Muhammad Yunus: Nobel Laureate Who Pioneered Social Business
By Mohammad Yacoob
Los Angeles, CA
A transformation of the global economy is desperately needed if we want to continue to serve the needs of all humanity. This can be done by combining the talent of the young and the old, to bring peace and prosperity to the world. Dr Muhammad Yunus, a renowned, a visionary economist, closely observed as the world economic system continued to exploit the masses. The existing economic order was designed to serve the rich, while the lower strata of society were not able to enjoy the same economic opportunities. As an economist, he could not resist himself from looking for answers. He saw how the current economic system places roadblocks in the path of the poor every step of the way.
DrYunus studied the economic system and exposed the shortcomings of the traditional banking system which denies its services to those who need it the most. He formulated a plan to tackle interrelated problems faced by the poor. He identified them: Lack of institutional services, lack of clean drinking water and sanitary facilities, lack of health care, inadequate education, substandard housing, no access to energy, neglect in old age, and many more. He looked at the conditions of low-income people in the world’s richest nations and discovered that they are also suffering from many similar problems.
He seriously examined the rising tide of wealth concentration which is responsible for rising inequality and ever-expanding gap in individual wealth, a condition that is getting worse with time.
The rise of inequality has led to social unrest, political polarization, and growing tension among groups. Muhammad Yunus felt that a fundamental change is necessary in handling economic problems and to challenge the ways it promotes inequality. He discussed the economic system and the problems it creates with different people who felt disinherited and without prospects for the future. They were becoming increasingly disenchanted and angry.
Searching for the Root Cause
Although many countries around the world have enjoyed economic success through economic reforms and have experienced rapid economic growth, some countries still have millions and millions of people mired in poverty - a condition that is widening the divide between the haves and the have-nots. DrYunus analyzed the social media activity and the tsunami of data about widening inequality and income gap, and found that the free markets and the ideology of free enterprise are responsible for the divide. They have fooled so many people for so long and have failed and failed miserably, even though we are living in a very prosperous age unlike any other in history. It's an age when society has enormous economic resources, unprecedented technological tools, freedom and cooperation than humans ever experienced before. He saw these markets in their current form are exacerbating world problems including poverty, disease, pollution, crime, and inequality. In the absence of proper oversight and guidelines, Muhammad Yunus did perceive that these free markets are highly destructive.
Yunus genuinely examined the present economic situation in the world, and perpetually and actively engaged in acquiring awareness and knowledge about the present conditions in his home country Bangladesh. He envisioned a new course that he felt is needed to be charted to a better future for millions of people in Bangladesh. His first attempt focused on the present economic system and its failures and a need to create a new civilization not only for Bangladesh but for the entire world to bring an end to income inequality. He strongly felt that by energizing and empowering the young people of the world, and by unleashing the powers of technology for the benefit of mankind, he could create a new civilization capable of liberating millions of people from the clutches of those controlling the present economic system.
A New Vision
DrYunus says that global trade is like a hundred-lane highway, with no stoplights, speed limit, size restrictions, or even lane markers, making it easier for the world’s most powerful economies using giant trucks to take over the highway. He strongly feels that the global free market is Financial Imperialism. He challenges the so-called free-market fundamentalists who argue that the idea of a business without profit has no place in the existing ideology of capitalism. He further analyzed the contention by capitalists who insist that all businesses must make maximum profit, treating this as an axiomatic truth. This assumption manifests in the creation of a world that ignores the multi-nature of human beings.
He started thinking about ways to create a new civilization based on a new type of business that pursues goals other than making personal profit, a business that is totally dedicated to solving social and environment problems. He concluded that by setting up a Social Business to recognize the multidimensional nature of human beings and pursuing specific social goals, it would help solve the problem.
Being a witness to a famine and the sufferings of the people of Bangladesh, he realized that he could not remain a spectator and began to search for answers to mitigate their sufferings. His first-hand observance of the money lending operation and the extremely harsh conditions imposed on borrowers and their treatment proved it was equivalent to slavery. He studied the banking system and discovered that not only banks but also various types of other financial institutions are intermediary instruments through which wealth concentration occurs, making the rich richer and allowing the poor and needy to suffer. DrYunus discovered that banking institutions believed that the poor are not credit-worthy, and made it difficult for them to obtain loans. It disturbed him and touched him in a deeply personal way. He established the Grameen Bank (Village Bank) after formulating the Social Business program and proved that poor people are highly creditworthy and can be trusted to repay their loans.
The Grameen Bank was the direct result of redesigning the present borrowing system and economic reinvention. The bank operates exclusively in the villages of Bangladesh. Seeing that the conventional banks serve mostly men, he created the bank to serve women, making them entrepreneurs and family bread earners. The bank is owned by the poor women who are its customers; poor women make up its board of directors and decide its policies.
Innovative Steps
DrYunus founded the bank, and created the financial system known as micro-credit system for the people of Bangladesh. He designed, planned, and formulated the micro-credit system that has “unleashed the entrepreneur capabilities of over 300 million poor people around the world, helping to beak the chain of poverty and exploitation that has enslaved them.” In Bangladesh, he introduced a new program of offering new-entrepreneur loans from Grameen Bank to support their efforts to create businesses. He called this as nobinudyokta which means “new entrepreneurs” in the Bangla language. The Yunus Center developed the system for operating the Nobin program that included the basic methodology, reporting formats, daily monitoring system, accounting procedures, and identification and assessment procedures. His idea was to make the youth realize that they are not job seekers but job creators. His social business projects were presented to young people who understood community needs and preferences and were ready to start small, ground-up companies. Some of the companies funded through the nobin program include a widow receiving fund to expand her late husband’s tailoring business; an expert at plant propagation to launch his own nursery business; a skilled weaver of jamdani, a fine muslin sari textile, to expand her home-based company; a young woman, who was physically abused by her husband, received funds for a business making palm-leaf hand fans; an experienced rice mill operator got funds to create his own rice mill business; and a trained beautician received funding to expand her business. Each project received funding in the range of US $1,000 to US $3,000. This gave these social business creators a first taste of the excitement of entrepreneurship and independence while providing useful goods or services to the community.
The world is a witness to the Social Business as to how it puts human qualities and capabilities to work and enthusiastically encourages for the blossoming of these qualities, helping those working hard to transform from one-dimensional human beings to multi-dimensional human beings.
Muhammad Yunus also introduced a new program of providing education loans for higher education to children from poor village families. He later reported that thousands of students who took education loans have become graduates, doctors, engineers, and professionals.
The concept of social business has gone from an obscure idea into a worldwide movement. In universities, the social business concept is being studied and taught and on top of that, many universities are opening social business centers. Yunus has created funds to provide seed money to college social business centers to help would-be entrepreneurs turn their dreams into realities.
As of 2016, Grameen Bank has lent out over $205 billion a year to 9 million poor women based on trust only with an amazing repayment rate of 98.96%. At the same time, micro-credit banks running on the same principles are operating successfully in many other countries, including the United States. Grameen America has nineteen branches in twelve US cities with 86,000 borrowers, all women, who receive business startup loans around $1,000 and the repayment rate is 99%!
Muhammad Yunus has proved that the Real Man is a better and very different creature than Capitalist Man. Muhammad Yunus is a courageous man who has taken his concept and implemented it in the very heart of the Capitalist Man’s country.
The Yunus Social Business Centers are very active in the poorest part of Europe especially the Balkan states including Slovenia, Croatia, Bosnia and Herzegovina, Macedonia, Montenegro, and Serbia to put an end to unemployment, poverty, environmental degradation, declining social institutions and wars following the breakup of Yugoslavia.
Yunus raised a question: Does the world have a destination? If not, should it? He provided an example and said that ‘a technology genius always has two basic options. For example, he can dedicate his work to creating a medical breakthrough that will save thousands of lives – or he can develop an app that will let people amuse themselves. In most cases, the technology genius will be pushed to develop a product that has the potential to create millions of dollars in profits. Profit is the North Star of conventional economics. Lacking a collective destination, the only highway sign we follow is the North Star for profit. We need to lead the world towards a collective desired destination.’ Then he went ahead and created organizations and developed Sustainable Development Goals (SDGs) to define an immediate destination. Many people and institutions have made commitments to travel in the direction of SDGs and Millennium Development Goals (MDG).
Some of the basic underlying causes of the dysfunctional economic system which decrees that any product that can’t be sold for a price established at the industry-average profit level must instead be discarded or destroyed, should be removed and the economic system should be made more functional by introducing the workable solutions of the social business. He designed businesses as income-generating companies, formulated plans to ensure that the products and services they provide reach more and more poor people on an ongoing basis.
Global Impact
Many international companies in several countries expressed the desire to adopt the social business concept and became eager to seek Muhammad Yunus’ advice in launching a joint venture using the Muhammad Yunus business model. He found that the assumptions and attitudes that are instilled in young people during their college studies are the core problems of the existing economic system including the one saying that a job is your destiny. He went ahead and envisioned a new civilization that in the long process brings about a change, recognizes, honors and empowers human desires and abilities.
To improve the quality of life of human beings he said the contributions and efforts of non-profit organizations are helping but not much, and he also proved those people wrong who assumed that government can solve social problems. Muhammad Yunus translated his vision into reality through his actions for the benefit of human beings, improved lives of millions of people in his native Bangladesh, inspired countless young people to devote themselves to social causes all over the world, and provided tools to the poor people that gave them the power to help themselves.
[Mohammad Yacoob is a retired industrial engineer and engineering proposals analyst who lives in Los Angeles, California]
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