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Muhammad Yunus Talks to Khabar

By: Alka Roy Email By: Alka Roy
October 2010
Muhammad Yunus Talks to Khabar Muhammad Yunus, in his signature handloom kurta and vest, is an unassuming and slight man with a disarming smile. He is not only an economist, an entrepreneur, a banker, a Fulbright scholar and a recipient of the Noble Peace Prize for his work with microcredit and the Grameen Bank, but he is also a very good storyteller.

He will tell you about how a loan of 27 dollars in 1976 expanded into an enterprise that has dispersed over 9.54 billion dollars with 8.29 billion borrowers who own 95 percent of the total equity of the bank, 97 percent of whom are women. And the recovery rate on these loans—97 percent.

But that is not all. In his latest book, Building Social Business, one compelling story follows another, making the case for the kinds of businesses he thinks we should be building. He calls them social businesses. They run on the same principles of profit and loss as other companies, but with one essential difference – the main objective of such a business is a social cause such as providing affordable healthcare, housing, nutrition, safe drinking water or renewable energy for the poor.

Prof. Yunus will tell you, with zeal, about his plan to eliminate poverty by 2050 and move it to museums. And then he will invite you to join him.

Winner of numerous awards and author of three major books, including Creating a World Without Poverty, Prof. Yunus (he has taught economics in Tennessee and Bangladesh) currently chairs the Yunus Center, which connects various Grameen and Grameen-inspired networks and companies around the world.

Prof. Yunus engages and excites people who are looking for alternatives to current business models—especially in today’s climate of collapsed banks and widespread predatory loans and mortgages—by giving them real-life examples of success. But he has also attracted critics who point out that though Prof. Yunus positions his ideas as radical, they are not quite radical. They cite that many of the social businesses are essentially subsidized by larger businesses and the increase in loans by the poor also demonstrates that they are stuck in a cycle of borrowing.

But what cannot be denied is that Muhammad Yunus has brought the debate around poverty to the mainstream in a unique way. He also speaks not as much about charity as about social responsibility and the need for solutions that include providing those who are poor access to financial means as well as an opportunity for active participation.

While Prof. Yunus was in Atlanta, he sat down with Khabar to talk about his ideas, his work, and his favorite topic, the social business.

When you were in the United States in the 1960s, were things harder because there was not as much integration in the South?

Vanderbilt University was integrated in 1964. Until then, it was a white school. And Nashville was very much racially divided. There was this small coffee shop right outside the campus that could accommodate 20 to 30 students, which was not integrated. Along with many other students I participated in demonstrations to integrate that. Being a Bangladeshi at that time, I was not considered black, and as a foreigner, I had access. But it was ridiculous that they wouldn’t let black people get in just to have a cup of coffee. From there, I also saw a lot of the [Civil Rights] movement started by Martin Luther King. I used to take trips from Nashville to Memphis to hear him speak. And when he was shot, there was such an explosion of anger throughout the whole country. And then there was the transition, and the laws for integration, and today, after all these years, a black president. That’s such a long journey.

These days, immigrants and Muslims have become targets of increased discrimination. As a Muslim, what has been your experience while traveling here?

When I show my passport, they look at the name and the moment you have a Muhammad in your name, you’re in trouble. So you go through special security and all that.

Even though you are a Nobel Prize winner?

When you have a Bangladeshi passport and a name that arouses their suspicion, you become a suspect. You go through all these things as you’re checking in—somebody’s looking at your passport and suddenly you’re politely taken out of the line for more questioning. My passport is a very special kind of passport because it’s very thick. I have many, many passports because the pages are full of lots of visa stamps. So anybody can see that this guy travels a lot.

Finally, the harassment became so much that the State Department had to pay attention to my case. They wrote down a whole sentence in my visa: This is Professor Yunus who has received a Noble Peace Prize.

When you spoke at Agnes Scott College last week, the hall was packed. People seem to be hanging onto your every word. What is it about you and your ideas that inspire people?

People are looking for something better to happen. They are disgusted with all the problems that have accumulated—poverty, health problems, children dying of malnutrition, maternal deaths, and unnecessary deaths caused by diseases that shouldn’t be there—environmental problems, food scarcity. When I speak, I don’t just talk about ideas but tell people what I’ve actually done, complete with examples. People can relate to that and feel that they can do it, too. I’m not demonstrating on the street with placards, but showing people that if I can do it, they can do it. If we get together, everything becomes more forceful, solutions become implementable, and problems get solved. I’m showing people that these are the problems I’m solving, and this is just the beginning.

And what inspires you to act?

The work itself is so exciting. When you can see that what you’re doing touches people’s lives. Families that we have been working with, their children are now going to colleges, studying mathematics, physics, economics, chemistry—subjects that any other young people are studying anywhere in the world. They are as intelligent as any other young people anywhere in the world. That poor, shy, skinny woman who was raising chickens, her kid is now a medical doctor. So the transition is not happening over a period of centuries but just in one generation.

You are always seen in a handloom kurta and vest. Would you say that you’re a modern-day Gandhi?

[Laughs] My attire came out of something I’m promoting. Our handloom products have a long history. But the handloom weavers of Bangladesh are very poor. When you talk of eliminating poverty, always the traditional answer is that poor people are poor because they have no skill. They say, teach them a skill and they can make a living. But the two million weavers of Bangladesh have the best skill in the world. Nobody can make these fabrics the way they make them, and yet they are poor because they cannot sell their product. So I created a company to market our handloom fabrics internationally. And when people see me wearing this, they ask me questions about it.

We had a fashion show in Paris with these fabrics. The models were young schoolgirls from Bangladesh. They absolutely impressed all the Parisians. I ask, why should these weavers be poor? Your secondhand, discarded clothes are sold in our markets in tons, not yards, and they’re so cheap that our handmade products cannot compete with them. When you go to the villages, you see an old, sickly-looking man plowing the field with a sickly cow, wearing a cheap foreign T-shirt, because he cannot afford the handloom clothes woven by his own people.

Women constitute 97 percent of Grameen Bank’s borrowers because you discovered that when women borrow they spend it on their families to a much greater degree then men. But if these women are already breaking their backs trying to take care of their family and the household, don’t you think that pushing them to take additional responsibility for the finances unduly burdens them?

Women were not able to show their talent because they were always under the command of men. So they couldn’t be themselves and were always busy pleasing men. When we started giving them finance, women gradually began to see that they could do things, too. It was a process of self-discovery. The women didn’t know they had any talent in the beginning. That’s why they were afraid to approach us. But once they begin, they blossom, and learn that they have all the qualities they need for success. And if those qualities impress the man, he changes, too. And a mutual respect begins. Their relationship changes for the better, because earlier she was just taking his orders, and now because of the mutual respect, there is a new closeness in the family.

Eventually, do you see a shift happening with men taking a more active role with household work?

Sure. Men will be impressed with women’s success, and will become more responsible for children, etc. And the children will grow up differently. The daughter will see the new, changed relationship between the father and the mother, and know that her own role as a wife when she marries will be more important. She will ask questions and not just obey.

Even though 97 percent of your borrowers are women, in your experience are there instances where the money is still controlled by a man in the house?

That’s possible, since these are the first winds of change. Change cannot be 100 percent right at the beginning. Sometimes, even when the woman is very strong-willed, she allows her husband some control because she doesn’t want any trouble in the family. So she goes about it very diplomatically. Women are very good diplomats.

The saying goes, money can’t buy happiness. Do you think we’re missing something if we focus on money and finance as the means to achieve social change?

I will not disagree with that. Money to just keep under lock and key is useless. But when you use it to bring happiness for others, you get much more from it. If you see that the life of even one family has changed because you did one small thing for them, it can bring you so much happiness. Credit is just one part of the whole thing. Credit is not the whole story. Credit comes only because these banks never give you the money if you’re poor. You have built a wall in front of them. So, they are pushed to the loan sharks. Their world is one of loan sharks and pawnshops. If you break that wall by giving them credit, they will do well. And we have demonstrated that it can work very well.

What you’re saying is that the money just serves as the means?

That’s on the microfinance level. I’m talking about a much broader idea, the social business. If you have the money, you can create a company, or the business, not for making money for yourself but to solve the problem.

Then financing is integrated to this vision of social business?

No, social business is the broader idea. Financing is one of those social businesses, one of thousands of social businesses. When someone is terribly sick, a cure for her disease is the most important thing for her. Money can’t do much.

How would you modify capitalism, which is essentially driven by selfishness?

Broaden it, so it can allow both selfishness and selflessness to coexist.

When you say the system needs change, why call it capitalism at all?

Because the same fundamental principal still remains intact in my system. All I’m saying is that something is missing, so fix it. You build a whole house but it doesn’t have windows and doors. I say, create some doors and windows. So, you are not destroying the building, but adding a piece which will make us more comfortable.

And how can we modify the system?

You say you have one business—the whole edifice is built on the basis of one business, to make money. I say no, have two businesses. It’s a two-wheeled thing. When it’s one-wheeled, it’s wobbly, and doesn’t work. If you have a two-wheeled thing, there’s a balance. With one, you accumulate [money], and with the other, you use the money to solve the problems that you have created along the way because you created a problem in doing business the wrong way. You ask yourself why and how you’re creating the problems, and you go back to fix them again. And then you’ll find a way of doing it right.

During your lecture, you talked about the social business venture with the French dairy giant Danone (Dannon) and another one for affordable shoes with Adidas. But in both these cases, aren’t the companies just subsidizing the social business with their other more lucrative ventures? Could a social business be sustainable on its own without a way for the company to also make money using the current model of capitalism?

First of all, these are not subsidized programs. These are separate companies. If it is not sustainable, then it’s not a social business because in social business, the company has to be sustainable. Otherwise, it becomes charity. It’s not like when big companies take some money from their profits and say, okay, here it is, here’s some social responsibility money.

You see this as being different from corporate foundations or other nonprofits?

Yes. This is an investment. This is just like any other company. At the end of the year, you show what profit you made, what losses you incurred, how you plan to overcome the losses and make use of the profit. The only difference is that the owners of this company promised that they weren’t in it to make money for themselves. The company will profit, and the profit will stay with the company. My interest in the company is to solve the problem that we designed to solve.

Then why go to big corporations?

I’m not going to big companies. They have come to me. I never knew there was a company called Danone. There is no Danone in Bangladesh. But I met the chairman of Danone, and I discussed this idea [of affordable nutrition-fortified yogurt for malnourished children] with him. He said let’s do it, and that’s how it happened.

Do you think that these social business ventures have changed the big companies in any way?

The total investment from Danone for this tiny little company [Grameen Danone] is about a million dollars. But Danone is a company worth several billion dollars. For them, this is small change, but this little company has influenced their employees and the management so much. Danone is in the U.S. and in Brazil, and they are talking about what is happening in Grameen Danone. And they want to do something similar at Danone in their own country. The employees want to do it because it excites them. So far, they had been working hard for the shareholders to make a good profit. But now they see that they can work hard to change people’s lives. Their skill and knowledge can help people solve a problem. Many things are now being done differently in the mainstream because of lessons learned there. People are asking why we do it this way, why can’t we do it like we do in Bangladesh.

In your book, you give another example of how business can be done differently.

Yes, the example of the yogurt cup. The first question I asked Danone about the product was what kind of material they were going to use for the cup. When they said it would be plastic, I said that we don’t want to see Bangladesh filled with plastic cups. They said plastic was what they used all over the world. I told them that here they were doing social business, so here they would have to use biodegradable cups. I was told it would be impossible—they just didn’t have the materials. I told them to look for the materials. Four to five months later, they found material for biodegradable cups in China. It was made from cornstarch. I asked them, are the cups edible? After all, poor people would be paying for the cups. Why should they just throw the cups away? Why not make them edible and nutritious? Something like an ice-cream cone? Again, they said it would be difficult to make something like that. I told them that if anyone could do it, they could, since they had the big research facility in Paris. Some months later, when I met the research team, they were happy that they had been asked these questions and given that challenge, because the solution would benefit the big company as well as little Grameen Danone. You see—it was a simple question, but it transformed the whole thing.

In the example you just shared, the material was bought in China, you’re building it in France, and finally selling the product in Bangladesh. What’s your view on using local goods and resources so that the business is sustainable and benefits the local community?

We cannot build walls, whether it’s a district wall or a state wall or national walls, because walls are against your interest. In the beginning, it looks like we are protecting our interest. Then you find out that you’re working against your interest. If you had done business with each other, you’d have done much better. So, walls are not a solution.

At the same time, you don’t want to dismantle the wall all of a sudden. Then people get upset because the floodgate opens, and we lose everything. So, you gradually adjust. I have to be cheaper than everybody else, or my product should be so special that people will still buy my product (whatever the cost). So, I have to learn how to do this. And those who are running the country, they have to be careful how to make this adjustment process work. For them, for politicians, the easy solution is to build a wall.

Have you heard about the New York Times exposé about the Koch Brothers funding an anti-Obama agenda with the Tea Party movement? What’s your view on billionaire businessmen getting involved in politics this way?

This has been my continuous complaint, that there is nothing called free media. The media is also a business—somebody owns it. And I’m saying why can’t we create a social media, not for making money, but for upholding the truth? Because today, if you’re on one side politically, you can make a tiny little news the headline of the day, or bury a news item on the third page in the bottom, just because it does not serve your political interest. As a reader, I give you free access to my mind, and you manipulate me all the time. Why should I subject myself to this kind of media where you can bring anything you want, and I have no say about that? My mind is continuously manipulated by the news you provide, and by the advertisements you provide. You tell me my life is worthless if I don’t wear this shirt, which is a lousy thing anyway, but you tell me again and again in all those fancy ways. So, why can’t we stop that manipulation?

As a representative of media right now, I want to thank you for your time.

[Laughs] Yes, yes

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