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Posted: Dec. 13 2006,10:05 by David Adams
from INTERNATIONAL - Fundacion Cultura de Paz |
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I am
struck by the following paragraph in the Nobel Lecture given by The
Nobel Peace Prize Laureate 2006, Muhammad Yunus (Oslo, December 10,
2006), and I believe that today's youth will find it an appropriate
goal.
Young people all around the world, particularly in rich
countries, will find the concept of social business very appealing
since it will give them a challenge to make a difference by using
their creative talent. Many young people today feel frustrated
because they cannot see any worthy challenge, which excites them,
within the present capitalist world. Socialism gave them a dream to
fight for. Young people dream about creating a perfect world of
their own.
To understand what he means by social business,
you need to read the entire address, as follows (© The Nobel
Foundation, Stockholm, 2006).
Your Majesties, Your Royal
Highnesses, Honorable Members of the Norwegian Nobel Committee,
Excellencies, Ladies and Gentlemen,
Grameen Bank and I are
deeply honoured to receive this most prestigious of awards. We are
thrilled and overwhelmed by this honour. Since the Nobel Peace Prize
was announced, I have received endless messages from around the
world, but what moves me most are the calls I get almost daily, from
the borrowers of Grameen Bank in remote Bangladeshi villages, who
just want to say how proud they are to have received this
recognition.
Nine elected representatives of the 7 million
borrowers-cum-owners of Grameen Bank have accompanied me all the way
to Oslo to receive the prize. I express thanks on their behalf to
the Norwegian Nobel Committee for choosing Grameen Bank for this
year's Nobel Peace Prize. By giving their institution the most
prestigious prize in the world, you give them unparalleled honour.
Thanks to your prize, nine proud women from the villages of
Bangladesh are at the ceremony today as Nobel laureates, giving an
altogether new meaning to the Nobel Peace Prize.
All
borrowers of Grameen Bank are celebrating this day as the greatest
day of their lives. They are gathering around the nearest television
set in their villages all over Bangladesh, along with other
villagers, to watch the proceedings of this ceremony.
This
years' prize gives highest honour and dignity to the hundreds of
millions of women all around the world who struggle every day to
make a living and bring hope for a better life for their children.
This is a historic moment for them.
Poverty is a Threat to
Peace
Ladies and Gentlemen:
By giving us this prize, the
Norwegian Nobel Committee has given important support to the
proposition that peace is inextricably linked to poverty. Poverty is
a threat to peace.
World's income distribution gives a very
telling story. Ninety four percent of the world income goes to 40
percent of the population while sixty percent of people live on only
6 per cent of world income. Half of the world population lives on
two dollars a day. Over one billion people live on less than a
dollar a day. This is no formula for peace.
The new
millennium began with a great global dream. World leaders gathered
at the United Nations in 2000 and adopted, among others, a historic
goal to reduce poverty by half by 2015. Never in human history had
such a bold goal been adopted by the entire world in one voice, one
that specified time and size. But then came September 11 and the
Iraq war, and suddenly the world became derailed from the pursuit of
this dream, with the attention of world leaders shifting from the
war on poverty to the war on terrorism. Till now over $ 530 billion
has been spent on the war in Iraq by the USA alone.
I
believe terrorism cannot be won over by military action. Terrorism
must be condemned in the strongest language. We must stand solidly
against it, and find all the means to end it. We must address the
root causes of terrorism to end it for all time to come. I believe
that putting resources into improving the lives of the poor people
is a better strategy than spending it on guns.
Poverty is
Denial of All Human Rights
Peace should be understood in a
human way in a broad social, political and economic way. Peace is
threatened by unjust economic, social and political order, absence
of democracy, environmental degradation and absence of human
rights.
Poverty is the absence of all human rights. The
frustrations, hostility and anger generated by abject poverty cannot
sustain peace in any society. For building stable peace we must find
ways to provide opportunities for people to live decent
lives.
The creation of opportunities for the majority of
people - the poor - is at the heart of the work that we have
dedicated ourselves to during the past 30 years.
Grameen
Bank
I became involved in the poverty issue not as a
policymaker or a researcher. I became involved because poverty was
all around me, and I could not turn away from it. In 1974, I found
it difficult to teach elegant theories of economics in the
university classroom, in the backdrop of a terrible famine in
Bangladesh. Suddenly, I felt the emptiness of those theories in the
face of crushing hunger and poverty. I wanted to do something
immediate to help people around me, even if it was just one human
being, to get through another day with a little more ease. That
brought me face to face with poor people's struggle to find the
tiniest amounts of money to support their efforts to eke out a
living. I was shocked to discover a woman in the village, borrowing
less than a dollar from the money-lender, on the condition that he
would have the exclusive right to buy all she produces at the price
he decides. This, to me, was a way of recruiting slave
labor.
I decided to make a list of the victims of this
money-lending "business" in the village next door to our campus.
When my list was done, it had the names of 42 victims who borrowed a
total amount of US $ 27. I offered US $ 27 from my own pocket to get
these victims out of the clutches of those money-lenders. The
excitement that was created among the people by this small action
got me further involved in it. If I could make so many people so
happy with such a tiny amount of money, why not do more of it?
That is what I have been trying to do ever since. The first
thing I did was to try to persuade the bank located in the campus to
lend money to the poor. But that did not work. The bank said that
the poor were not creditworthy. After all my efforts, over several
months, failed I offered to become a guarantor for the loans to the
poor. I was stunned by the result. The poor paid back their loans,
on time, every time! But still I kept confronting difficulties in
expanding the program through the existing banks. That was when I
decided to create a separate bank for the poor, and in 1983, I
finally succeeded in doing that. I named it Grameen Bank or Village
bank.
Today, Grameen Bank gives loans to nearly 7.0 million
poor people, 97 per cent of whom are women, in 73,000 villages in
Bangladesh. Grameen Bank gives collateral-free income generating,
housing, student and micro-enterprise loans to the poor families and
offers a host of attractive savings, pension funds and insurance
products for its members. Since it introduced them in 1984, housing
loans have been used to construct 640,000 houses. The legal
ownership of these houses belongs to the women themselves. We
focused on women because we found giving loans to women always
brought more benefits to the family.
In a cumulative way the
bank has given out loans totaling about US $ 6.0 billion. The
repayment rate is 99%. Grameen Bank routinely makes profit.
Financially, it is self-reliant and has not taken donor money since
1995. Deposits and own resources of Grameen Bank today amount to 143
per cent of all outstanding loans. According to Grameen Bank's
internal survey, 58 per cent of our borrowers have crossed the
poverty line.
Grameen Bank was born as a tiny homegrown
project run with the help of several of my students, all local girls
and boys. Three of these students are still with me in Grameen Bank,
after all these years, as its topmost executives. They are here
today to receive this honour you give us.
This idea, which
began in Jobra, a small village in Bangladesh, has spread around the
world and there are now Grameen type programs in almost every
country.
Second Generation
It is 30 years now since
we began. We keep looking at the children of our borrowers to see
what has been the impact of our work on their lives. The women who
are our borrowers always gave topmost priority to the children. One
of the Sixteen Decisions developed and followed by them was to send
children to school. Grameen Bank encouraged them, and before long
all the children were going to school. Many of these children made
it to the top of their class. We wanted to celebrate that, so we
introduced scholarships for talented students. Grameen Bank now
gives 30,000 scholarships every year.
Many of the children
went on to higher education to become doctors, engineers, college
teachers and other professionals. We introduced student loans to
make it easy for Grameen students to complete higher education. Now
some of them have PhD's. There are 13,000 students on student loans.
Over 7,000 students are now added to this number annually.
We are creating a completely new generation that will be
well equipped to take their families way out of the reach of
poverty. We want to make a break in the historical continuation of
poverty.
Beggars Can Turn to Business
In Bangladesh
80 percent of the poor families have already been reached with
microcredit. We are hoping that by 2010, 100 per cent of the poor
families will be reached.
Three years ago we started an
exclusive programme focusing on the beggars. None of Grameen Bank's
rules apply to them. Loans are interest-free; they can pay whatever
amount they wish, whenever they wish. We gave them the idea to carry
small merchandise such as snacks, toys or household items, when they
went from house to house for begging. The idea worked. There are now
85,000 beggars in the program. About 5,000 of them have already
stopped begging completely. Typical loan to a beggar is $ 12.
We encourage and support every conceivable intervention to
help the poor fight out of poverty. We always advocate microcredit
in addition to all other interventions, arguing that microcredit
makes those interventions work better.
Information
Technology for the Poor
Information and communication
technology (ICT) is quickly changing the world, creating
distanceless, borderless world of instantaneous communications.
Increasingly, it is becoming less and less costly. I saw an
opportunity for the poor people to change their lives if this
technology could be brought to them to meet their needs.
As a
first step to bring ICT to the poor we created a mobile phone
company, Grameen Phone. We gave loans from Grameen Bank to the poor
women to buy mobile phones to sell phone services in the villages.
We saw the synergy between microcredit and ICT.
The phone
business was a success and became a coveted enterprise for Grameen
borrowers. Telephone-ladies quickly learned and innovated the ropes
of the telephone business, and it has become the quickest way to get
out of poverty and to earn social respectability. Today there are
nearly 300,000 telephone ladies providing telephone service in all
the villages of Bangladesh. Grameen Phone has more than 10 million
subscribers, and is the largest mobile phone company in the country.
Although the number of telephone-ladies is only a small fraction of
the total number of subscribers, they generate 19 per cent of the
revenue of the company. Out of the nine board members who are
attending this grand ceremony today 4 are telephone-ladies.
Grameen Phone is a joint-venture company owned by Telenor of
Norway and Grameen Telecom of Bangladesh. Telenor owns 62 per cent
share of the company, Grameen Telecom owns 38 per cent. Our vision
was to ultimately convert this company into a social business by
giving majority ownership to the poor women of Grameen Bank. We are
working towards that goal. Someday Grameen Phone will become another
example of a big enterprise owned by the poor.
Free Market
Economy
Capitalism centers on the free market. It is claimed
that the freer the market, the better is the result of capitalism in
solving the questions of what, how, and for whom. It is also claimed
that the individual search for personal gains brings collective
optimal result.
I am in favor of strengthening the freedom of
the market. At the same time, I am very unhappy about the conceptual
restrictions imposed on the players in the market. This originates
from the assumption that entrepreneurs are one-dimensional human
beings, who are dedicated to one mission in their business lives to
maximize profit. This interpretation of capitalism insulates the
entrepreneurs from all political, emotional, social, spiritual,
environmental dimensions of their lives. This was done perhaps as a
reasonable simplification, but it stripped away the very essentials
of human life.
Human beings are a wonderful creation
embodied with limitless human qualities and capabilities. Our
theoretical constructs should make room for the blossoming of those
qualities, not assume them away.
Many of the world's
problems exist because of this restriction on the players of
free-market. The world has not resolved the problem of crushing
poverty that half of its population suffers. Healthcare remains out
of the reach of the majority of the world population. The country
with the richest and freest market fails to provide healthcare for
one-fifth of its population.
We have remained so impressed
by the success of the free-market that we never dared to express any
doubt about our basic assumption. To make it worse, we worked extra
hard to transform ourselves, as closely as possible, into the
one-dimensional human beings as conceptualized in the theory, to
allow smooth functioning of free market mechanism.
By
defining "entrepreneur" in a broader way we can change the character
of capitalism radically, and solve many of the unresolved social and
economic problems within the scope of the free market. Let us
suppose an entrepreneur, instead of having a single source of
motivation (such as, maximizing profit), now has two sources of
motivation, which are mutually exclusive, but equally compelling a)
maximization of profit and b) doing good to people and the world.
Each type of motivation will lead to a separate kind of
business. Let us call the first type of business a profit-maximizing
business, and the second type of business as social business.
Social business will be a new kind of business introduced in
the market place with the objective of making a difference in the
world. Investors in the social business could get back their
investment, but will not take any dividend from the company. Profit
would be ploughed back into the company to expand its outreach and
improve the quality of its product or service. A social business
will be a non-loss, non-dividend company.
Once social
business is recognized in law, many existing companies will come
forward to create social businesses in addition to their foundation
activities. Many activists from the non-profit sector will also find
this an attractive option. Unlike the non-profit sector where one
needs to collect donations to keep activities going, a social
business will be self-sustaining and create surplus for expansion
since it is a non-loss enterprise. Social business will go into a
new type of capital market of its own, to raise capital.
Young people all around the world, particularly in rich
countries, will find the concept of social business very appealing
since it will give them a challenge to make a difference by using
their creative talent. Many young people today feel frustrated
because they cannot see any worthy challenge, which excites them,
within the present capitalist world. Socialism gave them a dream to
fight for. Young people dream about creating a perfect world of
their own.
Almost all social and economic problems of the
world will be addressed through social businesses. The challenge is
to innovate business models and apply them to produce desired social
results cost-effectively and efficiently. Healthcare for the poor,
financial services for the poor, information technology for the
poor, education and training for the poor, marketing for the poor,
renewable energy - these are all exciting areas for social
businesses.
Social business is important because it
addresses very vital concerns of mankind. It can change the lives of
the bottom 60 per cent of world population and help them to get out
of poverty.
Grameen's Social Business
Even profit
maximizing companies can be designed as social businesses by giving
full or majority ownership to the poor. This constitutes a second
type of social business. Grameen Bank falls under this category of
social business.
The poor could get the shares of these
companies as gifts by donors, or they could buy the shares with
their own money. The borrowers with their own money buy Grameen Bank
shares, which cannot be transferred to non-borrowers. A committed
professional team does the day-to-day running of the bank.
Bilateral and multi-lateral donors could easily create this
type of social business. When a donor gives a loan or a grant to
build a bridge in the recipient country, it could create a "bridge
company" owned by the local poor. A committed management company
could be given the responsibility of running the company. Profit of
the company will go to the local poor as dividend, and towards
building more bridges. Many infrastructure projects, like roads,
highways, airports, seaports, utility companies could all be built
in this manner.
Grameen has created two social businesses of
the first type. One is a yogurt factory, to produce fortified yogurt
to bring nutrition to malnourished children, in a joint venture with
Danone. It will continue to expand until all malnourished children
of Bangladesh are reached with this yogurt. Another is a chain of
eye-care hospitals. Each hospital will undertake 10,000 cataract
surgeries per year at differentiated prices to the rich and the
poor.
Social Stock Market
To connect investors with
social businesses, we need to create social stock market where only
the shares of social businesses will be traded. An investor will
come to this stock-exchange with a clear intention of finding a
social business, which has a mission of his liking. Anyone who wants
to make money will go to the existing stock-market.
To enable
a social stock-exchange to perform properly, we will need to create
rating agencies, standardization of terminology, definitions, impact
measurement tools, reporting formats, and new financial
publications, such as, The Social Wall Street Journal. Business
schools will offer courses and business management degrees on social
businesses to train young managers how to manage social business
enterprises in the most efficient manner, and, most of all, to
inspire them to become social business entrepreneurs themselves.
Role of Social Businesses in Globalization
I support
globalization and believe it can bring more benefits to the poor
than its alternative. But it must be the right kind of
globalization. To me, globalization is like a hundred-lane highway
criss-crossing the world. If it is a free-for-all highway, its lanes
will be taken over by the giant trucks from powerful economies.
Bangladeshi rickshaw will be thrown off the highway. In order to
have a win-win globalization we must have traffic rules, traffic
police, and traffic authority for this global highway. Rule of
"strongest takes it all" must be replaced by rules that ensure that
the poorest have a place and piece of the action, without being
elbowed out by the strong. Globalization must not become financial
imperialism.
Powerful multi-national social businesses can be
created to retain the benefit of globalization for the poor people
and poor countries. Social businesses will either bring ownership to
the poor people, or keep the profit within the poor countries, since
taking dividends will not be their objective. Direct foreign
investment by foreign social businesses will be exciting news for
recipient countries. Building strong economies in the poor countries
by protecting their national interest from plundering companies will
be a major area of interest for the social businesses.
We
Create What We Want
We get what we want, or what we don't
refuse. We accept the fact that we will always have poor people
around us, and that poverty is part of human destiny. This is
precisely why we continue to have poor people around us. If we
firmly believe that poverty is unacceptable to us, and that it
should not belong to a civilized society, we would have built
appropriate institutions and policies to create a poverty-free
world.
We wanted to go to the moon, so we went there. We
achieve what we want to achieve. If we are not achieving something,
it is because we have not put our minds to it. We create what we
want.
What we want and how we get to it depends on our
mindsets. It is extremely difficult to change mindsets once they are
formed. We create the world in accordance with our mindset. We need
to invent ways to change our perspective continually and reconfigure
our mindset quickly as new knowledge emerges. We can reconfigure our
world if we can reconfigure our mindset.
We Can Put Poverty
in the Museums
I believe that we can create a poverty-free
world because poverty is not created by poor people. It has been
created and sustained by the economic and social system that we have
designed for ourselves; the institutions and concepts that make up
that system; the policies that we pursue.
Poverty is created
because we built our theoretical framework on assumptions which
under-estimates human capacity, by designing concepts, which are too
narrow (such as concept of business, credit- worthiness,
entrepreneurship, employment) or developing institutions, which
remain half-done (such as financial institutions, where poor are
left out). Poverty is caused by the failure at the conceptual level,
rather than any lack of capability on the part of people.
I
firmly believe that we can create a poverty-free world if we
collectively believe in it. In a poverty-free world, the only place
you would be able to see poverty is in the poverty museums. When
school children take a tour of the poverty museums, they would be
horrified to see the misery and indignity that some human beings had
to go through. They would blame their forefathers for tolerating
this inhuman condition, which existed for so long, for so many
people. A human being is born into this world fully equipped not
only to take care of him or herself, but also to contribute to
enlarging the well being of the world as a whole. Some get the
chance to explore their potential to some degree, but many others
never get any opportunity, during their lifetime, to unwrap the
wonderful gift they were born with. They die unexplored and the
world remains deprived of their creativity, and their contribution.
Grameen has given me an unshakeable faith in the creativity
of human beings. This has led me to believe that human beings are
not born to suffer the misery of hunger and poverty.
To me
poor people are like bonsai trees. When you plant the best seed of
the tallest tree in a flower-pot, you get a replica of the tallest
tree, only inches tall. There is nothing wrong with the seed you
planted, only the soil-base that is too inadequate. Poor people are
bonsai people. There is nothing wrong in their seeds. Simply,
society never gave them the base to grow on. All it needs to get the
poor people out of poverty for us to create an enabling environment
for them. Once the poor can unleash their energy and creativity,
poverty will disappear very quickly.
Let us join hands to
give every human being a fair chance to unleash their energy and
creativity.
Ladies and Gentlemen,
Let me conclude by
expressing my deep gratitude to the Norwegian Nobel Committee for
recognizing that poor people, and especially poor women, have both
the potential and the right to live a decent life, and that
microcredit helps to unleash that potential.
I believe this
honor that you give us will inspire many more bold initiatives
around the world to make a historical breakthrough in ending global
poverty.
Thank you very much. |
