“Creating a world without Poverty” is yet another attempt by Muhammad Yunus to reinforce his vision of a world sans the poor. In his debut bestseller he has outlined the ingredients of his innovative microcredit programme & how it had helped over 100 million poor families. Capitalism & free markets have done little to alleviate the woes of the hitherto marginalised sections of the population. Yunus reiterates this with facts & figures with the precision expected of a seasoned economist. Sample this, 94% of the world income goes to 40 %of world population, while the other 60% live with only 6% of the world income. (p.3).He is extremely critical of the elitist approach to free trade & the dominance of few countries in the borderless trading environment. Not one to mince his words, Yunus launches a virulent attack on the efficacy & credibility of multilateral organizations like World Bank, IMF & IFC. He disapproves of the mode of functioning of various bilateral & multilateral organizations & briefly illustrates his ideas for overhauling them.
The book written by Nobel Laureate Mohd Yunus, founder of Grameen Bank speaks on the much forgotten topic of contemporary significance, social business and future of capitalism and the kind of realignment that is desired to make the process more effective and its benefits more distributive to the poor of the world.
The narrative begins with Dr. Yunus meeting Mr Frank Riboud, the chairman and CEO of Group Danone. This meeting was about to be a watershed moment slated to affect the lives of millions. In this meeting Dr Yunus proposed to Mr Riboud a new company, a joint venture between Danone and Grameen and named it as Grameen Danone. He proposed it as a social business exercise. The notion of social responsibility was still a nascent concept in those times and the proposal was indeed a bold one. The broader agenda was to improve the nutritional status of poor families in Bangladesh. The impetus for future broad reaching change was arrived at Danone committing to the project, making it the world’s very first consciously designed multinational social business.
The narrative moves almost like a ballerina slowly unfurling the hidden nuances and each and every step looking in perfect synchrony. Reflecting over his experience with microcredit in Bangladesh the inspiration for which was received in a manner that can be best described as serendipitous. This was an event that put in perspective the flaws that current economic models and studies had, making him all the more determined to evolve a model that would be able to include the poor as well.
THE EVOLUTION OF THE GRAMEEN BANK…
The manner in which he went ahead could be put across in the following manner:
- He helped these farmers by paying their debt from his own pocket.
- He then tried to persuade the bank located on university campus to lend to the poor.
- The banks refused to do so by saying that the poor were not credit-worthy.
- They had no credit histories and no collateral to offer and because of their illiteracy they could not even fill necessary paperwork.
- Then Dr Yunus offered too become a guarantor for the loans to the poor, that is, bank would lend money to him and he on his own would lend the money to the poor. The result of this approach was that the poor lend back the loans every time.
The pinnacle moment arrived when the managing director of Bangladesh krishi bank stepped forward to promote the idea of lending to the poor. However field level officers were sceptical of the idea of lending to the poor and the mental block of viewing poor people as unbankable and unreliable appeared as an impediment. However Dr. Younus still felt that he had atleast initiated a degree of mindset change and all he now needed was some good experiences which if documented adequately would propel interest in this sector by the bigger formal players.
Seeing no prospect of changing the rules of banks Dr Younus decided to create a separate bank for the poor, one that would give loans without collateral to offer, without requiring a credit history, without any legal instruments.
After making further efforts, in 1983, the bank for the poor was born within the framework of a new law created especially for the purpose. The bank was named as Grameen Bank.
GRAMEEN BANK DEFIES ALL….
Grameen Bank was expected by many that it would not sustain for long. They believed that it would soon explode and disappear. But not only Grameen Bank survived but it also expanded and continued to make profit just like any other bank. Besides they also began to offer housing loan in 1984. The lending program of Grameen Bank also promotes a strong social agenda.
With the evolving system GrameenII came to existence, which was intended to further optimise service delivery to the poor and reduce overheads in a manner that access improves.
ISSUES WITH MICROFINANCE:
Dr. Younus in the course of his narrative does delve on the crucial challenges that microfinance faces and the measures that need to be put in place so that the only affordable source of credit to the poor doesn’t get severed.
Professor younus believes that market mechanisms do hold the key to a lot many problems that we are faced with. He believes in using the efficiency factor of the markets to iron out the inconsistencies in the sector. He provides market based solutions to the funding problem.
- One of them is that if an international or domestic organization can act as a guarantor, local banks can provide loan to microfinance companies.
- Another solution is that if MFIs can start accepting saving deposits.
Dr Yunus gives some suggestions to improve the condition of microcredit faculties.
- He speaks of increasing the aid volume in microfinance to Bangladesh to reach out to a bigger mass.
- He also says that each country should have a number of independent, nongovernmental wholesale funds.
- According to him conventional banks can also run microcredit programs if they have trained people, a methodology, and a management structure that will do the job. This can be done by forming a microcredit subsidiary. This is something that we are beginning to witness off late in India as well.
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Capitalism according to Younus is a half-developed structure & the multidimensional nature of human beings needs to be factored into it. He talks about developing three models within this structure i.e.
- Companies focussing on social benefits rather than financial rewards
- Companies focussing on profits but owned by disadvantaged or poor
- A Hybrid Model
Poverty according to him is the single biggest threat to world peace. According to him the capacity of poor people are never recognised. Grameen bank has also come up with a 10 point system that can be used to define if an individual has crossed the poverty line. Given the quantum of poor people, prioritisation of beneficiaries becomes of utmost importance.
An interesting point that is made here is that one needs to look at the poor through the asset base point of view and not the skill set lens. This is critical as the poor have skills that if bettered and given adequate linkage could work wonders, rather wasting time on imparting new skills, their domain expertise needs to be tapped into and developed. He emphasises on the need to establish good governance and reduction in the corruption level at all government levels.
THE DANONE EXPERIENCE…
The Grameen Danone joint venture was launched in March 2006 by Franck Riboud in Dhaka. The MOU indicated that the Grameen Danone would be a social business that would focus on maximising social benefit rather than financial profit. It also specified how they intended to help the poor. To sum up .The strategy was defined as “unique proximity business model”. The MOU combined social aspirations with practical business details in a way that captures the power of social business.
The main objective of Grameen Danone was to reach malnourished children with fortified yogurt. The strategy to reach out was clear and meant marketing a higher priced yogurt for more affluent consumers. Profit from these sales could help subsidise expansion to benefit the poor.
The objective was financial/operational efficiency to maximise social benefit. The idea was to make tasty and nutritious food and serve the community. Milk was sourced from local suppliers who had bought their first cows with a small loan from Grameen bank. These people would act both as supplier as well as customers for them. They involved the Grameen ladies in the distribution system that was to act as a key to the sales program for the yogurt produced by Grameen Danone.
THE CRITICAL QUESTIONS…
The questions that plague future entrepreneurs has been raised by the nobel laureate
- “where will the money for social business come from”?
- “Who will invest in the business which has social motive”?
The rationale that Professor Younus advances is that Investing in a social business at least make sense because when you invest your money in social business you get your money back and retain the ownership of a company that supports itself through earned income.
He actually believes that in time, more institutions to support the burgeoning universe of social business will emerge. A full fledge social stock market dedicated to trading social business share will be needed. There will be a social Dow Jones Index, reflecting the share value of some of the world’s largest, most important and most broadly representative social businesses.
ROLE OF NEW IT…
On the role that IT could play in taking resources to the masses, Younus is optimistic. The New IT cannot be controlled by a single owner or authority. It will help in giving dignity and self reliance to poor women. The science that however comes in has to adopt a strong bottom up model in the manner of its platform and design styles.
He talks about opening an organization which will be named as IT Solutions to End Poverty (ISEP). ISEP will generate ready to apply social –business ideas for using IT for poor, it could develop prototype for IT infrastructure and information system, it could study the interface between the informational needs of the poor and existing IT capabilities
PARTING SHOTS….
The book in its concluding part speaks about the vision that Dr. Younus has for the poor and marginalised of the world and how it is all about giving access to the poor that would be the panacea to the ills of the world.
He urges on redistribution as a strategy along with business accepting the fact that they cannot go on with the current strategy of unlimited profit maximisation as the process, the means and the end state.
He draws from his experience in Bangladesh which despite having very little emissions is currently at the receiving end of the global warming menace. With sea levels rising what needs to be done is strict enforcement of regulations and belt tightening rather waste time on more meaningless conferences, the fact that Bangladesh is sinking is proof enough to develop consensus. the associated fact is that with high population densities, any development intervention shall be successful only when these inter alia issues get addressed, else all interventions and financial aids shall fall flat on their faces.
Prof Younus does criticise the existing model of capitalism with its obsession with monetary profits, utter disregard for the interests of the poor and free markets that operate sans regulation. nevertheless Prof Younus is a believer in the goodness of the human spirit and believes that human beings don’t differ in capacity, it is all about access and a chance to prove oneself, once that is done the solution to global poverty can be met and the process of consigning it to the museums can be initiated.
He believes that the poor resemble the bonsai, even the best seed planted in a flower pot would grow as much as the space it gets….given a chance the poor can prove to be as competitive as the ‘riche’ of the world….its time we move ahead and truly globalise the cause of the poor and reach out all out…..
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