'The Rotarian' talks with Muhammad Yunus, a speaker at the 2012 RI Convention
In New York City’s Jackson Heights, Yunus helps launch the first Grameen America branch. Five others are now open in the United States. Photo by Erica Lanser
N obel Peace Prize winner Muhammad Yunus, known as the “banker for the poor”, began transforming lives while an economics professor at the University of Chittagong in Bangladesh. What began as personal microloans to poor women in nearby villages grew into Grameen Bank, which today has more than 2,500 branches throughout the country. Grameen Bank has helped launch or expand the businesses of more than 8 million borrowers – 97 percent of them women. Yunus, a keynote speaker at the 2012 RI Convention, recently spoke with Warren Kalbacker, a frequent contributor to The Rotarian. Here is an excerpt of the interview.
The Rotarian: In 1976, you introduced the concept of microcredit, which involves providing loans of as little as a few cents to individuals. Many businesspeople might be puzzled as to how lending such small amounts could be effective.
Yunus: Microcredit started in one village in Bangladesh. I was teaching economics, and the country was going through famine. I was frustrated because the economic theories I taught in the classroom didn’t have any meaning in the lives of poor people. I thought I’d try to do something to help individuals in the village next to the university campus. I noticed loan sharking in the village – people lending money to the poor with terrible conditions attached. The sharks took control of peoples’ lives. I thought I could solve this problem by lending money myself. I visited those who were borrowing from the loan sharks, and I made a list of 42 names. The total money they owed was the equivalent of US$27. I put the money in their hands to pay off the loan sharks so they could be free. When I did that, everybody got excited. If such a small amount of money could make so many people so happy, I thought I should do more of it.
TR: Your concept of social business involves raising and investing capital, then managing the enterprise for a return. Yet you specify that there will be no profit-taking. Aren’t you offering something like two cheers for capitalism?
Yunus: People think if you take out the profit incentive, businesses cannot survive. That’s absolutely wrong. There are many other incentives. In a social business, I make other people happy. By making other people happy, I become happy. That incentive is something economists don’t understand. I am introducing that. I’m not walking out on capitalism; I insist that capitalism is misinterpreted. It’s based on a single type of business: profit-making. It’s imbalanced. If you add the social business leg to the capitalist system, then it becomes stable. When a business is run only to maximize profit, people are too busy to examine or solve social problems, so they let governments take care of those problems. But we citizens are capable of solving problems ourselves. That’s what the social business can do.
TR: Grameen has teamed up with France-based food giant Danone to manufacture yogurt in Bangladesh. How does this venture differ from a traditional profit-making enterprise?
Yunus: This social business is a non-loss, non-dividend company designed to solve a social problem. If Grameen Danone Foods makes a profit, the profit stays with the company. Its purpose is to solve the problem of malnutrition among the children of Bangladesh. It makes a special type of yogurt that is inexpensive to produce and affordable to the poorest families. If a child eats it, he or she gradually becomes a healthy child. The company is now in its fourth year, and it’s doing very well. The nutritional impact is clear, and the company is approaching the break-even point.
TR: You’re a tireless advocate for personal initiative across all cultures. What motivates you?
Yunus: Economists assume that entrepreneurs who can take the risks and lead the way are limited in number – that these are the few people in the world with exceptional qualities, who are capable of being entrepreneurs, and the rest of the human beings are supposed to work under them. This is unacceptable. I insist that all human beings are entrepreneurs. No exceptions. No one lacks entrepreneurial capability. But institutions have framed policies that don’t give us the opportunity to discover our entrepreneurial ability. They’re being propagated through our education system, which is built on the premise that you work hard and get well paid, or you go to a good school and get a good job – as if a job is the ultimate goal of a human life. I say that is wrong.
TR: What will you focus on when you address this year’s RI Convention?
Yunus: I’ll be talking about the education system. All young people should be taught that they have choices. They can be a job seeker or a job giver. As they grow up, they can decide which they want to be. Institutions must be built so that whichever path young people take, they will be supported so they can pursue their goal in life. Right now, this choice is missing in the education system.
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