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

What brings you to Kathmandu?

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

Are you talking about non-profit business?

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

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

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

Seems like it could be applied to Nepal as well?

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

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

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

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

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

Are big banks interested in microcredit?

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

How often do the microcredit businesses graduate to macro businesses?

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

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

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

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

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

Have you considered continuing with politics?

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

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

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

Why is it not a good idea?

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

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

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

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

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

How do you go from this to building trust?

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


Right (laughs). That’s very unfortunate.

Source: The Kathmandu Post

Posted on: 2012-12-31