Muhammad Yunus: 'Business is a beautiful mechanism to solve problems'
At first, it is difficult to know what to make of Muhammad Yunus. In London this week to promote his work building social businesses, the Nobel prizewinner and founder of Grameen bank is compelling when he talks about his ideas to address poverty. But, after the recent microfinance fallout, there's a nagging feeling that what he's saying is a little too good to be true.
Yunus's latest idea is an international minimum wage for the garment industry, following the collapse of the Rana Plaza factory in Savar, Bangladesh, last month, which killed more than 1,100 people. Yunus suggests increasing the hourly wage of Bangladeshi workers – the majority of whom are women – by around $0.50. Foreign clothing firms could use this as a marketing tool to promote their product – garments made by these workers could be tagged as ethically sourced.
This "tax" on the garment industry would help women "tremendously", Yunus tells me. Women, he says, have transformed society in Bangladesh. "[The garment industry] brought 4 million young women from the villages to the city, where they live independently. It's transformed society." Bangladesh is now the second-largest garment producer in the world, and, says Yunus, in the process of becoming so, traditional beliefs that women should stay at home have been challenged.
"There are walls, but if you look close, [you see] there are lots of holes, so we take advantage of the holes," says Yunus. Show that an investment or project is beneficial to society and the cultural barriers will begin to fall. "If you can do something despite opposition in the beginning, if it's proven that people like it … all opinions will come around to it because people like it."
Yunus is clearly a champion of women. They were central in the creation of Grameen bank in 1983. Over the past 30 years, the bank has lent money to around 8.5 million people; more than 95% have been women.
But while women may have helped transform Bangladesh's economy, many have few other options than to put up with the poor conditions and low wages the industry offers. The UN says only 23% of Bangladesh's labour force are women. And a report by Human Rights Watch last year found that the country still has discriminatory laws on marriage and divorce that contribute to women's poverty.
While it could be easy to disregard Yunus's ideas as pie-in-the-sky optimism, listening to him talk, and looking at his impressive track record, does make you believe in possibilities.
Despite microfinance falling off its lofty perch, and a battle at Grameen that saw Yunus forced to resign as managing director, the bank is still going strong. It has teamed up with Tesco in the UK to offer loans in Scotland and has branches around the US. Yunus still passionately believes microcredit can be a force for good. "It's not the fault of microfinance, it's the fault of the way we have used this idea," he says. "We developed microfinance to fight loan sharks – I was telling people don't go to loan sharks – not trying to take advantage and make money for myself. I would be a junior loan shark if I did … It is not a panacea."
His philosophy is simple – start small and don't be afraid of failure. Yunus first dipped his toe into lending in 1976, when he lent $27 to a group of poor people in Dhaka to avoid them having to use loan sharks. He then acted as guarantor for loans taken out at local banks that refused to lend money to poorer people.
"Make it very small, don't be ambitious," he told an audience at the London Stock Exchange Group on Tuesday. "Don't worry about failure. Any business has a 50-50 chance of being wrong. Change of circumstances doesn't mean we have to go back and forget about it, but go back and redesign … wait for an opportunity and turn it around."
That's what happened when Grameen's partnership with the French food company Danone ran into difficulties. Established in 2006 to produce cheap, nutritious yoghurt to improve malnutrition rates in Bangladesh, the partnership soon encountered problems – people weren't buying the yoghurt, there were problems with refrigeration, and milk prices rose – making it difficult to offer a product people could afford. There was a choice of ending the partnership or rethinking the strategy. The companies opted for the latter. Grameen Danone has diversified its products, producing a yoghurt drink that uses less milk and needs less refrigeration, and is creating more storage facilities.
"Business is a very beautiful mechanism to solve problems, but we never use it for that purpose. We only use it to make money. It satisfies our selfish interest but not our collective interest," Yunus told the audience of financiers.
"I'm not against making money, but I am saying we can do both. We have designed a capitalist system wrong. We assume human beings are one-dimensional, all they do is make money, so we've created a money-centric world. Money commands everything because that's our interpretation of capitalism … what kind of world is that? It's a very uncomfortable interpretation of a human being. We have been turned into robots. Yes we are selfish, but also selfless, but we don't allow that to be brought out."
A paradigm shift is unlikely to happen soon. But after spending a couple of hours listening to Yunus, you begin to wonder whether maybe it could just happen – one day.
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http://www.guardian.co.uk/global-development/2013/may/24/muhammad-yunus-business-solve-problems
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interesting read.
