Profile: Professor Muhammad Yunus
Using innovative social business and micro credit models, Grameen Bank founder and 2006 Nobel Peace Prize laureate Professor Muhammad Yunus has shown how “bottom of the pyramid” market opportunities can be successfully served. He is also joining hands with the Indian Institute of Management to float a fund to seed social ventures. He shares his experience and insights at the National University of Singapore Business School this week, which also goes on a live webcast. Read More
National University of Singapore Business School:
925 million people around the world do not have enough to eat and 98 percent of them live in developing countries (2010 United Nations). Using innovative social business models, Grameen Bank founder and 2006 Nobel Peace Prize laureate Professor Muhammad Yunus and other social entrepreneurs have shown how Bottom of the Pyramid (BoP) market opportunities can be successfully served.
This forum brings Prof. Yunus together with the leaders of some global corporations to share their experience and insights at the National University of Singapore (NUS) Business School.
Co-organised with the Asia Centre for Social Entrepreneurship and Philanthropy (ASCEP) at the NUS Business School, this Forum brings Prof Yunus together with the leaders of a number of these far-sighted global corporations to share their experience and insights in embracing social business models to do good AND do well.
Live webcast 22 February 10am Singapore time (GMT+8)
At the end of the Forum, selected innovative social businesses being incubated by GCL@NUS will showcase their social ventures and pitch to potential corporate partners and social venture investors.
Professor Muhammad Yunus established the Grameen Bank in 1983 which gave loans to the poor. The 2006 Nobel Peace Prize was jointly awarded to Prof. Yunus and the Grameen Bank “for their efforts to create economic and social development from below”.
Ahona Ghosh in The Economic Times, India (16 February 2012):
Professor Muhammad Yunus, the father of microfinance and chairman of the Yunus Centre in Bangladesh, has finally found a taker for his brand of social businesses in India. He is joining hands with the Indian Institute of Management, Ahmedabad (IIM-A) to float a Rs 50-crore fund to seed social ventures.
He will help raise the corpus and mentor social entrepreneurs. “I am in talks with several industrialists (in India),” Yunus said. He met some of Mumbai’s biggest industrialists during his visit to the city this week.
For the uninitiated, Yunus defines a social business as one that pays no dividend to shareholders, but ploughs all profits back into the company whose purpose is to serve social needs. “It’s a new class of non-dividend business done in a serious way to solve social problems,” he said.
Yunus has pioneered many such social businesses, including a JV with Danone that sells fortified yoghurt to poor children for 6 Bangladeshi Taka; Veolia that sells clean water to 100,000 people across five villages for 1 taka (for 5 litres); and a third JV with chemicals multinational BASF that sells long-lasting insecticidal nets and multi-micronutrient sachets to the poor.
His alliance with IIM-A fructified after one year of discussions with its Centre for Innovation Incubation and Entrepreneurship (CIIE).
STRONG MENTORING NETWORK
We are exploring a collaboration with Yunus to build a stronger ecosystem to support fledgling entrepreneurs who are creating innovative solutions in the social sector,” Rakesh Basant, chairperson of CIIE and professor of economics at IIM-A, said.
The CIIE has been involved in incubating early-stage enterprises across the healthcare, education and livelihood space. They will collaborate with the Mumbai-based arm of Grameen Creative Lab (GCL).
GCL, which seeds social businesses, is a joint venture between the Yunus Centre and circ-responsibility, a consulting company in Germany.
The CIIE and Yunus will collaborate to create a strong mentoring network, an incubation program to be designed by GCL to help entrepreneurs identify and build viable social business options.
The CIIE’s initial idea was to raise a Rs 5-10 crore fund, Basant said. But Yunus raised the bar with the proposal for a Rs 50-crore fund. “Fund-raising has not started yet and we don’t yet know how much we will be able to raise,” he added.
This is the Nobel Laureate’s second visit to India in the past 26 months. He has been building the case for Indian industrialists to start social enterprises that do not return profits to shareholders. None has responded yet. Hence, the plan for a Rs 50-crore fund. Yunus hopes to raise the corpus from Indian corporate and philanthropic foundations.
“Rich industrialists in India prefer charity than investing in business without any return expectations,” says Vineet Rai, founder and CEO of Aavishkaar, which invests in social impact enterprises with a profit motive. India as a country has only now started discovering the risk-reward paradigm and it will be a few more years before the Yunus model will find takers, he said.
Anu Aga, director on the board of Thermax, a $1-billion engineering solutions company, who met the professor in Mumbai last Sunday, is intrigued by the model but is not yet ready to try it out.
There are some exceptions, though. Recently, Piramal Group Chairman Ajay Piramal and Dr Reddy’s Laboratories Founder K Anji Reddy independently started working on social businesses similar to the Yunus model. Reddy’s project provides villagers with pure drinking water. Piramal has a low-cost healthcare delivery model and a rural BPO. Both do not expect returns, but plough profits back to scale up the businesses.
Yunus’ personal journey in this sector has been long, and controversial in the recent past. On April 2011, Bangladesh’s highest court dismissed Yunus as managing director of Grameen Bank, the path-breaking microfinance institution he founded. But Yunus is undeterred and has set up three international joint ventures and about eight social business enterprises over the last five years.
Muhammad Yunus was born in 28th June, 1940 in the village of Bathua, in Hathazari, Chittagong, the business centre of what was then Eastern Bengal. He was the third of 14 children of whom five died in infancy. His father was a successful goldsmith who always encouraged his sons to seek higher education. But his biggest influence was his mother, Sufia Khatun, who always helped any poor that knocked on their door. This inspired him to commit himself to eradication of poverty. His early childhood years were spent in the village. In 1947, his family moved to the city of Chittagong, where his father had the jewelery business.
In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.
Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of ? 17 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty.
Against the advice of banks and government, Yunus carried on giving out ‘micro-loans’, and in 1983 formed the Grameen Bank, meaning ‘village bank’ founded on principles of trust and solidarity. In Bangladesh today, Grameen has 2,564 branches, with 19,800 staff serving 8.29 million borrowers in 81,367 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 97% are women and over 97% of the loans are paid back, a recovery rate higher than any other banking system. Grameen methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.