I. Opening RemarksIt is a very great pleasure for me, as Chair of the British Council, together with our Chief Executive, Martin Davidson, to welcome you here and also to thank the University of Reading for their kindness in sponsoring the lecture, which is part of a series that we have been organising, together with many other activities, to celebrate the 75th anniversary of the foundation of the British Council. II. British Council Anniversary Series
In recent months, we have had the delight of hearing President CalderÃ³n of Mexico during his state visit to the United Kingdom, and also two Nobel laureates, Professor Amartya Sen and Archbishop Desmond Tutu. Today, we have the honour to be addressed by our third Nobel laureate, Professor Muhammad Yunus.
III. British Council Work
Professor Yunus, ladies and gentlemen, in the decades since its small beginnings in 1934, the British Council and its people has served millions throughout the world by helping them to gain educational, aesthetic, vocational and creative opportunities. By such means, the Council with our partners and our users has advanced understanding of Britain throughout the world and, we hope, advanced understanding of the world in our country. The development of such cultural relations continues to be our propelling mission. We are convinced that the exchange of ideas, knowledge and creativity between peoples and persuasions enlarges individual life chances and contributes directly to securing a more peaceful, enlightened and prosperous 21st century.
IV. Work with Bangladesh
We have been applying these practical and productive principles for 75 years, and since 1953 the British Council has operated in a country which, for 37 years, has been the Republic of Bangladesh. Naturally, we greatly value the relationships that have been developed closely throughout those decades with people of all ages and backgrounds, and institutions and organisations of every kind. We continue to build on the strong links between the United Kingdom and Bangladesh with activities in that country, and of course, activities that relate to the communities that originate from Bangladesh in this country.
V. Work of Professor Yunus
Ladies and gentlemen, our distinguished guest this morning is the son of Chittagong who, as a young professor of economics in the university in 1976, launched a cooperative credit project among impoverished women workers, which eight years later became the Grameen Bank. Grameen has gone on to transform the lives of millions of people, not only in Bangladesh, but because of the application of the principles developed by Professor Yunus and his supporters in several other countries too.
The spread of what can justifiably be called â€˜the Grameen systemâ€™ has proven a potent weapon in the fight against family poverty in less developed nations. In the third of a century since the project was originally founded, it provided the basis for developments that extend into agriculture, fisheries, textiles, telecoms and a wide spectrum of economic and technological activities.
A huge number of international accolades have rightly been given to Professor Yunus for inspiring what amounts to a creative global revolution, but I know that no distinction had been more valued by him than the Nobel Prize awarded to the Grameen Bank in 2006. The achievements of the Bank and all that it implies are driven by the vision of a remarkable founder and by the relentless commitment of its low income investors and beneficiaries. It is a remarkable force for progress, for security, and for dignity â€“ a blessing that has been built truly by the poor, for the poor.
Ladies and gentlemen, with great pride and pleasure, I ask you to greet Professor Muhammad Yunus.
A Framework for a Better Future
I. Relationship with the British Council
Thank you very much, Lord Neil, for your very generous introduction. I am very honoured to be here this afternoon to participate in the 75th anniversary celebration of the British Council. The British Council is not an institution far from me. I grew up with British Council as a student, spent hours and hours in the British Council library in Dhaka. It was a favourite place of many friends. With this 75th anniversary, I also express my gratitude to providing the service that you provided to us younger students for many generations.
Today, I am very happy that I could participate in the celebration, and also share what has happened since then.
These days, not too many people invite bankers; I am glad you invited me. When Grameen Bank and I were awarded the Nobel Peace Prize, I received a lot of congratulations from bankers saying they are so happy a banker received a Nobel Peace Prize! We shared that common feeling, but we come from a really different side of banking than where conventional banking is done.
I became involved in it rather accidentally. I had no plan to do that. I was not working to a blueprint of what I was going to do. As a young person, everyone has great ideas of what they want to do. It goes through phases; at each level of your life you want to do something, but not in my wildest dream did I think I would become a banker. Circumstances were so desperate that I was pushed into doing something that looked like banking and became banking as we went on.
II.Nature of Lending
My first work was simply to help people in a personal way to protect them from the loan sharks. Loan sharking is very well known everywhere. It is nothing new. Shakespeare immortalised it by â€˜a pound of fleshâ€™. However, it does not seem like we have done anything about it. We know about it. We read about it. We hear about it. Nothing is done. It flourishes all over the world, even today. When the financial crisis upsets us that it is falling apart, the system is no longer working, everyone is worrying about what is coming up, I remind all the time that it is the deepest of crises, but we should not forget this is the best of opportunities because this is the time to rebuild. When things work, you do not want to touch it, because it is working. When things do not work, then you think about it. If it still does not work, then you kick it! This is the time to kick.
2.Lending for the 21st Century
That is what we should be doing. That subject has not really opened up. We are very busy with packages to salvage the economy. I keep reminding that, when we return to the normalcy out of the crisis, let us not go back to the same old normalcy that we are coming from. We should be creating a new normalcy from where this crisis will be a matter past. The 21st century should not be a century of crisis. The 21st century will be the century of celebrations of what we could not do in the past and we have now done. That is what we should be doing.
III.Changing Lending in Bangladesh
1.Moving away from Loan-Sharking
I became involved because people took tiny little amounts of money from the loan sharks in the village next door to the university campus. The loan sharks took full control of their lives. They were turning them to slave labour. They work as if they were working from themselves, but actually everything passes on to the loan sharks. They cannot receive anything.
I tried to understand how it went on, because no matter how much I was given to learn in the classrooms in learning economics, I was never given the full view of what loan-sharking is. That is not a subject dealt with in the economics subject. That was something for other people, not us. We are busy with the capital markets. In order to understand that, I did something very simple: make a list of people borrowing from the loan sharks. When that was done in a few days, I saw 42 names on that list who borrowed from the loan sharks. The total money they borrowed was $27. I could not believe that people had to suffer so much for so little.
I knew, therefore, that the problem was very intricate. However, what came to my mind was that the solution is so simple. â€˜All I have to do is to give this $27 to all these 42 people and ask them to return the money to the loan sharks and they will be free.â€™ So, I was very excited that it had such a simple solution. I immediately did that. Then I was busy doing other things in the village, but now people look at me in a very strange way, as if I have done something of a miracle. I felt awkward. I felt embarrassed. I kept telling myself, â€˜With $27, if you can become an angel, maybe if you put in another $27, you will become a super-angel.â€™ In my mind I translated it as, if you can make so many people so happy with such a small amount of money, why should you not do it more? That was back in 1976 and I still ask myself the same question and ask us all the same question: if you can make so many people so happy, why should you not do it more?
2. Taking the Idea to the Banks
I wanted to do it more in 1976, so I went to the bank. The idea came that instead of loan sharks giving the money, if the bank gives the money, the loan sharks will be out of business, and people will have reasonable deals with the banks. The banks said, â€˜No, it cannot be done, because the poor are not credit-worthy.â€™ The rest of the story is a struggle with the bankers, saying nasty things about the banks to make them feel pressured to do something. Nothing happened.
Ultimately, after months of trying, since the door of the bank did not open, I offered myself as a guarantor. I said, â€˜You give the money, Iâ€™ll sign all your papers as guarantor, so the risk is on me and not on you any more.â€™ Finally, that worked because there is no good argument against it that they could come up with. That was the beginning. I was signing and taking money and giving it to people. I had no idea whether this was going to work or not, but luckily it worked.
3. Furthering the Potential
This went from one village to the next village; we continued. As we continued, the more it became successful, the more the bank became reluctant, because they were hoping that after the first round, I would not come back again. It was the best way to get rid of me! Seeing that it was coming back, doing well, 100% repayment, they were becoming worried, because it was increasing and more money was involved. Seeing their reluctance, a new thought came into my mind, â€˜Why do I not create a separate bank now it is working?â€™ I had had no idea if it was going to work or not. I did it out of an impulse, out of a sense that something needed to be done. I thought that even I could try. That is what I was doing.
4.Founding Grameen Bank
It took another long period to receive permission to establish the Bank. In 1983, we became a bank and from there on we were expanding. Today, within Grameen Bank in Bangladesh, we have nearly 8 million borrowers, 97% of them are women, and on a monthly basis we lend out over $100 million, loans averaging around $220. It is a huge nationwide operation. The Bank is owned by the borrowers, not by any rich person, or anything.
5. Lending to the Poor
I have sometimes jokingly said, â€˜This is a strange kind of bank, because everything we do is just the opposite of the conventional banks. Whenever they do something, we notice, and we try to do it the other way. And it works. They go to the rich; we go to the poor. They need collateral; we do not need collateral. They need lawyers; we do not need lawyers. And still it works. The whole of this banking is, in a way, trust-based banking. There is no legal connectivity between the borrower and the lender.
They told me in 1976 that poor people are not credit-worthy. Since then, the repayment of the Grameen programme has remained near 100% at around 98% or 99%. Today, that idea has expanded all over the world. We have had the same experience wherever it went: repayment is very high, near 100%, without any collateral, without any guarantee, or anything. 2009 is a good year to ask the same question again: who is credit-worthy? Is it the large banks with large clients? They cannot obtain their money back. They are collapsing, going bankrupt, whereas the poor people taking tiny loans, without collateral, are paying every penny of it, and changing their lives.
So, we have to settle this issue before we get back to the normalcy. What kind of banking must we have? Definitely, one lesson we have learned is that it cannot remain the exclusive club of privileged people. Banking should be an inclusive system, not an exclusive system. This is a task we have to accomplish, not just, â€˜There is Grameen Bank doing something. We heard about something called microeconomics.â€™ Not like that. It should be part and parcel of the mainstream banking, because there is no way you can just keep it away from the mainstream. Almost two-thirds of the worldâ€™s population do not qualify to receive the services of conventional banks.
IV. Changing Lending in the United States
We are now doing something in New York City. Last year, we started a programme called Grameen America. We followed the same procedural steps that we followed in Bangladesh: five women coming together and forming a group, taking individual loans without collateral, for income-generating activity, repaying in weekly instalments â€“ everything that we do in Bangladesh, right in the heart of New York City.
We now have 660 borrowers, all women. The average loan is $2,200, which is about 10 times the loan that we give in Bangladesh. That is about it. People cannot believe that, in the United States, people need $2,200, but we see how eager they are to take this $2,200, and go through all the preparation just to come to the point that they can take this $2,200. That is an average, meaning that some of the loans are $600 or $700. The repayment rate is near 100%. It is 99.3%.
2. Opening Savings Accounts
Even in the United States, the difficult part was not giving loans to these people. That was not a problem. The problem was opening a bank account for these borrowers, because Grameen Bank rules require that, as you join Grameen Bank, the borrower has to open a savings account, and put in a weekly saving. Whatever little money you can, you put in your savings account, so you have a habit of putting some money by for yourself. It grows with you.
Since Grameen America is not a bank, we could not keep the money to ourselves. We have to find a bank where they can put the money. We could not find a man who would like to take that money. It was the biggest hassle in our work in New York to find a bank to open this account. We had to go to the highest authority of Citibank, because we know each other very well. They are very sympathetic to our work. Even the highest authority took a lot of time to persuade the branches to do it. Each borrower saves $2 a week. That is their programme, that they decided they would put away $2 a week. That was what was making all the trouble for the bank.
There are millions of people in the United States who cannot open a bank account, because the bank will not give this facility to them. When they receive their salary cheque at the end of the week or month, they cannot go and put it in their own account. To receive the cash, they go to a pseudo-company called a cheque-cashing company. These thrive all over the city. Everywhere you go, there is cheque-cashing, big signs for big cheque-cashing companies. You leave part of your money to the cheque-cashing company. You do not receive the full amount of it.
Nobody pays any attention to it, because we are so busy making money, who cares if somebody has their cheque cashed or not? If you go around the same neighbourhood, you will see at least 10 payday loans, lending money to people, charging unbelievable interest: 100%, 500%, 1000% interest. It is not a small business. This is billions of dollars of business. Nobody cares about it though.
These are the lessons that we need to now bring together to ask ourselves what kind of financial system we should be creating when we move out of this crisis.
V. Lending for Income Generation
In Grameen Bank, we lend money for income-generating purposes, so that they can gradually move towards higher and higher income through their own efforts and also encourage them to send their children to school. This became part of our work and we succeeded because our borrowers are women and, as mothers, they understood the meaning of this and supported it very warmly. We succeeded in sending all the children to school.
2. High Performance and Scholarships
Then, we started noticing some very striking results. Coming from totally illiterate families, these children go to school and some of them come at the top of the class in performance. It is a highly thrilling experience to see this kind of phenomenon. We wanted to celebrate that, so what we did was introduce scholarships for those students who were performing very highly in the class. Grameen Bank gives 30,000 students 40,000 scholarships every year. Now, the number keeps growing.
Many of them are now reaching higher education. When we first noticed this some 14 years ago, we immediately introduced education loans. Now, waves and waves of students are coming fro higher education. Currently, there are more than 36,000 students in medical schools, engineering schools, universities.
You see a whole new generation coming from the illiterate, poor families, which never had the experience of going to school ever. When you see these families, with illiterate mothers, and her daughter is a medical doctor, or her son is an engineer, one thought cannot escape your mind: â€˜her mother could have been a doctor tooâ€™ or â€˜his mother could have been an engineer too.â€™ There is nothing wrong with this mother, or her mother. Simply, society never gave her a chance. She could not even go to school; forget about becoming a doctor or an engineer.
n the case of her son or her daughter, the only difference that happened was there was a bank created in the meantime that provided a little facility to bring some tiny loans. Her first loan was probably $30, or $35. That is where she started. She was scared to death taking this money in her hand. Probably, she was scrambling. She could not believe anybody would trust her with an enormous amount of money, but she enjoyed it. She took it and that was the change she saw in her life that led to a different direction. When her child was born, she made sure this child went to school. When the child succeeded in going to higher education, Grameen Bank provided a student loan. Just one intervention makes the change.
VI. The Idea of Poverty
We all ask the question all of the time. Ask yourself the question: where does poverty come from? If you go through these experiences one after another, you cannot but come to the same conclusion as I come to. Poverty is not created by the poor people. Poverty is not their creation. Poverty is an imposition on them. It comes from outside.
I will give an example to help people understand what I am saying. Poor people are like a bonsai tree. You take the seed of the tallest tree in the forest and plant it in a flower pot. All you see is a tree this high. It looks exactly like the tree that you saw in the forest, but a very scaled-down version. You wonder what happened. â€˜Is there something wrong with the seed? No, we selected the best seed.â€™ The problem was it was not given the space to grow. Poor people are bonsai people. There is nothing wrong with their seed. Simply, society never allowed them the space to grow, so they remain stunted and we pity them. If you had provided them the space, they would be as tall as anybody else.
2. The Potential of All
All people are packed with unlimited capacity, unlimited potential. There is no difference between a child born in a poor family or a child born in the richest family. Potential-wise, they are exactly the same. However, in unleashing those capacities, there will be different circumstances. One will never see that power or capacity unleashed. He or she will die without ever knowing what gift he or she were carrying. It will remain completely unknown. The other person will have all the privileges, or some. That makes all the difference.
3. Poverty Created by the System
Poverty is created by the system. That is the chance we have now: to think away that system so that it does not behave differently for different people. The system is made up of institutions, like the banking institution. The financial institution is one of those measuring institutions that decides peopleâ€™s future. Why, then, should a bank be limited to a few people, not all people? You cannot find an answer to that.
Grameen Bank is owned by the borrowers, as I mentioned. Grameen Bank makes profit every year. Profit goes back to the borrowers as their dividend. It is not a bank depending on foreign aid. It is a very strong financial institution. It does not take money from the government. It does not take any money from international agencies. Nothing. All its money comes from its own deposits. It takes deposits, just like any other bank, and lends money to the poor people. That is about it. In the process, poor people can create their own lives, unleash their own energy. The bank makes profit; the profit goes back to them. What is the angle that you now have to say that the poor people are not capable people to borrow from a bank?
We continue to explain this outside of the country. People take this idea and continue it.
VII. Institutional Concepts Failing the Poor
I am very happy Principal Pamela Gillies is present here. We were discussing; she invited us to create a Grameen programme in Glasgow. Maybe something will come out of this programme that people, who are on welfare, can find a way to leave welfare. I find it very difficult to accept a permanent situation of welfare. The very first sentence of welfare law should be: â€˜Welfare is being provided to citizens to help them leave welfare as soon as possible. The whole objective is to help the person leave welfare, not to keep the person in welfare.
That is how it became. All welfare laws all over the world are so generous to make sure people feel very comfortable to live in welfare. They close down all the doors and windows so they cannot try to leave. Even if they try, it will stop you.
In the USA, there was another experience of a major problem in the past. If you are on welfare and you earn $1 somehow, you have to report it to the welfare authority. The welfare authority will deduct that dollar from your cheque. I said, â€˜It is a very funny situation. In writing this welfare law, I would have done it the other way. I would have said, if you earn $1, you report it to the welfare authority and the welfare authority would be obliged to match it with another dollar so that you are encouraged to leave.â€™ The other way it means, â€˜Do not dare make money. I am watching you!â€™ It does not make sense. I will just mention one financial institution. You can go all over the place.
Another is the concept where you have a design failure focuses particularly on business. I said, â€˜It is a very strange way that economic theory has conceptualised what business should be. In the theory, there is only one kind of business in the world: to make money. The mission of business is the maximisation of profit. We have taken it so dearly to heart, that we do not dare do anything else. All we do is maximise profit.
I keep reminding that economic theory has misinterpreted human beings very badly. If you want to be generous, you could say that it has interpreted human beings very narrowly. Human beings are not one-dimensional beings. I do not think we have a debate on that. The economic theory has interpreted us as one-dimensional beings: all they enjoy in life is making money. The real human being is not a money-making machine. It is not a robot. Money-making is a very interesting part of our life, but not our whole life.
As human beings, we all have selfishness in us. It is part of our life. Do not forget, there is also selflessness in our life and in our heart. The economic theory took only one part of us, that selfishness, and built a whole economic theory out of it forgetting about the selflessness. As a result, we have created all the problems that we have, the crisis we are talking about. Everybody has agreed the cause of this crisis is the super-greed. Some people became excessively greedy and made the whole system collapse for themselves and for the whole world with everybody suffering. The entire world is suffering. Then they have described it by saying the marketplace has been turned into a gambling casino. Why?
The seed of that is in the theory. We allowed it to happen. To justify the true human being, we should include another type of business based on selflessness. What kind of business will that be? The first business, as we all know, is based on selfishness, what we say is self-interest. This is about keeping as much business as I can to myself, so I am the centre of all my activity, where everything has to come to me. The second business, which is based on selflessness, is the other way. Everything should go for others, nothing for me. Then I said, â€˜No, people are not crazy like that.â€™ Then I said, â€˜People are crazier than that!â€™ They give away their money. Some give hundreds of dollars. Some give millions of dollars. Some give away billions of dollars. I said, â€˜Why am I crazy? All I am saying is, invest that money to do good things that you want to do to make an impact in the world.â€™
I am less crazy than charity where you give it away. I keep reminding myself that the charity dollar has only one life: you give and it never comes back. One cannot deny that it does some good work, but if you can transform this idea of whatever you want to accomplish into a business idea, and transform it into a social business, your money will be recycled again and again. Much greater impact can be derived from it than from charity. It becomes more transparent and powerful because it becomes an institution. Rather than disappearing, it remains.
VIII. Social Businesses
I started to do this myself in order to demonstrate what I was saying. I set up a lot of social businesses. One of them has become quite popular because I set it up in conjunction with a giant French company, Danone. We created a Grameen-Danone social business in Bangladesh. We produce yogurt. Danone is a great producer of yogurt, so we thought that they could bring their technology with them. Millions of children in Bangladesh are malnourished, so we have taken the micronutrients lacking in children â€“ such as vitamins, zinc, iron and iodine â€“ and put them into the yogurt. We also made the yogurt very cheap. In social businesses, it is easy to find unnecessary costs, such as marketing. You do not need fancy packaging. In some products, the packaging costs more than the content. In a social business, you do not need to fool anybody, so we are selling this yogurt to poor children in Bangladesh.
In a profit-making business, you ask the CEO of the company, â€˜How much money have we made this year and how much more will we make next year?â€™ If the CEO does not come up with a bigger figure next year, they are not a good CEO. We asked the Grameen-Danone CEO how many children avoided malnutrition this year and how many will do so next year. While their consciences and thinking processes are different, the business format remains the same: you recover your costs and the business makes money, but it does not go into the pockets of investors.
We created another social business called Grameen-Veolia, which is a water company. Veolia is a French water company. We created a small water treatment plant in Bangladesh, which has a serious problem in terms of arsenic in its water. Millions of people drink poison every day, but there was no solution. We created this solution and made water very cheap, so that everyone could afford it while allowing the company to recover all of its costs. In social business, there is no subsidy; everything is self-sustaining. The people love the fact that they can drink clean water, and the company is not losing money. Now that we have started one, we can repeat its success.
We have signed a joint venture agreement with BASF, from Germany. BASF-Grameen will provide treated mosquito nets at very little cost, so that every household can afford to protect itself from malaria.
You can explain this social business idea in any sector, including environment and healthcare. I am happy to mention that Pamela Gillies and her institution have been collaborating with us in the healthcare programme in Bangladesh to create a nursing college as a social business. Many other things in healthcare could be done, such as eye hospitals.
The environment is a very good social business. We already have a solar energy company called Grameen-Shakti, which provides solar home systems in Bangladesh. Afforestation might be an excellent social business, given that many countries are protecting their forests instead of cutting them down. By creating a social business around them, the forests will look beautiful, contain food and involve people.
IX.Theory and Reality
We have no option but to accept social business. Theory is created on the basis of reality, not vice versa. Today, problems are created because we try to imitate the theory rather than express our reality. If it is included in the theory, our children will grow up knowing that there are two kinds of business in the world: one whereby you make money and one whereby you make an impact and change the world. They will say, â€˜When I grow up, I will work for the profit-making companyâ€™ or â€˜I will work for the social business â€“ it looks more excitingâ€™. Today, we have no choice, but our children will. We are told by parents to work hard and earn a good degree in order to obtain a good job. What does â€˜a good jobâ€™ mean? If you work for a private company, it means helping them to make more money, which is not an exciting prospect. A truly exciting prospect would be having the creativity and talent to solve a problem. If you create just one tiny social business, you will have developed a seed. Others can take the seed and plant it, thereby eliminating the problem.
In any redesign of the worldâ€™s structure, if this could be included, we would have the world that we want to see, such that we would be proud of the world, rather than be ashamed of it, leaving all these massive problems around us. You could not do anything better because you were so busy making money.
X.The Creation of a Parallel Business
We have an enormous quantity and quality of technology. In human history, we have never had such powerful technology, and it will continue to grow. Technology continues to grow very quickly, but all this technology is in the hands of business. By definition, business uses amazing technology to make money. If we could use this technology to solve the problems of poverty, ill health, diseases and the environment, we would achieve more, but this cannot be done. There is no way of achieving this because it is a world away from business.
What I am suggesting, then, is the creation of a parallel business, whereby this technology would be accessible to social businesses. If it does, this same technology will be helpful in solving the technology. In the process, technology will not suffer; technology will gain, because there will be a lot more experience, so technology will move much more quickly than it has done so far. The wall has to be broken down in order to allow the use of technology both ways. That is why companies such as Danone are important: not only do they come from France, but they brought with them the finest bits of their technology to make this yogurt happen. We are not expert in this business, so they brought their technology with them.
Similarly, in terms of Veolia, while it invested a small amount of money, technology was what really solved the problem. The challenge was around how to make this water to Veoliaâ€™s standards. If the water quality was a fraction lower than the normal standards, Veolia would have received such a bad press around the world.
We invite everyone to design social businesses. If you can create social business ideas, investors will come. Ideas are being bandied around the world to create a social business fund, so that anyone with a great idea can be funded. Someday, probably, we will have a social stock market. Todayâ€™s stock market is about making money. If I want to make a change in the world, I cannot go there. I said, â€˜Why donâ€™t we create a social stock market, where all the social businesses are listed and we can buy the shares of those companies that we feel excited about.â€™
In a two-business world, making money through a money-making business will be the means, and using this money to change the world will be the end. Today, we do not have that option. Today, the only way to express yourself is that the money-making business is the means, and that making money in the money-making business is the end. It does not conclude very well. We have to find a way that makes sense to us, so that we can use our individual creativity in order to address the problems that we see around us. Once we can do that, we will no longer have any problems. Thank you very much.
Questions and Answers
Professor Yunus, thank you so much. Before I give proper thanks for what I found a deeply inspiring lecture, we have a few moments for some questions and answers. Alison Benjamin, a prominent journalist, is going to chair this session. Alison is currently Deputy Editor of The Guardianâ€™s Society section and was previously a freelance writer specialising in social housing, the voluntary sector and corporate social responsibility.
Alison Benjamin,The Guardian
Thanks very much. I am sure we have a lot of questions from the audience in response to Professor Yunusâ€™ very inspiring talk.
Thank you very much, Professor. What are the applications of your model to housing?
When I think about the British Council and the group gathered here today, one of the projects I did in 2001 was on creative industries. I led the evaluation of creative industries for the British Government, and it is really strong here. I was thinking that there might be a way in which British Council offices that are already overseas could act as incubators in the development of these social business ideas, using the creative spirit. Do you like that idea?
Housing is an excellent example of a social business. Within Grameen Bank, we have a housing programme and we make housing loans, but housing could be a separate social business itself. It is a question of design. Billions of people in the world need housing. You can make it affordable by bringing technology to it, so that you do not have to approach it in a traditional way. In Bangladesh, houses should be built such that, if a flood is imminent, they can be moved, or even turned upside down into boats. It needs to be something that fits the situation. Every year, floods come that damage houses, so everyone has to start over again. Why do we not make multiple uses of the house? Those are my ideas around creativity, although they might sound crazy.
The British Council can, of course, provide an incubation facility to encourage young people to design social businesses. In some places, they have declared competitions for social business designs and given awards to good ones. Those award-winning designs can attract investors to make it happen. This is another possibility. Some universities are creating Grameen creative labs, so that these discussions can take place along recognised principles. At the moment, we use the term social business, but tomorrow it might take on 100 different meanings. The Grameen creative labs are used to bring together people from the faculty and business in order to work together across departments. Incubation will be a very important element and one in which I hope the British Council will play a role.
Thank you very much for your lecture. I am from Ecuador, where I have witnessed the impact of your work on so many families. From my reading of your book, my question is: what are the main challenges behind channelling these funds towards social enterprises? We assume that the money is there, but taking the example of housing, a massive amount of money needs to be invested. In your experience with these big companies, what are the main challenges and how can we engage them in this process?
David Barker, White Box Social Enterprise
We use trade to bring it to people in poverty. We think about how we set up microfinance to people in poverty. How are you guaranteeing to lenders that you will pay back such huge sums of money, given that you are not taking income from anywhere to lend out?
I wanted to ask about the disconnect between land, people and food. Supermarkets are dominant and, going forward, we have a problem with climate change. How are we going to feed ourselves? How could we use the opportunity of social business to do so?
In terms of the first question, I initially thought businesses would look at this issue with a distance, in the same way that bankers looked at microfinance â€“ rather than getting involved, they remained on the sidelines. Amazingly, amazingly, big and small companies are coming forward and asking for our help in designing a social business. For example, one of the worldâ€™s leading shoe companies â€“ in fact, they produce the most expensive shoes in the world â€“ approached me. I was invited to talk with their CEO about social business. I said that, to begin with, they could state a simple principle. The principle would be that nobody in the world should go without shoes and that, as a shoe company, it would be its responsibility to ensure that they produced shoes that were affordable to people with the lowest incomes.
He looked at me, thought about it and nodded, saying, â€˜Yes, it is possibleâ€™. I said that, now he had his principle, he had to implement it. It was essential to ensure that people on the lowest incomes could afford to buy shoes. He said, â€˜What do we do now?â€™ I replied by suggesting that they produce a shoe for less than $1, at which he said he would have to consult his colleagues. He did so and came back with their approval. I emphasised that, rather than being a â€˜charityâ€™ shoe, it had to cost less than a dollar. It also had to be green. The CEO said that, while it would be hard work, they would come up with a solution. They had the technology but nobody ever challenged them. If you challenge them, they get excited. They are now saying that they will launch this shoe at the World Cup Final in July next year in Johannesburg.
In terms of microfinance, these loans are made for income-generating purposes. We do not teach these people anything. This is how it works: if one does, another follows. This is how it works all over the world. A basic principle that we follow is that, if we do not receive our money back, we never blame the borrower, but ourselves. We did not know how to do business with them, so we had better learn. The borrower is always right; it is we who make the difficulties, so we have to learn.
In terms of land, people and food, these elements cannot be looked at in isolation. The entire planet is involved in this. Today, we are handing the planet on to the next generation in a more dangerous state than that in which we found it. We inherited a world and are making it more dangerous to hand over to our children â€“ what a shame. The real principle should be that each generation commits to handing over our planet safer than they found it. If we continue to do that, the world will be a very safe place.
The second principle that we have to follow as individuals is that our lifestyle should not harm anyone or take away their right to enjoy their lifestyle. If we follow that principle, the planet will be safe. If I buy something, I need to ensure that, by using this, I am not harming anybody on the planet. Products could carry green, yellow or red marks, with green meaning â€˜safeâ€™ and yellow and red meaning â€˜unsureâ€™ and â€˜harmfulâ€™. The aim should be that, by living our lives, we do not impact on somebody elseâ€™s in a negative way. That is what the world is doing to Bangladesh today. We are the frontline people soon to be eliminated if sea levels continue rising and our ecology continues changing, so we have to be very careful in terms of how we live on this planet
My question has to with the sort of loans that you provide. You also mentioned scholarships, which sound very tantalising. What sort of measures do you have in place to ensure that the needy receive them, rather than the middle class people who are aware that these things are in place?
Thank you very much for a fascinating lecture. You mentioned how you have helped women in Bangladesh to gain their freedom and that you have made them understand the need for education. I wondered if there was anything that anyone could do in a similar vein to help women in Afghanistan and their children to go to school and become educated, and to protect them from their men folk.
Nigel Kershaw, Chairman, The Big Issue
It has been an honour to work with you over the last 15 years. We have launched an investment fund, which is not about being given philanthropic money and asking for more next year. It is not about maximisation of profit with negative social screens. However, we are finding that we have to offer investors a return. We use the â€˜andâ€™ word: â€˜We are going to offer you a financial and social return.â€™ I do not think that it is different, but I think there might be different climates whereby, if we are attracting capital to invest in social change, to dismantle poverty and to treat poverty as a human rights abuse, we need to attract investors in. There may be some differences if you are just offering the capital, whereas we are also trying to offer some enticement. The fact that we rob ourselves on the way to the bank and reinvest it in social business is the same thing.
The scholarships are within Grameen Bank and are given to the poorest families. They are given to the children of Grameen borrowers, who are the poorest women in the country. We make an extra effort to ensure that none but the poorest receive them. There is no scope for anyone else to receive them.
In terms of the question on Afghanistan, this type of programme is doable anywhere. There are microcredit programmes in Afghanistan and Saudi Arabia. It is simply a question of doing it. Just because someone is doing it does not mean that I no longer have to. There are about 1,000 microcredit programmes in Bangladesh alone.
On the fund, the returns differ to what I have been proposing. I want to decouple completely from the idea of profit. Today, we all wear profit-maximising glasses, so we see the world with profit-maximising eyes. It looks like a very different world. I take off these glasses and put on my social business glasses, and I see the world completely differently. You need two pairs of glasses. Once you do this, there are all kinds of intermediate solutions. To me, the idea of profit does not exist. It is all about changing the world. It is about selflessness. If you are selfless, nothing should come to you; it is all about others. I am not saying that your idea is a bad one, but social business is a different idea.
Matt Kepple, Chair, Commission for Youth Social Enterprise
I really liked how, as a student at university, you saw that there was a need. Many of my friends studied international development and are finding it hard to find jobs within that sector. Is there an opportunity to use your story to inspire international development students to undergo â€˜boot campâ€™ training in basic social entrepreneurship and then to go around the world to identify local social problems and make change? That is an idea that I had, so it would be good to see how other people in the room could create a legacy that moves that forward.
One of the criticisms that have been levelled at microfinance is that it is not reaching the poorest people. You say that Grameen reaches the poorest, but within that there is a higher and lower class of poverty, so what is Grameen Bank doing to reach the poorest in these societies?
We have just seen the conventional financial institutions collapse dramatically. At the moment, they will be putting a lot of effort into simply trying to fix things and return to business as usual. The concept I have in mind is that, as many of them have been bailed out with the public purse, they should be required to set aside, let us say, 5% of the bailout value that would require the bank, on a commercial basis and deploying all of their technical banking expertise, to find and invest in neighbourhood-level vehicles that could be a coalition of local resident, business and financial communities and the bank at the regional and national level. The enterprise would have to be organised and governed at the local level by that coalition. Would it be viable to require banks that have been bailed out by public money to demonstrate their willingness to put effort into developing new ways of investing and lending into neighbourhoods?
In terms of the first question, I have always encouraged students to use their creativity to address one social problem and create a social business out of it. How do you address this as a social business, such as poverty, employment, housing or the environment? These are large-scale issues, but underneath there are tiny pieces. You can take one of these pieces and say, â€˜I designed this and, if I do it this way, it will be a business and, at the same time, its impact will be reduced.â€™ If it is around the environment, it might be to do with renewable energy and bringing it to the people in a way that is affordable and attractive. The use of renewable energy will grow so that people no longer need to use fossil fuels. You could also create a social business and take 50 people out of welfare in doing so.
If you can do that, you have really invented something. The whole problem of welfare will be resolved, because you will have designed the seed. If, with your friends, you do this and post your design on a website, others might say that theirs is a better design. This will lead to interactions and better designs, at which point someone will say, â€˜This looks good. How much money are you talking about and how long will you need to demonstrate it?â€™ You will work it out and the investment will come. That is why the creation of a social business fund becomes important. You do not need to go to business school to demonstrate that you can do that; anyone can do it. All it needs is a creative mind, and this is the right time to design, because you are in the best phase of your creativity. I would invite you to create those designs and share them, so that we can move into the implementation phase. If you can develop a prototype, you will have made a great contribution.
In terms of reaching the poorest, we go to great lengths to ensure that anyone entering Grameen Bank is among the poorest people. We have a checklist that they need to fulfil. We look for people whose house has a leaky roof, not a solid one; whose house has just one room, not more than one; and who sleep on the floor, not in a bed. There are endless criteria to fulfil before the person is admitted as a Grameen Bank member, so that we can reach the very poorest.
We also give loans to beggars. When we started 40 years ago, we thought we would have 3,000-4,000 beggars in our programme; now, we have 120,000. It is a very simple idea. We ask beggars that, as they go from house to house begging for food or money, they carry some merchandise with them, so that people have an option to give them something for nothing, or to buy something from them, or to do both. We give them a loan, which is typically $15. Today, more than 16,000 beggars have stopped begging completely, because they became very successful at selling. The remaining $100,000 are â€˜part-timeâ€™ beggars, mixing begging and selling at different times. They know which houses are good for begging and which for selling. They have never been to business school, but they understand market segmentation. It is just a question of your intention.
The repayment terms are very simple. We told them from the outset that no Grameen Bank rules apply to them, so nobody will touch them. They make the rules on an individual basis. We follow their rules. The only stipulation is that, since we have given them a loan, they have to pay us back, although there is no time limit. There is no chance of them becoming a defaulter in their lifetime, and there is no interest on the loan. Some of them have paid us back and taken out two, three or even four further loans.
With regard to the question on bailouts, companies and institutions receiving these bailouts participated in creating the problem. However, the victims of this problem receive nothing. While I am not objecting to the bailout, there should be a separate bailout package for the victims, to be used on microcredit and social business â€“ things that are never done. While these bailout packages are created all over the world, countries should use their overseas aid on microfinance. Instead of Department for International Development (DfID) money being given as grants, it could take the shape of a social business fund, allowing people to design social businesses and the DfID to invest in them. For every 10 funded, three or four might become very successful, allowing the programme to be expanded. The USA has a Millennium Challenge Fund that has not even been used â€“ billions of dollars are sitting around. Why not convert that into a social business fund so that people can come up with creative social ideas and use this money? I agree completely that creating microfinance and social business funds could and should be done.
Vote of Thanks
Professor Yunus, when the British Council was founded 75 years ago, it was against the background of a world in recession, global unemployment, economic nationalism and national isolationism â€“ all those rather depressing signs of what might also be part of our world now. We were founded with the belief that the exchange of knowledge and ideas was the way in which the world comes out of those rather depressing problems. Today, you have given us an exchange not just of knowledge and ideas, but an exchange of almost limitless humanity, extraordinary optimism and that sense that, at a time of crisis, it is a time to rebuild and the 21st century has an opportunity to be a century of celebration. The thought came to my mind that, maybe, when our successors in 75 yearsâ€™ time are sitting here listening to lectures in the crisis of their time, it will not be a crisis of an excess of greed, but rather the crisis of an excess of selflessness.
Thank you all for making the effort for coming here today and for the questions that you have asked. Thank you, Alison, for chairing the questions and answers. I would also like to thank the University of Reading for their generosity in supporting this lecture. Above all, however, Professor Yunus, I would like to thank you for not just giving us a framework for a better future, but a promise of a better future. Thank you very much indeed.
This Transcript was produced by Ubiqus