Victory of the People
Outcome of Cop 21 got me thrilled and inspired. After 40 years of battle between believers and non-believers finally believers won. They persuaded everyone that the world is in real danger, and we must act collectively. Paris got all the nations, big and small, together to sign on a legally binding agreement to protect the planet from impending climate disaster. Everyday I feel like thanking all the activists who have gone through an uphill task to convince political leaders, businesses, and ordinary people, year after year to show the writing on the wall. Many took it as their life-long campaign to bring the nations to their senses. Citizens who were on the sidelines gradually became activists. They voted for political candidates who supported climate action. Political parties started getting elected to power because they are green.
I see Paris as the victory of the people led by the committed activists who never gave up campaigning for their cause. Even during the Paris conference over 7,85,000 people marched at 2,300 events in 175 countries united in one voice calling for a 100% clean energy future to save everything they love. Normally we expect governments to mobilize public opinion behind their brave actions. In the case of global warming it was the reverse. It is the citizens of the world who mobilized their governments.
Paris inspires me to believe that this kind of citizen's movement can make the world ready to overcome another impending disaster which has been looming on the horizon. This has been a hot subject in politics for ages. Many powerful movements, many ambitious initiatives have been taken over centuries to address this problem. Much blood has been shed over this issue. But it not only does not go away, it gets more threatening than ever. This is the problem of ever-exploding gap in private wealth. It keeps ongrowing locally, nationally, and globally. As the economy grows concentration of private wealth gets worse. Faster the rate of growth, faster is the rate of concentration of wealth. This disaster is dangerous because it destroys peace and harmony, it threatens human rights and democracy. It pushes the world towards social explosions each worse than the previous ones. It triggers armed conflicts among nations.
Oxfam Updates on Wealth Concentration
Oxfam has been giving us horrifying updates on wealth concentration each year. This year they tell us that 62 richest people own more wealth than owned by bottom half of world population. In 2015 they reported that the 80 richest people, and in 2014, according to them 85 richest people owned more wealth than owned by the bottom half of world population. In 2010, six years back, it was 388 richest people who had the pleasure of owning similar wealth. They also told us that wealth of 80 richest people doubled in five years, between 2009 and 2014.
Oxfam has a terrifying projection for 2016. During the current year, they projected, the richest 1% of the world will own 99% of the world's wealth. That means 99% of the people will be left with only 1% of the wealth.
This information is so unbelievable that it takes time to absorb. We feel like asking many more questions. How many of world's richest people will own more wealth than owned by the bottom half of the world population, say, in 2025? It is obvious that if the number can drop from 388 persons to 62 persons in six years we are just one small step away from one lucky person owning more wealth than owned by bottom half of the world population!
US presidential candidate Bernie Sanders keeps reminding in his campaign speeches that in the USA, the top 0.1% owns 90% of the nation's wealth.
What about Bangladesh? Is it 62, or more, or less, of the richest owning more wealth than owned by the bottom half of the country's population? Does it interest anyone to find the number? How long will it take to reach a point where only one person will own more wealth than owned by bottom half of the people of Bangladesh? Obviously he will be the 'King'. His wishes will be the law of the land. Does it sound too far-fetched?
Concentration of wealth also means concentration of power -- political and social, privileges, and opportunities. The reverse is also true. If you don't have any wealth, you have no power, no privileges, no opportunities. The bottom fifty percent of the people of the world who own only a tiny fraction of 1% of the global wealth, belong to this category. Tomorrow it will be worse.
Concentration is an ongoing non-stop process under the present economic system. That's the point I am drawing your attention to the richest people are not necessarily bad people, as popularly imagined, engineering the ever-expanding concentration of wealth with bad intentions. It is the system which does it for them. Wealth is like a magnet. The bigger the magnet the greater is its pulling force. It draws smaller magnets towards it. That's how the economic system is built. People with no magnet find it difficult to attract anything to them. If they somehow own some tiny magnets, retaining them becomes difficult for them. Bigger ones pull them to themselves. Unidirectional forces of concentration of wealth keep changing the shape of wealth-pyramid making its base thinner and its peak narrower and higher, ultimately looking like a thinning column rising out of a thin but large base.
These are horrifying realities which are taking shape minute by minute, while we are busy with our daily chores. For example the temperature of our planet quietly reached 1 degree Celsius, above the temperature during the industrial revolution, only a few months back, without drawing much attention. If we don't take heed of such major milestones our planet will keep getting warmer and warmer, and at one point we will reach the point of no return. Had it not been for the dedicated scientists and activists, who worked day and night over years, to galvanize a citizen's network and mobilize the governments forging a collective decision on global warming. Wealth-concentration is as dangerous as environmental threat. One is a physical threat against the existence of the planet; another is a threat against humanity, against the right of the people to live with dignity and peace pursuing higher ideals.
If the collective efforts of citizens led by committed group of scientists and activists from all sections of society could make us aware of climate danger, I believe by following the same roadmap we can galvanize forces to protect humanity from the danger of its destruction through ever-intensifying wealth-concentration. Citizens have to create little islands of wealth harmony through their efforts. They have to inspire the world, particularly the youth that this can be done and must be done. We have to remind ourselves that we are in an era where impossible become possible faster and faster. This is one impossible that we'll have to make possible very fast irrespective of all the hurdles in reaching it.
Let me share some of my thoughts on how we can make it happen.
People at the Centre
Can wealth explosion be stopped?
My firm answer is, yes, it can be done. Human beings can do anything they want. There must be a strong desire behind it. Old ways of doing it through government and charities alone cannot do it. People will have to take it up as their personal priority. People will take the lead in doing it themselves and then put strong pressure on government to move in the direction of creating right kind of policy packages to facilitate this.
Since the appearance of modern capitalism around 250 years back, the concept of free market has been well established. It has been believed that an invisible hand ensures competition in the economy and thus, it contributes to the equilibrium in the markets. It is also believed that society is benefited automatically if individuals pursue their own benefits without paying any attention to social benefits. Now the question is: Does the invisible hand ensure benefits equally for everybody in the society? Obviously the invisible hand is dedicatedly biased to the richest. That's why enormous wealth concentration continues.
How Can We Reverse Wealth Concentration?
My faith in the possibility of transforming a wealth-pyramid gradually into a new shape, wealth-diamond -- very few at the top, and very few at the bottom, bulk of the people in the middle, simply sky-rocketed after the victory of the people in Paris. Now I feel confident that wealth explosion can be arrested.
First of all it is not an unalterable fate that mankind was born with. Since it is our own creation, we can solve it through our own efforts, same as global warming. It is our blocked mind which prevents us from seeing the problem that is pushing us towards this explosion. Our efforts should be directed to unblock our minds. We must challenge the existing paradigms which led the world to this problem. The usual political agenda to reduce the problem focuses on income-gap, not on wealth-gap. It is done through a programme of income redistribution -- taking from the top (through progressive taxes) and giving it to the bottom (through various transfer payments).
Obviously only governments can undertake income redistribution programmes. Some governments carry out this programme with toughness, some do it in a relaxed pace. Unfortunately in a democratic environment a government cannot achieve any significant success in a redistribution programme. People at the top from whom the governments are supposed to collect heavy taxes are politically very powerful. They use their disproportionate influence on the governments to restrain them from taking any meaningful step against their interest.
I don't think addressing income inequality is a real answer. We will have to address the cause, not the manifestation of it. We must address the wealth gap which is the cause of the income gap. If we keep the wealth base unchanged any reduction in income gap will be ineffective. On top of that, governments' cashtransfer programmes are usually charity programmes. Charity programmes are excellent as temporary relief, they cannot give permanent solution to the problem. Rather they hide theproblem. Democratic governments committed to the rule of law find it extremely difficult toembark on wealth redistribution.Land distribution seems to be the only successful wealth distribution programme undertaken by some democratic governments.
While governments should continue with their redistribution programmes, I am proposing to bring the citizen's power to transform the wealth-pyramid into a wealth-diamond. Central point in my proposal is to redesign the economic framework by moving from personal interest driven economics to both personal and collective interest driven economics.
I want to tell you why I think redesigning of economic framework is the essential task in achieving an egalitarian society.
My Personal Journey
As I look back, I see how circumstances pushed me into doing things which I knew nothing about. Famine of 1974 pushed me into growing an irrigated third crop in the village of Jobra. This introduced me to the money lending operation in the village. I wanted to help the victims of money lenders. In 1976 I offered to lend them from my pocket to protect them from money lenders. My money was running out as I gave loans to more and more people. I went to the bank, Janata Bank, located in the Chittagong university campus inviting them to offer loans to the poor. They refused. Finally I persuaded them by offering myself to become the guarantor. I called the project Grameen Bank Project. Then came the Krishi Bank to help me because of the personal interest taken by its Managing Director. They opened a special branch in Jobra with me as its de facto head, operating with staff that I recruited for the branch, all of whom were my students. I called it experimental Grameen branch. Later Bangladesh
Bank wanted to expand it to Tangail because of strong support from some board members of Bangladesh Bank. In 1983 we became a formal bank.
Everything They Do, We Do the Opposite
What we created was not just another bank. It turned out to be an anti-thesis of a conventional bank. Everything a conventional bank did we started doing the opposite in Grameen Bank. Conventional banks love to operate where businesses and rich people locate their offices. As a result, they work in the cities. Grameen Bank (GB) works in the villages.
Even after 40 years GB does not have any branch in any city or municipal area. Conventional banks are owned by rich people, GB is owned by poor women. Poor women sit in its board. Conventional banks serve mostly men, GB focuses on women. Conventional banks believe that poor are not creditworthy. GB established for the first time in history that the poor people, more so poor women, are creditworthy in any formal banking sense. Grameen America has shown that even in the USA poor women can demonstrate amazing ability to handle bank credit to transform their lives. Grameen America has 18 branches in 9 cities in the USA with 62,000 borrowers, all of whom are women. It has given out a cumulative amount of $ 380 million with average start up loan of $ 1,000 and repayment rate of 99.9%.
Conventional banks operate on the basis of collateral, GB is collateral free. Therefore, it is lawyer -free. We have developed a banking system based on trust. In GB, borrowers don't come to the bank, the bank goes to borrowers wherever they live. GB created pension fund to make sure that borrowers can take care of themselves during their old age. GB offers health insurance, loans to beggars, student loans for the children of GB families, loans for sanitary latrine, tube wells. GB partially covers the funeral cost of the borrowers, loans are written off when a borrower dies. In GB total interest on loan cannot exceed total principal no matter how long it takes to repay.
By November, 2015, cumulative disbursement of loans of the bank came to Tk 1.21 lakh crores and total loan outstanding stood at Tk 9,400 crores. The balance in the savings account of borrowers stood at Tk 10,826 crores. This means borrowers now have more money in their saving accounts than their total loans outstanding. One can say, in reality, they are the lenders to the bank, rather than borrowers of the bank.
In recent years the World Bank, IMF, UN, and many bilateral donors are promoting inclusive finance. It is mostly manifested inencouraging conventional banks to take steps to provide limited financial services to the poor. If anybody aims at inclusiveness in banking with any seriousness, definitely it can't be achieved through conventional financial institutions. These financial institutions are built on principles and mode of operation which promote financial exclusion. Their DNA will not allow them to work for inclusion. If we wish to reach the poor, we need to build separate institutions with completely different architecture. Rich people's banks are not designed to serve the poor. They may take some token actions through NGOs, under pressure from above, but that won't constitute even a fraction of one percent of their business. The unbanked of the world need real banking, not some "let-us-look-good" actions.
Through my work with microcredit I questioned the very basics of the banking system. I kept pointing out that real human beings are much bigger than the human beings assumed in the theory on which banking system is designed. Story of Grameen Bank is a living proof of that. Grameen Bank's microcredit idea flourished globally because NGOs took it up. But NGOs are not the answer to fill the vacuum left by existing financial institutions. I have been arguing that one easy way would be to give banking licenses, with some restrictions, to the microcredit NGOs, to operate as banks and take deposits, so that they can become self-reliant institutions. I am very happy to see that after many years of bringing it up, now Reserve Bank of India is issuing licenses to microcredit NGOs in India to become microcredit banks. This is the beginning of the right steps towards inclusive financing. But there is still a long way to go. There is an empty space for providing varieties of essential financial services to the unbanked, exclusively designed for them, not just offering them nano-versions of what is being done by the conventional institutions for their regular clients.
I have been arguing for years that credit should be recognized as a human right, so that it can be addressed seriously, and be given the importance it deserves. We can establish this human right only by creating complete financial system for the poor.
Critics of GB always pointed out that the loans it gives is actually wasted because the poor don't know how to use the money. It only adds to their debt burden. The reality turned out to be far from that. Instead of accumulating debt burden they accumulated large savings, now bigger than their outstanding loans. GB helped them to prove themselves to be excellent savers, proud owners of investment capital, and owners of a financially robust nation-wide bank. I have been arguing that all human beings are born with unlimited creative power. If the society gives them the chance to unleash this power it will surprise everyone.
Critics argue the opposite. They warned us not to waste our money by giving it to the poor people, rather to give it to people who can employ them in large numbers. I did not see it their way. I wanted to turn the poorest women into entrepreneurs by bringing out their suppressed talent of entrepreneurship. The critics seem to believe that entrepreneurship belongs only to small class of special people, the rest are born to work for them.
If we leave the financial institutions unchanged, they will only keep on adding fuel to the wealth concentration. To slow down concentration of private wealth two things need to be done. Existing financial institutions have to be redesigned to make sure they cannot remain to be the facilitating vehicle for wealth concentration. Secondly, we need to build an entirely new set of financial institutions to deliver all financial services to the poor. It is extremely important to provide financial services to the poor so that they can move up on their own. These exclusive institutions should be designed as social business rather than allowing them to become instruments of personal profit making for the rich, which in turn would strengthen the wealth accumulation process for them.
If one wants to find out why the wealthy becomes wealthier, all one has to do is to look closely at the financial institutions. They are the engines which drive wealth concentration. If we wish to see change in the wealth-pyramid in favour of the poor, a new financial system is a must. Existing system has not only created the wealth-pyramid, it is making it worse at a faster and faster rate.
Working with the poor led me to many other problems of the poor. I tried to address some of them. I always tried to solve each problem by creating a new business. Over time it became a habit with me. Every time I confront a problem I created a business to solve it. Soon I created many companies, and company-like independent projects, such as, housing for the poor, sanitary toilets for the poor, health care, renewable energy, nutrition, water, nursing college, eye care hospital, auto mechanic training school, and many more.
They gradually started displaying some common features. They are created as sustainable businesses, but no one is allowed to take any personal profit out of it. Investor gets back the investment money, nothing more. Company's profit is ploughed back into the company for improvement and expansion. I called this new type of business social business, defined as a non-dividend company to solve human problems.
I was amazed how easy it was to solve human problems if we designed it as a business with the sole mission of solving a problem, and with no intention to benefit personally from the business. We are always told that business-engine was designed for only one use, making personal money. I used the same engine for a completely different purpose, that is, to solve human problems. I found it extremely powerful in getting the job done. Suddenly all the creative power could be marshaled behind this engine for one specific purpose -- solving human problems. I wondered why the world left the problem-solving to the governments and charities alone? I found my own answer. It was because business world was given a very clear mandate by the economic theory. Their only mandate was to make money, leaving the people's problem to be addressed by governments and charities. A businessman is supposed to be driven by self-Interest. To him business is business.
Human beings are not money making robots. They are multi-dimensional beings with both selfishness and selflessness. When I create a social business I am allowing theselflessness to be expressed through business. Old interpretation says selflessness cannot be a part of the business world, it is to be expressed in the world of charity. My point is if human being has selflessness in his DNA, why should it not be allowed in the business world. Business world should be an unbiased playground for both selfishness and selflessness. Economics text book should introduce two types of businesses to the students, self-interest driven business and selflessness-driven business. Let the young people decide whether they would like a cocktail of bothbusinesses mixing them in various proportions, or enjoy each one separately.
In the world of selfishness driven business, many express their selfishness in its extreme form, they become limitlessly greedy. They become addicted to money. In the process mankind has been brought to the verge of losing its human identity. A human being is a person of love, empathy, compassion, and fellow feeling. If we create a conceptual framework that allows us, indeed encourages us, to express our deep rooted human values in our economic life we can transform the wealth-pyramid into a wealth-diamond. These values can be expressed through social business to take us there.
Social business may be seen from two perspectives. From charity side we can look at it as sustainable charity. From business side we can see it as a selfless business. Great thing about social business is that it is done by choice, no compulsion is involved. One can go in and out of social business as one likes. This makes people feel free. They can decide what they want.
I am glad social business is drawing attention from all sections of people from all around the world. Universities are opening social business centers, multinational companies coming forward to set up social businesses, young people are getting attracted to the idea. More and more people are convinced that as human beings we are capable of solving all our problems. Combined power of youth, technology, and social business will make it happen.
Technology is expanding exponentially. What is impossible today, becomes possible tomorrow. Dramatic changes take place in technology in such quick succession that it does not surprise us anymore. Young people are the beneficiaries of the full power of this incredible technology. They absorb the new technology much faster than the older generation. It is only the power of their imagination which limits the exploitation of each new technology. The bolder their imagination the greater is their accomplishments. If they start imagining a world where wealth disparity shall not exist, I can guarantee you it will not exist. The combined power of the youth, technology, and social business can become an irresistible force.
Education has to Play the Key Role
Education has to play the key role to bring the wealth concentration problem to the consciousness of people. Reorientation of education system is vital. Despite its ambitious goals, education system has basically become a training ground for preparing young people to be job-ready. It is assumed that every young person has to be able to find a job. Job is such an overriding issue that all other purposes for education had to take a back seat. Education is supposed to help a young person to discover himself and to find meaning of his life. The motto was to “Know Thyself.” Now most of the time he is kept busy to “Know Thy Boss.”
I find it extremely demeaning to imagine such a fate for human beings. I see human beings as beings much larger than spending life time trying to fit themselves into the wishes of their bosses. I see human beings as go-getters, creator of new horizons, and problem solvers.
We are not Job Seekers, We are Job Creators
Human beings are packed with unlimited creative capacities. They have to discover their potential during their life time. Task of education is to introduce them to their potential as a human being, so that they become aware of their power, they start imagining the use of their power. The least education should do is to prepare them as entrepreneurs- as job creators, not as job seekers. There is a world of difference between the two. By training young people as jobseekers we create unemployment because there is no job for everybody. If we had prepared them as job creators, there would be no unemployment.
Can everybody be an entrepreneur -- a question that is frequently asked. Entrepreneurship is natural to human beings. That's how we began life on this planet. Millions of microcredit borrowers all around the world are entrepreneurs. If illiterate rural women can become entrepreneurs, why should we question the entrepreneurial ability of the educated young? All they need is a supportive financial system.
We have created social business funds, as the supportive financial institution. We are asking young people to come up with business ideas. When they come we invest in their businesses. We become their partner, like an angel investor with one exception, we don't take any profit from them because we are social business. Once they are successful they buy back our shares without giving us any profit. They pay a share transfer fee, a fixed fee to help us cover our management and advisory services.
Now thousands of young people, boys and girls, are running their businesses with partnership with us. We encourage young people to believe and practice that "we are not job seekers, we are job creators".
I am very happy to see that Indian Prime Minister Mr. Narendra Modi has been repeating again and again in his speeches to the young people of India that "we are not job seekers, we are job creators". He has established a refinancing bank, called Mudra Bank, to support the actual implementation of the programme. I hope he succeeds in building up a support system to make it real.
Once we get our education system transformed to produce creative ntrepreneurs, the global picture of wealth gap will start changing. If we leave the talented young people with the destiny of making other people rich, wealth- oncentration will continue to soar. We cannot let our young people become mercenaries for wealth concentration.
To counter the concentration of wealth we need a two-way flow of wealth, instead of a one way flow. Present flow takes wealth upwards to the wealthy. We need a flow which will bring wealth from the wealthy to the wealth-less. I see social business as this new force. Whether it will be as strong as the existing upward moving force will depend on how strongly people rally around it.
Resources for Social Business
As I go about promoting social business concept, I feel happy to receive warm response from all countries. Now social businesses are growing up in many countries. While discussing social business a question always comes up:
where can we find the investment funds to enable social businesses to spread around the world?
Existing investment funds are available only to personal profit making enterprises. The more personal profit you can promise or deliver the more investments you get. These investors have no reason to pay attention to social business. Where should social business look for investment funds? Of course, it has to come from the selfless part of human beings. Selflessness has the best expression in the charity world. Anything that happens in charity world gives us a measure of selflessness that is already expressed. It is a matter of time to see how to convert some charity money into social business investment money. After all charity and social business has the same root. Both focus on helping people.
Charity has been with us since time immemorial. It has been recognized as an integral part of human beings. All religions put great emphasis on it. Islam puts it up as one of its five fundamental pillars, and requires every Muslim to give away 2.5% of wealth and income every year. Imagine how much potentially this sum is. If we add up the amount actually paid out every year that will be a huge sum too.
Total amount of charity given out by US public charities (organizations based on raising money from general public and others) each year is over $1.6 trillion dollars. They have combined assets of over $3 trillion dollars.
These two I mention as examples. There is an enormous variety of charities with huge amounts all around the world.
In addition we can go over the innumerable stories of personal giving. Mark Zuckerberg is a recent one. He announced on the occasion of the birth of his daughter that he would donate 99% of the shares of Facebook to charities over course of time. The present value of this is $45 billion. He started out by giving away one billion dollar a year. I find it a very interesting case of selflessness. It was done on the occasion of the birth of his first child. Usual story would be that father handing over the inheritance to his new-born ahead of time as a gesture of love. Mark did the opposite. He deprived the child from inheritance by giving away his wealth for creating a better world for her. Usually one gives away wealth at the end of one's life. Mark made a remarkable decision; he gave away nearly all his wealth at the beginning of his life. He is only 31. Since the beginning of Facebook Mark takes a salary of only one dollar as the CEO of Facebook. He already signed up "The Giving Pledge" when he was 27. Zuckerberg, Bill Gates, and Warren Buffett signed a promise in 2010, they called "The Giving Pledge ", in which they promised to donate to charity at least half of their wealth over the course of time, and invited others among the wealthy to donate 50% or more of their wealth to charity. The Giving Pledge started out with 40 multi-billionaires. Now there are 141 multi-billionaire signatories.
I highlight the case of Mark because he is young. He is at the age when one is expected to be ambitious about money, and remain busy with “building the future". He has been doing the opposite. Mark may represent a new trend among the young generation. They are different. They are more committed to the creation of a better world then just making their fortune. The old generation may be holding them up by passing on their old structures to them.
As the idea of social business becomes popular a part of charity money, wherever the law or religious requirements will allow, will start flowing into social business. And that flow will continue to grow. As decisions are taken, a question will arise, should I give it to charity or rather give it to a social business fund. Individuals, charities, foundations, companies will see social business as a sustainable charity, where the same money can be used endless times.
Selflessness in the Business World
But what about business money? Will the business door remain ever closed to social business? I don't think so. Already there are many examples of selflessness in the existing business world. There were many even in the past. Unfortunately they were never made part of business school curriculum. I give two outstanding examples from the past, which are still going strong.
Bosch is a 130 year old German multinational engineering and electronics company, with an annual revenue of $ 50 billion. It is a familiar name throughout the world. Not many people know that it is owned by Bosch Foundation. Founder of the company created a foundation to own the company. Only 8% of the shares were given to the family. It is still that way. Foundation manages the company and use the profit for charitable activities. If we are looking for an example how business and selflessness can be combined Bosch is a good example. This is what I call type 2 social business, a company owned by a trust or a foundation to solve human problems.
Another example is again a household word in many parts of the world, particularly in South Asia. This is Tata. Founder of Tata did the same thing 128 years ago. Two-third of the shares of Tata group of companies, worth $118 billion, is owned by Tata Trust.
There are endless examples, big or small, old and new, all around the world. These are examples of defiance of the capitalist rules, but done in a smart way so that they could not be excommunicated from business world. They led the initiative to create a new business world. These examples could have been followed boldly and massively. But orthodox theory of business did not recognize them.
Corporates and Social Business
Besides individuals, corporates can also invest insocial business. Usually corporates create foundations for their companies. They can easily direct the foundations to invest in social businesses. Foundations can invest in regular
companies, and make money to invest in social businesses, like in Bosch and Tata examples. In addition, corporates can create social businesses as their subsidiaries, can have joint ventures with other social businesses. Already we have many excellent examples of joint venture social businesses created
by Danone, Veolia, Uniqlo, Intel Corporation, McCain, Euglena, and others.
Corporates can do something else. They can invite their shareholders to sign a "giving pledge". Shareholders will be asked to give their consent to allow a percentage of their dividends to be deducted to go into a social business fund as their equity. In case of necessity these shares in the fund can be sold to another social business investor at the face value. That way their money is not gone forever.
Corporates can use their annual CSR contribution to go into a social business trust.
I have been trying to draw attention of investment funds to a similar programme. They manage huge funds. Total worldwide assets invested in mutual funds alone amounts $30 trillion. There are many types of investment funds. All put together it amounts to ocean of money.
My proposal to them is to give each individual investor a choice whether he/she would like to set aside, say, 2.5% (or more, or less) of his assets to create a sort of recoverable endowment fund. Annual Income from this recoverable endowment fund then can be invested in social businesses. All that an investor has done is to sacrifice the income of 2.5% of his assets to achieve some social objectives, without sacrificing his assets. If the companies agree and the investors agree this recoverable endowment fund can potentially be enormous.
I have been suggesting to top policy-makers of giant pension funds to apply the same policy to create recoverable endowment funds. Globally pension funds have a combined total asset of $ 84 trillion. All they need to do is to take the initiative to write to their investors about the plan and seek their consent by signing up. I did not get positive response yet. They explained that nobody will respond positively to this idea because all that the investors want is the growth of their funds, they are not interested in giving. I politely pointed out that they may be surprised by the responses, they may be completely contrary to their expectation. I tell them if you don't ask you'll never know what surprise is waiting for you. I have concrete experience of seeing a Fortune 500 company asking a similar question to all its shareholders and getting a totally unexpected positive from 98% of shareholders. Of course, not in every occasion we may be as lucky as that. All shareholders or investors may not sign up after the first call. If some of them sign up that will be the beginning of a great story. It will snowball if the result produced by social businesses is convincing.
It is all about taking initiative. It may begin with one pension fund in one city. No matter how small the response, it opens up a door which may get wider over time. But a beginning has to be made. We have no reason to hide behind our age-old conviction that investors are interested in nothing but making money. They see nothing else, and hear nothing else. We must remain aware thatthe world and people are changing. They have started tobehave differently. Their behavioral pattern will continue to undergo changes.
Money generated from the recoverable endowment fund borne out of pension funds can be invested in taking care of all old people, from the richest to the poorest, with differentiated prices. It will create social businesses to provide health insurance, health facilities like hospitals, clinics, nursing services, income opportunities, hospice care, old people’s home, housing, sports, travel etc.
Social Business Day
Whenever people look for ways to bring down the wealth-gap they will find social business as a very powerful tool to make it happen. Social business will slow down the process of accumulation at the top while people at the bottom will build up their asset base and retain whatever they earn.
All of us present here today on the occasion of the celebration of the 25th anniversary of the Daily Star can play our role too. All of us can examine the concept to see if it makes sense. Each one of us can come up with social business ideas. Idea is the most precious thing in social business. Each one of us can decide to invest in social business directly or through others who are involved in it. We can earmark 5% of our annual income and put it in a separate account, sort of personal social business fund, toinvest in social businesses. To give a simple idea, anyone can transform 5, 10, 25 or more unemployed youth into entrepreneurs. We can show you how we are doing it. You may like it.
We hold a big event Social Business Day each year. This year it will be held on July 28-29. In addition to sessions devoted to exchanging experiences in social businesses throughout the world, we will hold Country Forums to let the delegates from each country exclusively country-wise sessions to discuss plans for social businesses in their own countries. They will bring business leaders, political leaders, academics, foundation leaders, to participate in these country forums. Of course, among other countries, there will a Bangladesh Forum on social business. You can take a lead role in organizing the Bangladesh Forum, or be an active participant in it. Bring your friends too. The Forum will conclude by announcing what social business action plan it has adopted for Bangladesh.
You may like to think about what you can do in slowing down wealth concentration. You can play a role in reducing wealth gap with some simple steps. Think about creating your own "giving pledge" or create a collective giving pledge with your friends and your business partners. You may decide to make a "will" now, to leave most of your wealth or at-least half of your wealth duringyour life time, to a social business fund of your own, or toa trust dedicated to solving human problems through social businesses. You may think about leaving all your companies in the hands of a trust. That way your wealth will perpetuate and grow as Bosch's and Tata's grew, and contribute fundamentally in changing the country, as well as the world.
I remind everyone that making money is happiness, but making other people happy is super happiness. Don't miss the super happiness. It is better to act now, than later, so that you can see things happening and enjoy the super happiness resulting from it, rather than waiting for things to happen when you are no longer around.Invite your children to run social business funded by your trust or social business funds. You will be surprised to see how much they are enjoying doing that. Instead of just being successful second generation entrepreneurs they may become global celebrities by creating and successfully replicating social businesses globally. They will enjoy being leaders of the new global generation.
Anybody above a certain level of wealth may make a will to give away his or her wealth to social business trusts or funds. Their children may remain involved in these trusts or funds, so that they don't feel they are left out of the control of their parents wealth. You'll be amazed how you and your family can impact on the whole world.
If you wish to take any one of these initiatives, we at Yunus Centre would be happy to offer our services to make it happen. Don’t hesitate to contact us. In addition, to experiment with social business you can create a joint venture with your friends, or yourinternational business partners, and see how it feels. It could be as small as you want. Size is no issue. The purpose is the issue. Bangladesh has been apioneer in bringing down poverty by half. World hasapplauded it. We can be the leader in reversing the process of wealth inequality too. Instead of allowing inequality toincrease each year, faster than previous year, we can make it decline each year, as the economy grows. Then we can call for a global Paris conference (may be Dhaka conference) to bring all the nations of the world to tell the story how we made it happen, who did what in the process. The conference will end by inviting the UN to convene a conference to let every nation declare a deadline when it will stop the increase
in wealth gap and reverse the process. It would be similar to the global commitment to stop the increase in global temperature and hold it under 1.5 degree Celsius.
Wealth-concentration is a global threat. It has already entered the danger zone this year with 99% of wealth going to 1% of people. Not only it is getting worse globally, it is getting worse within nations, and between nations. Wealth gap between nations is always a threat to peace. Historically some nations had accumulated more wealth than others. Some nations took unfair advantages over other nations in accumulating their wealth. There are old scores to settle and there are new scores taking shape. This leads to confrontations, conflict, and wars. If a nation feels threatened they hike up their military budget, which is shockingly huge already. Present annual global military expenditure stands at over $1.7 trillion. US alone accounts for 39% of this total. If the wealth-concentration within and among nations become acute social, political and economic compulsions for armed conflicts will become imminent.
The time is ripe for us to recognize the gravity of the situation on wealth-concentration, and take actions against it. As we learn from the process of arriving at an international consensus on global warming we can initiate a similar process to build a global consensus on bringing the speed of wealth concentration to zero in phase one, and making it negative in phase two. Both global warming and wealth concentration arise from the same root -- a flawed economic framework based on human greed.
We can undo both by reinventing ourselves in the economic world as caring and sharing human beings. We may aim at creating a world of three zeros: zero poverty, zero unemployment, and zero net carbon emission. A world of diamond-shaped wealth distribution. A world of equality, harmony, peace and happiness. It can happen only if we citizens get into the action.
At this gathering on the occasion of The Daily Star's 25th anniversary I would humbly propose to take the initiative to make Bangladesh the starting point for a global wave of actions against wealth-concentration.
Let's do it.
(Delivered at the 25th Anniversary event of the Daily Star on February 5, 2016 in Dhaka.)
Chairman, Yunus Centre
Founder, Grameen Bank
(Remarks by Nobel Laureate Professor Muhammad Yunus delivered at AmCham Luncheon Meeting on July 12, 2011)
Thank you Aftab and thank you Gafur!
Assalamu Alaikum! First I apologize for being delayed. This is due to the familiar circumstances that are beyond the control of citizens.
But these fifteen minutes of delay is not as big a delay compared to five years of delay. Gafur has been very persistent for the last five years that I come and speak at this meeting and his persistence has become more and more intensive as the years went by. This has brought me to the conclusion that if you want to accomplish anything impossible, you can assign it to Gafur. You can rest assured, he will make it happen; he is a very persistent person.
I was always promising, but not delivering. So today I am very happy that finally I could deliver myself here to talk about social business. And that is the issue that he wants me to discuss in this meeting.
The basic concept of social business came to my mind because that is the kind of thing I was doing. Traditionally we talk about business as a vehicle to earn money, to make profit. The whole idea of business was built around the idea of making money. We all know that the earliest form of business was barter, the exchange of one good for another goods. You have something, and I have something else, and we exchange them so that both of us are better off. You have rice and I have fish. So we exchange some rice for some fish. After the exchange both of us have rice and fish. Both are happier.
February 4, 2006
By Professor Muhammad Yunus
Happy Birthday to the Daily Star!
This is a great occasion to celebrate. Pages of the Daily Star have documented fifteen years of history Bangladesh history. For Bangladeshis this is a period to be proud of. Fifteen years of democracy itself is a great cause of celebration.
Now we are at the outset of a new year which is going to be a critical year for Bangladesh democracy. Whole country is abuzz with one single question: Can we hold a peaceful and fair election on schedule as required by the constitution and desired by the nation? We see many bad signs. They upset the citizens. Despite all the bad omens, the nation must express its resolve by saying: "We shall hold the election on time. We shall make it more peaceful, more credible than any other election ever held in the past. Despite all shortcomings still remaining, we shall accept the result of the election and move on to build the nation unitedly."
Election is the Overriding Agenda
Holding the national election on time is a necessary condition to keep the process of democracy alive and strong. Any derailment from this course will be a disaster for the nation. Getting derailed is easy and, sometimes, attractive, but it becomes costlier by the day to stay derailed. Getting back on the rail is an extremely painful and slow process, and exhausts the nation by consuming all the energy and attention of the nation.
Despite outstanding accomplishments recorded by Bangladesh, people of Bangladesh feel unsettled, unhappy and frustrated. Our politics is killing our spirit. It has led to our major national crises: 1) limitless corruption, 2) rise of unprecedented terrorism, 3) fast deterioration of the public service structure. They are all inter-connected and linked to politics.
From all indications it is absolutely clear that Bangladesh has quietly and steadily built a very strong foundation to make the big leap forward. But our non-stop political bickering does not give a respite to celebrate or get inspired by our enormous successes to prepare ourselves to reach out to still higher levels of accomplishments. We are ready to launch ourselves into a path to cross USD 1,000 per capita income, 8% GDP growth rate, and reducing poverty level to under 25% in the near future. But our political attention remains riveted to day to day party politicking rather than strategic national issues.
Lucky to Have Two Giants As Our Neighbours
India and China are almost there. They have already reached the 8% growth rate and 25% poverty level. They are becoming such political powers and economic power-houses that the whole world is gathering around them to get their attention.
Bangladesh is lucky to have two globally sought-after giants as her next door neighbours. These giants are not sleeping giants. They are super-active, and growing very fast. We must learn how to take advantage of fast growing giants. We must assess our best interest in building our relationship with them. In their turn, they'll assess their best interest in having us as their neighbour.
Obviously, they will look at us as their market, their competitor, their partner, and also as a potential trouble-maker. From our side we must make it absolutely clear that we have no intention to be trouble-maker for our neighbours, nor do we want to see them as trouble-maker for us.
But a section of our politics find it a very attractive theme to impress on the common people of Bangladesh that India is behind all the terrible things that happen in Bangladesh. If you don't vote for our party, India will turn Bangladesh into her client state.
Countries are not made of saints only or angels only. There are bad people in India, who can dedicate themselves to do bad things to Bangladesh. Similarly, there are bad people in Bangladesh committed to do bad things to India. Both countries must remain vigilant to catch the bad people and punish them forthwith to uphold the friendship between the two countries.
Growing Up With Giants
When our giant neighbours bring the whole business world to their door-steps, our door-steps come very near to the business world. Visibility and contacts are very important factors in business. They come to us easily because of having important neighbours. If we play our cards right our economy can pick up the speed of our neighbours. Even if a small proportion of their business finds its way to our shores, we benefit tremendously. Before business moves away to Africa, buyers and investors will examine our capability. It will be our failure to catch them that will push businesses away from us.
Growing neighbours are also sources of technology and experience. Expanding economies keep moving towards more and more high-profit products and services, leaving behind low- profit, labour intensive items. This creates opportunities for neighbours. This is not to suggest that Bangladesh has to satisfy herself only with the markets and the products which giant neighbours are not interested in. What Bangladesh can do will depend on our level of efficiency and management skill. Bangladesh can find niche to provide high value specialised products and services to her giant neighbours.
I am emphasising on the fact that having two fast growing giant neighbours is a great boon for us. Let us dispel the fear that living between two giants is a scary prospect --- that we may be stepped on from any side, any minute! On the contrary we'll be the beneficiary of coasting effect of having two giants next to us. We can get a ride on the fast train with them.
An Open-Door, Open Arm Country
Future of Bangladesh lies in being an open-door, open-arm country. We must not live under the fear of Indian wolf. We must get the constant fear of Indian wolf out of our system. If it is a real threat, we'll have to prepare for it and get on with our lives. If it is imaginary, we'll have to get our minds cleansed out. Frequent cries of Indian wolf is a sign of our political emptiness. We carved out a separate country for the Muslims in 1947 to protect us from Hindu domination in the united India. We created Bangladesh to protect us from the Punjabi domination. Now some of us are rediscovering Hindu domination coming from India. Where do they want us to go now?
We are not going any where. We stay where we are. In the world today domination does not come through sneaky conspiracies. Domination comes from economic power. If we remain a poor country, everybody will dominate us, not just India. Moving up the economic ladder quickly is the best protection from all dominations. Let us not confuse this issue.
In order to move up the ladder quickly we should open all our doors, invite everybody in, encourage our people to spread themselves all over the wide world, show their talents and win over the confidence and appreciation of the whole world. Hiding behind closed doors is no protection at all.
Let's Make Bangladesh the Cross-Roads of the Region
Let's vision Bangladesh as the cross-roads of the region, if not the world. Let people, products, investments from all over the world flow into Bangladesh, and out of Bangladesh, with utmost ease, safety, and efficiency. Let's make our laws, institutions, bureaucracy, travel and transportation facilities, financial system most friendly to the movement of people, investments, goods and services in and out of Bangladesh. Let's build everything in Bangladesh in such a way that Bangladesh becomes the natural first choice of hard-nosed investors and traders. Let Bangladesh be Bangladesh International. Let us all agree on this vision and then move forward unitedly to make it a reality in the fastest possible speed.
To make Bangladesh an international cross-road we'll have to address the following:
- Reduce corruption level drastically.
- Provide reliable electricity all over the country.
- Open up ICT and make Bangladesh a very attractive country in terms of state-of-the-art ICT.
- Build a mega-port in a suitable location along the Chittagong coast line capable of serving the following countries: Bangladesh, Nepal, Bhutan, Eastern India, Myanmar and South-Western China.
- Build highways to connect the mega-port with all six countries.
We must visualise Bangladesh as the ICT, industrial and trading hub of the region. On the first day of 2006 we have signed a document which has the potential to change the economy of SAARC region. The document we signed was the document relating to SAFTA agreement. Now Bangladesh should take the lead, rather than wait for initiatives to come from other countries, to move SAFTA forward. We can be smart, open our doors, convert disadvantages into opportunities, and change our destiny. Our biggest worry is corruption. In a corrupt environment it is easy to befool the system; by throwing in money, one side can take away all the gains of trade (even so, I'll not support a closed border, which creates a fertile ground for higher-stake corruption). There is no way out but to eliminate corruption in politics, from where the infectious disease of corruption spreads around.
Geographically Bangladesh is strategically located to provide access to international shipping to Nepal, Bhutan, Eastern India, Myanmar and South-Western China. We should start making appropriate preparations, in consultation with these countries, to create facilities for access. Again, it'll to be our call to draw attention of our neighbours. We'll have to do our home-work well to show them the benefits accruing to them by opening up the access to the sea-routes through Bangladesh, and doing business with Bangladesh. We'll have to resolve formidable political and technical issues with India. Remaining passive is not at all to our interest. It is actually very costly in terms of gains foregone. True leaders not only have visions, they have to have the burning drive to push through the solid walls of obstacles to make their visions come true. Vision must be backed up by hard work and dedication.
Mega-port at Chittagong
Mega-port at Chittagong is the key to making Bangladesh the cross-road of the region. With the economy of the region growing at a sustained high speed, demand for the access to a well-equipped well-managed port will keep on growing. A region, which includes two giant economies, will be desperately looking for direct shipping facilities to reach out to the world. Chittagong will offer the region the most attractive option. Even today, despite the problems of present Chittagong port, Kunming is requesting permission to utilise this facility.
With global competition becoming more fierce shorter and shorter lead time for delivery will become the magic formula to attract business. An efficient mega-port at Chittagong will be in high demand. This port can be built and owned by a national or international company with government participation in equity. It can contract out the management of the port to a professional port management company.
Mega-port may support an international airport in its proximity. With appropriate aircraft servicing facilities and hotels, this airport can become an airline hub. It has the advantage of cutting distances to many Asian cities like Tokyo, Osaka, Beijing, Shanghai, etc, and taking off the pressure from important SAARC airports.
During the SAARC Summit held in Dhaka recently, Dr. Manmohan Singh, Prime Minister of India, proposed to build a highway network to connect the SAARC countries. We should enthusiastically welcome this proposal and offer our plan to build highways connecting Nepal, Bhutan, eastern India, and Pakistan. We should make sure that our highway network extends upto Cox's Bazar, so that it can be connected with Myanmar, Thailand and China --- in the eastern side.
Need a Regional Water Management Plan
With borders opening up, highways criss-crossing the region, businesses growing, we can create mutual trust among our neighbours leading to right kind of political climate to engage them to work towards preparing a regional water management plan in conjunction with the plan for regional production and distribution of electricity. Fortunately, this region has an enormous capacity to produce hydro-electricity. With political understanding Bangladesh can meet her ever growing electricity need from a mutually beneficial arrangement with Nepal, Bhutan, and India.
Human Resource of Bangladesh
Human resource is our best resource. We must pay our top priority to make sure our young generation get prepared to play important roles in a global framework. It is nothing but utter disgrace that we have allowed some of our young people to turn into suicide bombers. This is an unforgivable failure on our part. We must take the blame without any excuses, and must ensure that no other young man has to choose the path of suicide for any reason.
USD 100 Lap-tops to School Children
Bangladesh has a very young population. Half the population is under the age of 18 ! If we pay serious attention to them we can create a dramatically different next generation. Some countries are already signing up with MIT Media Lab to provide USD 100 lap-top to each school student, just like text books. Lap-top to a child gives a message. Message is: Discover yourself, discover the world, create your own world. There is no reason why we cannot sign up with MIT Media Lab to do exactly the same and give lap-tops to our students. Let us not miss this world-changing opportunity.
One way to let all children, poor or rich, boy or girl, urban or rural, feel equal is to ensure access to computer and internet. This connectivity also takes off some of the unevenness in our educational facilities. We have already witnessed a telecommunication revolution. Within a short span of five years mobile phones have reached every village in Bangladesh. At the end of 2006, one in every eight persons in Bangladesh will have a telephone! With USD 100 lap-top, every school student will have access to internet telephony.
Our Young People Can be Role Model
The world that these young people will create will be the world of innovative ideas. Old resistance to new ideas will crumble away. Ideas will chase ideas. Seekers of ideas will sift through mountains of ideas to get to the ones they are looking for. Unlike in old times, ideas and innovations will no longer remain unknown. Creativity in every direction will be rewarded more than anything else. Our education system has to be oriented towards promoting creativity in our young people.
Grameen Bank employs 17,000 staff. Ninety per cent of them are young people. I see the dedication and commitment with which they work. They can be role model for young people any where in the world. Grameen Bank gives student loans to Grameen borrowers' children to pursue higher education. Nearly 10,000 such students have received student loans from Grameen Bank to study in medical schools, engineering schools, universities, etc. Their parents are illiterate and poor. It is for the first time in the history of their families that some one went to school. They are making a sharp break in their family history --- going from illiteracy to highest level of education ! It is a thrill to meet them and talk to them.
I meet many Bangladeshi young people when I am visiting foreign countries. Many of us are used to meeting Bangladeshis in New York. But it is a quite different experience to meet young Bangladeshis in a small town of Spain, or in an island in Italy, or in Argentina, Chile, Columbia. They show up to meet me at the hotel, or in the conference where I am speaking. They discover my presence in the town from the newspaper reports. They come individually. They come in groups. Among everything else they express their worry about the political situation in the country. I ask them how they got there. Each tells a horror story. Each time it is a story of perseverance, tenacity, and high risk adventure. It is quite an experience to hear them tell the story of how they moved from one country to the next, how they switched from one livelihood to another. They are doing well now. They have learnt the local language, and understand the local way of life. They are at ease with local people. Story one gets from a migrant worker working in an Asian country is different, but not too different. It is the story of how they are cheated by the man-power agents, and how they are mistreated by the airport officials, at the time of departure as well as at the time of visits.
Bangladeshi young people reached out to all corners of the world with basically individual and family initiative, using network of friends and relatives. Government has built some facilities to help them by making it easy for them to go out. But you hear more about the harassment, bribes. extortion and unresponsiveness of the government officials than nice things about these arrangements. These young people who live under extreme difficulties are making a big contribution to the national economy. They have been sending a very substantial amount of money as remittances.
More important than the quantum of foreign exchange earning, remittances go directly into poverty reduction. The World Bank Global Economic Prospects Report says this remittance inflow has helped cut poverty by 6% in Bangladesh and given a boost to rural economy.
This is one fascinating example of low-income people making direct strategic contribution in achieving nation's economic and social goals. This is also an example of common people's initiative in changing their own lives. As an appreciation of their great contribution to the nation we could have done a lot more to reduce the risks involved in venturing out of their own known world to totally unknown territories. We could help them increase their earnings, reduce their costs, and humiliation.
Must Keep On Building Up Respectability As a Nation
Bangladesh is a rather new name in the list of nations. It came to world's media attention mostly through disasters --- floods, cyclones, tidal-waves, etc. Reporting on disasters always highlight poverty, and helplessness. That's the image of Bangladesh that sticks in people's mind. Two recent negative images have been added to that. One, Bangladesh has been repeatedly found to be the most corrupt country in the world, and two, suicide bombers are killing innocent people in Bangladesh.
Image of a country is very important when it comes to dealing with the world. The better the image a country has, the better is the deal it gets. To be successful in international relationships we'll have to build up respectability as a nation. Luckily for us Bangladesh has a very strong positive side which counters the negative image to a large extent.
Bangladesh is enormously respected globally for being the birth place of microcredit. Every country in the world feels the need for microcredit. No country can ignore it. They study microcredit in academic institutions, discuss it in meetings, conferences and workshops. Most countries, rich or poor, have active microcredit programmes. They all pay respect to Bangladesh for being the originator country. Bangladesh, microcredit, Grameen have become synonymous in the minds of people around the world.
Bangladesh is remembered as the country which gave the world oral saline to combat diarrhea.
Bangladesh earned respectability by demonstrating her skill and efficiency in disaster management. World media publicly suggested that Tsunami affected countries and the USA, after devastating Katrina, should learn from Bangladesh in disaster management.
Bangladesh is cited as a success story in producing enough food to feed her people despite doubling the population in 35 years.
In Terms of Human Development Indicators Bangladesh is Third From the Top
Bangladesh birth rate has declined significantly. Fertility rate declined from 6.3 in 1975 to 3.3 in 1999 - 2000 reduced almost to half. This is cited as a global success story.
During early 1990's world looked at Bangladesh with pessimism. But it all changed dramatically. Now Bangladesh stands up with many laurels over her head. World is trying to understand how can a country do so well when it is number one country in corruption, its weakness in governance is so unbearable, politics is so chaotic and confrontational, work stoppages are so frequent and unpredictable.
Economic performance and human development indicators of Bangladesh have been moving upwards since early 1990s. GDP growth has been over 5 per cent during this period.
Bangladesh has very impressive performance in terms of the human development indicators. In terms of these indicators Bangladesh came out in number three position in the developing world, after China and Cave Verde.
Life expectancy of women in Bangladesh used to be lower than men. Now it is higher than men --- a better performance compared to South Asia as a whole.
Female labour force participation rate increased dramatically between 1983 and 2000, both for rural and urban, with sharper increase in rural, than in urban. Female labour force participation rate in rural area increased from 7 per cent in 1983-84 to 22 per cent in 1999-2000. Urban rate increased from 12 per cent to 26 per cent during the same period.
Child and infant mortality have been falling at more than 5% a year, malnutrition among mothers has fallen from 52% in 1996 to 42% in 2002. Primary school enrolment rates have reached 90%, up from 72% in 1990. Enrolment in secondary education has been rising. Bangladesh has already eliminated gender disparity in primary and secondary school enrolment and has made remarkable progress in providing universal basic education.
In the past decade, Bangladesh reduced infant mortality by half ---- at a rate faster than any other developing country has done, increased adult literacy rates by 8 per cent for women, and 6 per cent for men.
In terms of infant mortality rate and female primary enrolment, Bangladesh is ahead of West Bengal, Punjab and Uttar Pradesh of India.
Progress towards achieving millennium development goals (MDG) in Bangladesh is surprisingly on track. According to data on current trends, Bangladesh has either met or is expected to meet most of the MDG targets. If right policies are pursued dedicatedly there is a good chance that Bangladesh will reduce poverty by half by 2015.
Capacity Has Been Built, We Are Ready to Go
Bangladesh has outstanding accomplishment in reducing child labour. According to UNICEF, percentage of child labour in Niger is the highest (66%). Bangladesh has one of the lowest percentages (7%). Nepal is 31%, India 13%.
The list of our accomplishments is long and very impressive. We notice the admiring eyes of international delegates focused on Bangladeshi delegates when we attend international conferences, be it microcredit, disaster management, health, education, renewable energy, environment, women empowerment, or child labour.
When we visit capitals of SAARC countries we are always asked, "How did you do it? What must we do to catch up with you?"
I am not saying that Bangladesh is on top of everything. Far from it. Our list of failures is much longer than the list of successes. I bring up the list of successes to point out how wrong we are when we throw up our hands in the air to say in frustration that we'll never make it. This list of successes will convince anybody that not only will we make it, we have already made it in many respects, and will do better than many others around us, and like us.
Good news that comes out from these successes is that we have created the capacity to address all our problems roundly and solidly. Not only we have gained self-confidence, we are ready to earn the confidence of the world. Soon a Bangladeshi passport can bring out admiration and respect from others, rather than suspicion and disrespect.
It is hard work to score points in respectability. It is easy to lose points. One tiny incident, one tiny misstep, one tiny callous decision can push us down quite a bit in respectability. Let us hold on to what we already have, and add to it, as much as we can. It is our very precious capital in facing the world.
Here are our two most important tasks at the moment: we must combine all our efforts 1) to make sure we hold our election on time with the participation of all major political parties, and 2) make sure we reduce corruption sharply and immediately.
Voters Must Unite to Say 'No' to Corrupt Candidates
Yes, Bangladesh has done very well so far. We may thank our luck for it. But let us not get used to relying on our luck alone. If we do, everything around us will crumble soon.
This year, 2006, is the year for the nation to sit up and make a desperate attempt to put our house in order. People have to wake up to the fact that they are the boss. People have to make their minds known to the politicians who want their votes to run the country on their behalf. This is the election year. This is the best time to get heard. Voters should not allow themselves to be treated as absentee owners who do not have any knowledge of their own properties. All that the absentee owners are offered by their employees, is to sign on the dotted lines. No question is allowed.
Voters must refuse to sign on the dotted line. When political parties nominate their candidates, they do not consult the voters. Voters are not given any real choice, such as a choice of voting for an honest person, for a person who is committed to work for people, for someone who is not known to have amassed wealth by using his power as a member of parliament or as a party official or a worker. Only choice voters are given, is the choice of voting or not voting.
Voters want to vote, and want to vote for a person they admire, rather than be compelled to vote out of party loyalty, or on some other considerations. Voters must create their own choice. If political parties offer corrupt candidates, people will put up their own clean candidates. If we don't do that we'll continue to be the most corrupt country in the world, and our dreams will never get a chance.
Voters Can Organise Campaign for Clean Candidates
I propose that this year the voters create their own option. They tell the political parties who is to be nominated in their constituency. Supporters of each political party or alliance of political parties will organise themselves to prepare a three member panel of clean candidates of their choice, in order of their priority, and give it to the political party/parties to nominate one out of them. If none of their candidates are nominated voters will be free to submit blank ballots as a protest, unless they actually ask one of their candidates to run as an independent candidate. Similarly, voters who do not vote on party lines will organise themselves and suggest to all parties who they should nominate.
Voters must start speaking out their minds from now on. Rather than speculating about who is going to get which party's nomination, party supporters and independent voters have to start speaking out who they think should be nominated. This year people should get themselves heavily involved in the nomination process. This will be the only way to get the bad people out, and good people in.
Core agenda of the voters and non-voters this year will be to eliminate corrupt candidates from the ballot-paper. If they still get on the ballot-paper, it has to be ensured that they'll not be the only ones on the ballot-paper. Honest persons as protest candidates will be put on the ballot-paper as people's choice. The loudest message the voters must give to the political parties is: "We shall not give votes to a candidate who is known to be corrupt, who is known to have amassed wealth by misusing his power and authority or using his power to terrorise people."
All civic groups, associations, professional bodies (teachers, doctors, journalists, etc.), youth groups, farmer groups, women groups, business groups, student groups, political parties, individuals, both voter and non-voters, can prepare and submit their panels to the political parties. They can make a panel for each alliance of political parties. Groups can share these panels among each other, can come up with common panels to make their cases stronger. If the clean candidates within the party do not want to run against the party candidates, voters can select an independent clean candidate to run.
When sending the chosen names for party nominations to respective party, voters should give those names also to the press. Voters should keep lobbying with the parties to let them know how strongly they (voters) feel against the potential party candidate and promote the case of their own candidate. Voters should tell the party that if they nominate the person that voters reject, then that candidate will not get their vote. Voters will vote for their own candidate instead. Even if their candidate does not win, voters will have a tally of protest votes. If these protest votes add up to be a significant number, it may have an impact on the outcome of the election. Some protest candidates may even win.
I invite the media to launch their own Clean Candidate Campaign. They can start a series of reports identifying and highlighting at least three potential clean candidates for each contesting political party, in each constituency. They may refrain from publishing speculative news about possible nomination of non-clean candidates who are usually considered as front-runners. Media can play a decisive role in bringing out support for clean candidates, and destroy the chances of non-clean candidates in getting nominated or elected.
Students can play a vital role in this Campaign for Clean Candidates. But they'll have to start building up the campaign organisation right from now. They can work in the constituencies where they appear as voters, or volunteer in other constituencies. Electing clean people to the parliament is very important task this year.
A Proposal To Resolve Election Impasse
Opposition parties have put some conditions for their participation in the next general election. These conditions can be discussed and resolved if the two opposing sides can sit face to face. But given the past history, we do not expect this to happen.
Here is my proposal. I request both sides to find a Respected Person, accepted by both sides, who will come up with a solution package in consultation with both sides. He will be given 30 days. If both sides agree time can be extended. The Respected Person can co-opt two persons of his choice to help him prepare the solution package.
There may be other proposals to resolve this impasse. Let us all put them on the table to see if any one of them can interest both the parties. Although ruling party's position on those conditions is clear and constitutionally correct, there is nothing wrong or unconstitutional about making attempts to bring all parties on board to hold a peaceful, credible national election.
Our media, and individual or groups of citizens can suggest names of the possible Respected Person. Ruling and opposition alliances can come up with their own choices and pass on to the other side.
Important thing is to hold the election in the right manner, and right mood, to uphold our democracy and move forward.
Tremendous Energy Waiting to be Mobilised
World is changing very fast. If we are late by a day we'll fall behind by years. We have come a long way and we are ready to go forward with speed. Bangladesh has the fire in her belly to keep pace with her giant neighbours. Let us not allow ourselves to slow down. We need the right politics and the right leadership to mobilise the tremendous energy in Bangladeshi young people.
Let us think and work hard to make it happen.
"Creating a New World: A Dream or a Reality?"
A very good afternoon to everyone.
I am deeply honoured and privileged to be invited to deliver the Nelson Mandela Annual Lecture here in South Africa. I have been to South Africa many times before, but it is indeed very special to be invited by the Nelson Mandela Foundation to deliver the 7th Annual Nelson Mandela Lecture bearing the name of one of the greatest icons of our times.
The Financial Crisis
I had to create Grameen Bank because the conventional banks refused to lend to the poor. This is the same for conventional banks the world over. Today, after 32 years, we reach with microcredit in Bangladesh, 80 percent of the poor population in Bangladesh. In the next two to three years, 100 percent of the poor will have access to microcredit. Globally, 130 million poor families receive microcredit. Even with the experience, banks have not changed the way they do business. They do not mind writing off a trillion dollars in a sub-prime crisis, but they still do not lend $100 to a poor woman despite the fact such loans have near 100 per cent repayment record globally.
Banks explain that poor people are not credit worthy. The real question to ask is whether banks are people worthy. In Grameen Bank there are no legal instruments between lender and borrower, no guarantees, no collateral. And yet our money comes back while the prestigious banks all over the world that went down had all their intelligent paperwork, all their collateral, all the lawyers and legal systems to back up their lending. This contrast raises many questions in one's mind. Here's how Grameen Bank works: The bank gives loan to the poorest of poor on their promise to pay it back. There's no collateral, only mutual trust, accountability, participation and creativity. Loans are granted on the potential of the person instead of the amount of material possessions. The bank is owned by poor women, not rich men. And its goal is to make the world a better place by eradicating poverty.
For example, when we give a $100 loan, behind that there's a cow, there's a few chickens, there's something real. The banks that are collapsing were based on chasing papers. It was a race to create a fantasy world of papers. And when something went wrong, the whole thing collapsed. The Grameen Bank is locally based; our source of money is local. In other words, the money comes from the deposits of the people in the bank. We take the depositors money and lend it; we are not connected with international banks, so their crisis could not reach us.While other experts are banking on gloom and doom, I see the economic downturn as a prime time to shake things up in a positive way that will lead to permanent social change. This is a big crisis, but this is also a big opportunity to redesign and retool, so we don't have to go back to the same normalcy. So in a certain way, the crisis is good; it gives us a good opportunity to redesign for the better. This is an overwhelming crisis, but it is not the only crisis.
In 2008, before this crisis began, there were other crises, including the food crisis, the energy crisis, and the ongoing environmental crisis.Â Although they all are happening at the same time, because of the sudden disappearance of enormous wealth and the number of big companies collapsing, financial crisis has occupied all the news media. I'm trying to bring attention to those forgotten crises, because they have not disappeared, they simply got pushed back. They are very much alive and have to be addressed.Global warming, for instance, is hitting Bangladesh, which is a flat, highly populated country. The sea level is rising 4 millimeters a year, the ocean is rising, and Bangladesh is sliding into it.
The projection is that within this century at least one-quarter of Bangladesh will disappear.These crises must be examined and solved together because they are not separate; in reality it is only one crisis with separate manifestations. They are all coming from a fundamental cause, and that happens to be the very way we have conceptualized our world. There is something basically wrong with the framework that we have developed. As of today, we have only seen the beginning of these crises; it is going to be a long and painful period ahead.
The combined effects of the financial crisis, the food crisis, the energy crisis, and the environmental crisis will continue to unfold in the coming months and years, affecting the security of the bottom three billion with special force. And of course the troubles of the world's poorest will have an impact on the developed nations, too.
Social unrest, border clashes over scarce resources, spreading instances of state failure, and vast migrations by populations desperate for relief from poverty and environmental disaster will create political and military hot spots around the globe that will threaten world peace.Over the past year, world leaders have been particularly focused on the emergency situation on the financial front. This narrow view of the financial crisis is likely to exacerbate our global social and political problems. The human aspect of the financial crisis must be integrated into all policy proposals. The appropriate thing would be to treat all four crises as one crisis, since all are linked together.
So far, many governments have been creating bail-out packages for the financial institutions which were responsible for creating the financial crisis in the first place, yet little is being done to bail out the victims of the crisis the three billion people at the bottom of the economic pyramid and the planet that sustains us all. For this reason, I have repeated that this mega-crisis be taken as a mega-opportunity to redesign our existing economic and financial systems so that they can become the foundations for lasting global security. To find the solution, the world right now has to work together, must concentrate on the opportunity, not the crisis, and capitalize upon the lessons of these crises. When things don't work, that's the best time to re-do it, to reorganize it, to re-conceptualize it, to redesign it. The change must begin in the financial sector because that's what caused everything to collapse like a house of cards. How do we make the financial system different, and how do we make it inclusive so nobody falls through the cracks? How do you change it so everybody has a chance? We have to create an inclusive global financial system.
Capitalism is Half-Done Structure
In the last 50 years, capitalism has reigned supreme. It has brought unprecedented wealth and prosperity to some countries and to some people. But billions are left out. The situation, in many cases, is getting worse and worse for those who are left out. Even if we can overcome the problem of financial crisis, we are still left with some fundamental questions about the effectiveness of capitalism in tackling many other unresolved problems. In my view the theoretical framework of capitalism that is in practice today is a half-done structure. The theory of capitalism holds that the marketplace is only for those who are interested in making money, for the people who are interested in profit only. This interpretation of human being in the theory treats people as one-dimensional beings.
But people are multi dimensional. They may have their selfish dimensions, but also they have their selfless dimensions. Capitalism, and the marketplace that has grown up around the theory, makes no room for the selfless dimensions of the people. If some of the self sacrificing drives and motivations that exist in people could be brought into the business world to make impact on the problems that face the world, there would be very few problems that we could not solve.The present structure of the economic theory does not allow these dimensions of people to play out in the market place.
I argue that given the opportunity, people will come into the market place to express their selfless urges by running special types of businesses to make a change in the world. In the absence of such opportunity in the market place people express their selflessness through charities. Charities have been with us since time immemorial, and they are noble, and they are needed. But we have seen that business is able, to innovate, to expand, to reach more and more people through the power of the free market. Corporate social responsibility was an important development in the business world but it still does not let business people to express the selfless urges I describe within the framework of the market. The concept that there could be another type of business, crystallized in my mind through my experience with Grameen companies. Over the years, Grameen created a series of companies to address different problems faced by the poor in Bangladesh. Whether it is a company to provide renewable energy or a company to provide healthcare or yet another company to provide information technology and cell-phones to the poor, we were always motivated by the need to address the social need.
We always designed them as profitable companies, but only to ensure its sustainability so that the product or service could reach more and more of the poor - and on an ongoing basis. In all these cases the social need was the only consideration, making personal money was no consideration at all. That is how I realized that businesses could be built that way, from the ground up, around the specific social need, without motive for personal gain.
I am proposing a different structure of the market itself. Along with the profit maximizing business, I propose a second type of business to operate in the same market along with the existing kind of profit maximizing business. I am not opposed to the existing type of business - although I call for many improvements in it like many others do. I propose a second type of business alongside the existing one.
This new type of business I am calling social business, because it if for the collective benefit of others. This is a business whose purpose is to address and solve social problems, not to make money for its investors. It is a non-loss non-dividend company. Investor can recoup his or her investment capital but beyond that, there are no profits to be taken out as dividends by the investors. These profits remain with the company and are used to expand its reach, improve the quality of the product or service it provides, and design methods to bring down the cost of the product or service.
The idea of social business got a boost when we launched a joint project with Danone. Grameen has collaborated with Danone to supply nutritious fortified yoghurt to the undernourished children of rural Bangladesh. The goal of this social business is to fill the nutritional gap in the diet of these children. Grameen Bank borrowers buy cows and sell the milk to Danone. Once the yogurts are prepared by Danone, Grameen Bank borrowers sell the yogurt door to door in the villages. The yogurt is sold at an affordable price, charging just enough to make the company self sustaining. Beyond the return of the original investment capital, neither Grameen nor Danone will make any money from this venture. The aim of the Grameen-Danone venture puts micronutrients in the yogurt that the kids are missing. They don't spend money on fancy marketing or on design of packaging. If children eat two cups of this yogurt a week regularly over a period of eight or nine months, they get all the micronutrients needed to be healthy. We have one yogurt plant already operating in Bangladesh, and in time we hope to have 50 such plants throughout the country.
We have created a joint-venture with Veolia of France to deliver safe drinking water in the villages of Bangladesh.This joint venture is building a small water treatment plant to bring clean water to 50,000 villagers, in an area of Bangladesh where the existing water supply is highly arsenic contaminated.Â It was launched just last month. We are selling the water at a very affordable price to the villagers to make the company sustainable, but no financial gain will come to Grameen or Veolia.
We also have built an eye care hospital on social business principles. A second one will open next month. We have also created a joint venture social business with German chemical giant BASF to produce treated mosquito nets to fight mosquito borne disease and also a nutritional sprinkle to combat nutritional deficiencies in women in children.
There is also great synergy between the rapid development of technologies and social business.Technology is the one most fast developing sectors in the world today. The various methods of communication and networking have made it possible to reach anyone in any part of the world. Being a witness to these wondrous improvements I have voiced again and again that technology is one very powerful tool which can be used to bridge the gap between the rich and the poor, in a manner other devices cannot possibly do so. If we could channel some of this intelligence and creativity into building IT solutions for the poor, we would make giant leaps in our race to end poverty. From e-healthcare to mobile phone banking to online supplying to products and services to the poor we are beginning to visualiase what the possibilities are. Grameen has created a social business with Intel to bring these technologies to benefit the poor.
More and more companies are coming forward to partner with us to set up new social businesses. We feel excited about creating a series of examples of social businesses, which, hopefully, will encourage others to join in.Some people are skeptical when I describe the concept of social business. Who will create these businesses? Who will run these businesses? Why would anyone devote time, energy, and money to projects with no hope of personal gain? I always say that, to begin with, there is no dearth of philanthropists in the world, no dearth of donor countries giving grants. People give away billions of dollars every year. So do donor countries. Imagine if those billions could be used by social businesses to help people. These billions would be recycled again and again, and the social impact could be all that much more powerful. In the same way, money allocated by companies to corporate social responsibility projects could easily go into social businesses. Each company would create its own range of social businesses. We can also create Social Business Funds to pool funds from many sources and invest them in social businesses.
The opportunities for launching social businesses are really limitless.We can also recognize a profit-maximizing company as a social business if it is owned by the poor. This constitutes a second type of social business. Grameen Bank falls under this category of social business. It is owned by its poor borrowers. The borrowers buy Grameen Bank shares with their own money, and these shares cannot be transferred to non-borrowers. A committed professional team does the day-to-day running of the bank. Every year, dividend checks are sent to the borrowers, representing their share of the bank's profits.Bilateral and multi-lateral donors interested in supporting economic development could easily create social businesses of this type. When a donor wants to gives a loan or a grant to build a bridge in the recipient country, it could create instead a "bridge company" owned by the local poor. A committed management company could be given the responsibility of running the company.
Part of the profits earned by the company would go to the local poor as dividends, while a part would go towards building more bridges. Many infrastructure projects, like roads, highways, airports, seaports, and utility companies could be built in this manner. In additional to local projects, powerful multi-national social businesses can be created to capture a share of the benefits of globalization for poor people and poor countries. Social businesses will either bring ownership to poor people, or keep the profit within poor countries, since taking dividends will not be their objective. Direct foreign investment by foreign social businesses will be exciting news for recipient countries. Building strong economies in poor countries and protecting them from plundering companies will be a major area of interest for social businesses.
To connect investors with social businesses, we will need to create a social stock market where only the shares of social businesses will be traded. An investor will come to this stock-exchange in order to find a social business, which has a mission to his or her liking, just as someone who wants to make money goes to the existing stock-market. To enable a social stock-exchange to perform properly, we will need to create rating agencies, standardization of terminology, definitions, impact measurement tools, reporting formats, and new financial publications, such as The Social Wall Street Journal. Business schools will offer courses and business management degrees to train young managers how to manage social businesses in the most efficient manner, and, most of all, to inspire them to become social business entrepreneurs themselves.Making money in a profit-making business will be the "means". Using this money for social business will be the "end". Social business can work in tandem with profit-making ventures. Once the concept of social business is included in economic theory, thousands of people will come forward to invest in social businesses because of the social dreams they have in their hearts.
Poverty can be overcome
The thought that always energizes me is that the poverty is not created by the poor people. Poverty is an artificial imposition on the people. Poor people are endowed with the same unlimited potential of creativity and energy that any human being in any station of life, any where in the world. It is a question of removing the barriers faced by poor people to unleash their creativity to solve their problems.Â They can change their lives, only if we give them the same opportunity that we get.
Creatively designed social businesses in all sectors can make this unleashing happen. I always insist that poverty does not belong in civilized society. Poverty belongs only in the museum where our children and grandchildren can go to see what inhumanity people had to suffer, and where they will ask themselves how there ancestors allowed such a condition to persist for so long.We have to decide that poverty no more! We overcame slavery. We overcame apartheid. We have done other things that people once thought impossible. We have put persons on the moon, into space to explore far away worlds. We can overcome poverty, if only we decide that this does not belong to the world that you want to create. We can take advantage of the global financial crisis by working together to make the 21st-century to be the beginning of a world that will be a better place for all to live, and where poverty will be found is the poverty museum. The people of South Africa have an indomitable spirit. With this spirit and with its vast human and other resources, South Africa can be the first country to build a poverty museum.
Madiba, I look forward to coming to South Africa in the not too distant future for the opening of the first poverty museum.
Thank you again for inviting me here.
Happy birthday once again our beloved Madiba.