The Bangladeshi economist has helped millions by pioneering microcredit. Now he has a new idea—social business—which he believes can eliminate world povertyby Mark Hannam / April 27, 2008 / Leave a comment
Muhammad Yunus is a modest man with much to be immodest about. In the mid-1970s, he started providing small loans to the poor of Bangladesh and in 1983 he established a bank, which he called Grameen (“of the village” in Bengali). Grameen flourished, and now employs 25,000 people. Every year it lends over $500m in small loans, primarily to women. This “microcredit” model has been copied all over the developing world, and in 2006 Yunus and Grameen Bank were jointly awarded the Nobel peace prize.
Not content with setting up one business, Yunus has created a series of companies under the Grameen brand name to provide cheap goods and services to the poor: mobile phones, student loans, knitwear, a textile mill, an eye clinic and, most recently, a joint venture with the French company Danone to sell low-cost yoghurt to rural children. Yunus has also written a manifesto for his style of entrepreneurship, which he calls “social business.” This, he claims, will make it possible to put an end to world poverty, and on a shorter timescale than most people think achievable. It is, then, a very big idea, even if he is only partly right about the scale of the benefits involved.
In February, Yunus came to London to promote his new book Creating a World Without Poverty (PublicAffairs). I met him one cold morning, and we spent an hour talking about the book’s central idea: the prospects for social business—businesses whose primary goal is to help the poor. As befits a former academic, Yunus’s style of advocacy is patient and clear.
Yunus doubts the ability of governments, multinationals, charities and NGOs to achieve radical and sustainable improvements to the living standards of the poor, and instead looks to business. Yunus titled an earlier book, about Grameen Bank, Banker to the Poor; Yunus is now a business leader for the poor.
Social businesses, as Yunus describes them, make profits but do not distribute them. Investors get their money back but no more: no dividends or capital gains. All profits are reinvested in expanding the business, developing products or lowering costs. This is capitalism minus tooth and claw. The point is not to make the rich richer, but to allow the business to become bigger and thereby make a larger impact on the world; in Yunus’s words, to allow the individuals who work for the business “to leave a…