'Social business' plan aims to create social change

By 
  • September 8, 2010
YunasOTTAWA - The Nobel prize-winning pioneer of the micro-credit movement is developing a concept he calls “social business” to lift people out of poverty and perhaps help revitalize Haiti.

Mohammad Yunus, founder of the Grameen Bank in Bangladesh, said his social business model could transform Haiti, still reeling from its devastating earthquake, by creating a problem-solving environment that addresses deep-rooted issues such as employment and housing.

Speaking at an event Sept. 2  sponsored by the International Development Research Centre, Yunus said the more money he saw pouring into Haiti, “the more I got worried.” He is concerned because, he said, Haiti lacks the infrastructure to ensure donations are used wisely to address pressing social needs such as employment and housing.

He wants donors to allocate 10 per cent of contributions to a social business fund that will pursue what he calls a problem-solving, rather than a profit-making, model for social change.

“You won’t make any money at it, but you solve the problem,” he said. If money is donated, “the money never comes back,” he said.  “If you create social business, the money goes out, it does the job and it comes back.”

Yunus and the Grameen Bank won the 2006 Nobel Peace Prize in recognition of the dramatic impact that their micro-credit movement has had in empowering women, unleashing their entrepreneurial skills and helping lift people out of poverty. He founded the bank in 1983 to provide a way for the poor, who were excluded from normal banks because they could not read contracts or provide collateral, to borrow small amounts of money on trust. Repayment of the small loans opened doors to larger loans.

“The whole thing relies on the money coming back,” he said. “Otherwise it is not banking.”

The bank now serves 8.3 million borrowers, mostly women.  It’s owned by the women, who started out with initial loans of $30 or $40. Now some of them sit on the board.

It was an amazing experience for women who have never handled money to have that $30 in their hands, he said. They were often in tears, not believing it was true, but it awakened a desire inside them to work very hard to attain a better life and to make sure they pay every penny back, he said.

This had a powerful impact on women who had many fears in their minds based on their historical treatment, he said.  They had already been told, “you are no good, you brought misery to the family, you should have been a boy,” he said.

The transformation was not overnight, he said.  “It takes time for a person to realize they can do something.”

“Women are so different in Bangladesh than they were 25 years ago,” he said, noting the birthrate has dropped sharply to 1.4 children per woman, one of the lowest in South Asia. The massive use of micro-credit has been part of this transformation, he said, because of how it has empowered women.

The Grameen model works not only in poor countries, but rich ones. The micro-credit movement has spread even to the United States, with several bank branches in the boroughs of New York City serving women who could not get ordinary credit. They have nearly 5,000 borrowers, Yunus said.

Micro-credit banking by-passes the exploitation of the loan sharks and the payday lending services that charge the poor exorbitant interest rates. He noted two-thirds of the world can not access loans through normal banks.

“We pride ourselves on the beautiful banking system that we have,” he said. “What kind is it if people have to go to loan sharks or pawn shops?”

He said a sign of success for his movement will be the demise of pawn shops and payday loans.

“Poverty is not created by the poor people,” Yunus said. “It is artificially imposed on them.”

He blasted the profit-making business model as well as the destructive effects of welfare.

“Human beings are not robots,” he said, noting that human beings are not only selfish, money-making machines. While they can be selfish, they can also be selfless, he stressed.

He encouraged people to think in new ways, to become entrepreneurs instead of slaves to the concept of “slaving for shareholders.”

The Canadian Catholic Organization for Development and Peace (CCODP) also supports the use of micro-credit, but usually within a project that is doing other things as well, said CCODP communications officer Francois Gloutnay in an interview.

A project for the establishment of some kind of co-operative might include running workshops, helping them get their product to market and a micro-credit component to help them get started, Gloutnay said.

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