Do you think they should explore such flexible methodology?

Dr. Yunus: It is up to them, what they like I cannot advise. We thought we can solve some of the problems. we see the opportunity that we have by relaxing our procedures and rules to make it more friendly.

MF FOCUS: What is the next level for Micro finance and how to take it forward?

Dr. Yunus: Next level is to enter into insurance, pension funds, second generation issues young children are coming up and we should try to make them into better citizens to deal with life.

MF FOCUS: Savings product is much needed by the poor. Regulation is cautious not to allow collection of savings by certain categories of MFIs. What is your opinion?

Dr. Yunus: Savings product is very important. Change the law!!! Keep on insisting that the system is right.

MF FOCUS: With Microfinance Focus, the monthly magazine, we are working on information exchange and trying to promote best

practices in the sector. How important are projects like Microfinance Focusfor the sector?

Dr. Yunus: Yeah! This is a good initiative. Communicate I mean let people know what is happening, what is right, what is wrong, so they can participate in debate, discuss, make it more efficient, more cost effective and more friendly.

 

Source: http://www.microfinancefocus.com/news/?page_id=633

Money well lent

by Alison Benjamin
The Guardian
As a bank created for poor women in Bangladesh prepares to open its doors in Britain, Alison Benjamin hears from its Nobel peace prize-winning founder Muhammad Yunus about how the recession can help people out of poverty

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