Out to maximize social gains, not profit-Muhammad Yunus with NY Times

August 22, 2008

The following is an interview of Professor Muhammad Yunus given to New York Times way back to December 9, 2006 after Yunus associated himself with Danone in his venture of social business, I am specially impressed with his answer to the need of job for the Grameen graduates at the end of the interview:

It was March 2005 and Muhammad Yunus, the microcredit pioneer who recently won the Nobel Peace Prize, had just agreed — over a handshake during lunch at a Paris restaurant — to start a “social business” with the head of Groupe Danone, the French food company.

Mr. Yunus’s Grameen Bank and Danone would recoup only their original investment and a 1 percent profit, reinvesting the rest into the enterprise. But unsure that his new partner, Franck Riboud, Danone’s chief executive, completely comprehended the unusual concept, Mr. Yunus dashed an e-mail message from the car to spell out what they had discussed and asking for a confirmation.

“I still couldn’t believe he understood what I said, because his English is not very good and my English is not very good, either,” Mr. Yunus recalled during a recent visit to New York. “So, I said we should put it on record and a few minutes later I got the confirmation.”

Last month, Grameen Danone, as the new company is named, opened the first of what are to be 50 fortified-yogurt plants in Bangladesh. Zinédine Zidane, the French soccer star who is an “ambassador” for Danone’s programs for children, attended the opening and drew frenzied media attention to the venture.

Over the last year and a half, officials from Danone and Grameen met in Dhaka, Bangladesh’s capital, under Mr. Yunus’s direction to plan the business to suit the needs and challenges of the country, said Laurent Sacchi, senior vice president at Danone, who sits on the joint venture’s board.

For instance, upon Mr. Yunus’s insistence, the company agreed to build 50 small, labor-intensive plants rather than one large and highly automated one as it does in the rest of the world, so more workers and suppliers would benefit from it.

As Mr. Yunus accepts the Nobel Peace Prize tomorrow, the anecdote serves as an example of his persistent and tireless efforts on behalf of the poor. Mr. Yunus, a former professor of economics, met recently with reporters and editors of The New York Times. Following are excerpts:

Q. Microcredit has been in operation in Bangladesh, India and many other places for some years, yet poverty remains entrenched in these countries. What are the most fundamental barriers to alleviating poverty in your mind?

A. My position has been that poverty has not been created by the poor people. The system has created them. The system being institutions, the concepts or framework of living. That’s where the seed of poverty is. Either we pluck them out so that poverty disappears or if this is so involved that you cannot pick them out, you have to create an institution which is free from this virus.

So we go step by step, concept by concept and institution by institution. We picked one institution that is banking. There may be something wrong there that we can fix. So we created another kind of banking — banking which doesn’t depend on collateral.

That’s what my interest is. I’m not stopping at what I’m saying is microcredit. I’m saying information technology is a very important thing. And there are other issues.

Q. Can you talk a little about the relative merits of nonprofit microcredit versus it as a business model and whether that is more sustainable, perhaps?

A. First of all, I’m not in favor of nonprofit things. These are charities. I’m not involved in that. I don’t particularly get excited about it. I’m talking about the business part of it where you do things so that you get your money back.

And there you have a distinction between two kinds: one, to make personal gain out of it. The other one, the way we run the business, for the results we want to produce in people. So one is a profit-maximizing business. The other is a social business. I’m on the social business side of it. If somebody wants to run it as a profit-maximizing business, welcome. This is competition. My mission is to get the person out of poverty rather than how much money I’m making out of it.

Q. Is there any way for you to know, or to guess, how much difference your company has made? What would your country be like without it?

A. One way to look at what we have done is to look within our families, the seven million families that we have worked with. We monitor it every day, every year, to see how many of them have gotten out of poverty, how many of them are coming close to getting out of poverty. We have 10 indicators. If a family fulfills all the 10 indicators, then we declare that the family has gone out of poverty.

Fifty-eight percent of the borrowers of Grameen Bank who have been with Grameen Bank for five years or more have gone out of poverty, according to these 10 indicators. The indicators are: How is the roof? Is it a solid roof? Can it protect from the rain? Do they have a sanitary latrine? Do you have a mosquito net? A blanket for the winter with warm clothing is another. Do they have enough savings in the bank account? Access to pure, safe drinking water? Are all children attending a school?

Studies after studies show that income level is rising, people are getting out of poverty. A World Bank study done in the mid-90s shows their conclusion is that 5 percent of Grameen borrowers get out of poverty every year. Also, 100 percent of the children of Grameen families are in school, 100 percent. And many of them are in high schools, now in universities, medical schools, engineering schools.

Q. Do you track the children of the women whom you have financed through the bank, how far do girls go in school or how well they do professionally?

A. So far as primary education is concerned, 100 percent stay in family education. We have no problem. Now this is also true for the whole country. Our worry in Bangladesh was exactly your worry, that girls will be dropping out, mothers or fathers will keep them home and boys will go out. Secondary education presents a very interesting case in Bangladesh. Girls outnumber boys.

We give scholarships. This is grant money from the bank. We give nearly 30,000 scholarships per year. The scholarship policy is very straightforward. Fifty percent of the scholarships are reserved for girls so that they don’t have to compete with the boys. The remaining 50 percent is open to both boys and girls. As a result, about 63 to 67 percent of the students who got the scholarships are girls.

Our interest is to bring them to higher education. In higher education, girls’ participation is still very low. Although it’s a 100 percent guaranteed student loan, but that’s where parents get into the dilemma of getting them married. So they don’t want to push them into the higher education. We are encouraging them.

Q. In some countries, there’s been a problem that education has created more graduates of colleges than in fact the economy needs.

A. This is a problem. Occasionally I go around and my colleagues go around and meet with these students, not their parents. These are bright young people. It’s not easy to get into higher education in Bangladesh and India. It’s highly competitive. And the seats are limited. So unless your performance is way above, you can’t get in.

And the question finally comes: You helped us a lot, Grameen Bank is something that we see as our family. But we always wonder, when we finish our education, where are we going to get the jobs. Will you help us to find the jobs? This is a question I cannot avoid.

I came up with my kind of response to that and I’m trying to build this thing up. My response is: “Yes, I understand your position, but I have a different view. As Grameen Bank children, you should have your own position, own pledge about your life. And the pledge you make, you repeat every morning: I shall never ask for a job from anybody. I will create jobs.”

They get shocked. They say, I’m asking for a job. He says I will create jobs? How am I going to do that? Some say we don’t know how to create a job. I said, if you don’t know, if you don’t find an answer, you look at your mother, what she has done. She didn’t apply for a job. Even if she applied for a job, she will never get a job. She’s an illiterate person.

She borrowed from Grameen Bank. That’s why you are here. And as a child she helped you to go to school, maintained you and brought you all the way. You are becoming a doctor, you are becoming an engineer. See what she did? You know it much better than I do. If an illiterate woman can create her job, what good is your education if you cannot do better than your mother?

Money is not your problem. And, as an executive of the bank, I’m guaranteeing you, whatever money you need, we have the money.

Compiled from New York Times, 9 December 2006


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