Our economic framework is wrong, it must change

Your last book, Creating a World Without Poverty, fuelled a lot of curiosity about social business. How is the response to the new book, Building Social Business, which elaborates the concept?

The first book generated a lot of interest and curiosity. It came out when people were not prepared for the concept of social business. But people were positive. Since then, we have set up a few more social businesses in Bangladesh and many people have come forward to engage with us. People are more aware now. The response to the new book is much better and there is a lot of interest from people because they are not satisfied with the existing economic system and are looking for alternatives. They want change.

Though you are calling for a transformational change in the way businesses are conducted, you expect the initial capital for social businesses to come from sources like CSR budgets of mainstream businesses and charities. How sustainable is this?

Social business is, by definition, sustainable. If each (funding) business is sustainable, then there is no reason why social business as a concept can’t be sustainable. CSR is a part of corporate charity. Charities in the US alone earn annual revenues of more than $1 trillion. Besides, there is the donor amount of $60 billion, which goes around in foreign aid. Social businesses don’t need all this money right now. But potentially this money can be diverted to social businesses. Even if a fraction of this money is invested in social businesses, it can make a big difference. The recipient countries would benefit. The donor too would be happy because the money would be used in a transparent way and it will be recycled. I don’t think money for social businesses should be a problem.

You have succeeded in setting up many companies as social businesses because today you are a big brand yourself. I presume aspiring social businesspersons face the same stumbling blocks that prompted you to set up Grameen Bank in the seventies. So, how do they get going?

I agree. People know me. They find it easier to trust me and enter into partnerships with us. While others would not find it as easy as us, at the same time, they would not find it as difficult as we did it when we had started out.

Your presence ranges from Bangladesh to America. You are also expanding from Europe to Africa. Why have you not really focused on India?

We are making progress now. I have held talks with some people in India in recent times. A couple of social investment funds are being set up in Mumbai. Talks of setting up a social stock market in Mumbai are also on. One will hear an announcement this year. Once India gets going, it will do so in a big way and give a fillip to the social business movement.

There are already a number of social funds all over the world, but they have remained confined to select pockets. How are the new social investment funds in India going to be different?

There is a difference between existing “social” funds and the ones I am talking about. The existing so-called social funds are like any other fund. They don’t give up the objective of making money for their investors. The social funds I am talking about are not promising the investors any monetary return at all. They are promising social impact that will be made by these investments. Investors would like the idea of social business and invest in them for solving social problems.

You have been reported to be against SKS Microfinance going in for an IPO. What is the alternative route for microfinance institutions to reach more people in a short span of time and enable them to come out of poverty?

SKS presents a case of a mission drift in microfinance. When you use microcredit to make profits for investors, you are following in the footsteps of loan sharks. That’s why I am opposing the SKS IPO. The solution is not in bringing IPOs to the market to raise money, but in giving them a legal licence to take deposits and use that money for lending. We lend more than $1 billion a year. All our money comes from our deposits.

Your journey from microcredit to social businesses has been a long one. What are the other missing pieces in your big picture of a sustainable social business ecosystem?

When we started to talk about microcredit, it sounded outlandish to most people. But the concept of social business did not sound outlandish to most people. There is more acceptance of social business than in the case of microfinance. But these are only pieces in a larger picture. There are other issues vying for attention. There is a financial crisis. There is a food crisis. There is an environmental crisis. There is an energy crisis. There is also a social crisis, amongst others. It is all because we have a wrong architecture of economic framework. We need to build the architecture in a different way. That is why I am trying to bring my ideas of conceptual redesigning. Others can bring their ideas. But the present architecture must change. There is no escape from this.

http://www.financialexpress.com/news/our-economic-framework-is-wrong-it-must-change/633705/0