Understanding Social Entrepreneurship from Muhammad Yunus
- October 29, 2021
- Posted by: Chong Jean Ju
- Category: Business
Yesterday, our editorial team had the opportunity to join in Entrepreneurs’ Organization’s live online interview of Professor Muhammad Yunus, Nobel Prize Laureate and the founder of Grameen Bank, and more than 50 other companies in Bangladesh.
His accolades do not stop there. He has won 136 awards from 33 countries, and received 62 honorary doctorate degrees from universities around the world.
Yet the person who sat in for the interview was incredibly humble, down-to-earth and spoke in practical, layman terms.
The interview was eye opening for us, and we got to learn what true social entrepreneurship really meant from the father of social business and micro businesses.
I Never Wanted to Become a Businessman
Professor Yunus never wanted to be an entrepreneur. He was offered a scholarship to study in the US, and after attaining his PhD in Economics, he settled down to do what he had wanted to do all this life – teach.
But after several years, he returned to Bangladesh and in 1974, famine had struck the country. He saw people dying by the roadside. And this, “shook him up”.
He realised that all the knowledge on economics he had learned was useless. He couldn’t help anyone and fell into a depression. He thought about how he could be of help to his fellow countrymen, and not knowing where to begin, he started visiting and talking to the poor people in the neighbouring village.
One day, he met a lady who had become the victim of a loan shark. He thought, why didn’t he start lending money to the lady instead? And that was how it all began. He started lending small amounts of $2, $5 and $10 to the poor people.
One thing led to another, and this would eventually lead to the setting up of Grameen Bank.
Going Against the Traditional Banking System
Before setting up Grameen Bank, Professor Yunus was at loggerheads against the traditional banking system. He wanted the banks to be responsible for lending money to the poor.
But the banks refused to lend money to the poor because in their eyes, they were not credit-worthy, and instead, continued to lend money to those who already had money.
Yet it was the poor who really needed help. And by neglecting them, the banks became what was termed as “not people-worthy” in his eyes.
Taking the Opposite Side
Finally, he decided to institutionalize the business and established Grameen bank, so that he could do larger things.
The strategy was to learn what the conventional bank did, and then do the exact opposite.
The conventional banks lent money to the rich, and went to the cities. They only lent money to people with collateral and targeted mostly men.
Grameen Bank lent money to the poor who had no collateral. They targeted the rural areas, and their customers were mostly the women.
The strategy proved to be highly successful. Today, Grameen Bank has lent over $12.5 billion with a recovery rate of 98%, empowering millions of women and their families to lift themselves out of extreme poverty.
Understanding Social Entrepreneurship
When asked what was the difference between social entrepreneurship and a business, Professor Yunus explained that social entrepreneurship is a non-dividend company that solves problems.
It is a company that is not profit-driven but built to help people and solve problems around the world.
While many assume that he is rich, but his companies are not built to generate a lot of profit; they offer products at an affordable cost, and whatever profit it makes is put back into the business to continue helping others.
Today he has founded more than 50 self-sustaining businesses, that have resolved problems for millions of people including eradicating night blindness caused by vitamin A deficiency from the nation, and distributing sanitary toilets in every home.
When asked about his thoughts about resolving sustainability world issues, Professor Yunus says most of the problems came from businesses. Therefore, the solution to these problems have to come from the businesses as well.
The problems arise when businesses are solely profit-driven, without regards to the negative impact they have on the rest of the world. Business owners have to take ownership of this and recognise the urgency of the problems we face today.
How Does One Get Started in Social Entrepreneurship?
Anybody can and has the ability to become a social entrepreneur and it doesn’t begin with a complex business plan. All one needs to do is to want to solve problems, and the way to get started is to help one, two or five people. Start by looking at how you can resolve their problems, and grow from there.
Photo Credit: Ralf Lotys