“The only place where poverty should be is in museums”—Muhammad Yunus
Coming to such a world-renowned organization such as Grameen I really wanted to try and prevent myself from being a Grameen groupie, thinking that no organization could actually be as wonderful as the media captures it. However, it’s becoming really difficult. Every single aspect I have come across during our time here, I have been amazed at the humility, brilliance and passion woven into the whole bank and its sister companies. As the first month of Grameen internships are designed as an exposure medium we have moved beyond solely their micro-credit programs, and now are focusing on their social businesses for the time being. It is actually a refreshing change of pace, because despite my love and belief in microfinance, nothing gets me more excited than the idea of blending traditional business into the search to fulfill social objectives.
Our first meeting today was at the Yunus Centre on the 16th floor of the bank’s building. Founded in 2008 by Dr. Yunus to efficiently handle the influx of attention from the international community after his Nobel prize in 2006, the Yunus Centre is primarily a resource for potential social business practitioners. We were given a presentation by the assistant managing director, Sharif who explained that the centre exists to promote social business worldwide. He began to paint the picture of the world I have moved into, a world where 90% of the population lives below the 2USD a day poverty line, and 50% live under the 1.25USD benchmark. An environment where 41.3% of the children under the age of 5 are underweight and malnourished, while the nation grapples with naturally occurring arsenic water and disasters, a vulnerability to world food prices, and a government that achieves very little good change for the majority of the people.
The Yunus Centre’s vision is centralized around turning Dr. Yunus’ dream of putting poverty into ‘poverty museums’ by 2050. Museums where he believes children will go to see pictures of what we allowed to happen to humanity, and ask us why and how. Its mission is to promote and assist in the development of social business to reach this ambitious goal in only 40 years time.
For those unfamiliar to the centre’s work, its key assignments are as follows:
1. Build itself as a centre of social business through promotion, the creation of centres worldwide, and partnerships with various institutes and chairs. They also work to promote and assist in the creation of social business funds, and aid in the creation of social business partnerships.
2. Their International secretariat handles Yunus’ international scheduling, media, press releases, and the Yunus Centre website
3. The Yunus Centre Library is a hub of resources directed towards social business, and houses Dr. Yunus’ writings, by him, and about him. It will hold his awards, prizes etc eventually to show what he has done and has achieved throughout his career.
4. The centre also throws a number of events, including the Yunus Centre Forum, Social Business Day, and a social business plan competition.
As the Grameen Bank has received so much attention worldwide for its programs and insights into how to use business for global good, they have been approached by many massive companies worldwide who are interested in learning how they can partner with Grameen to use their own expertise for innovative solutions to social issues. Two of these examples include DANONE Foods and ADIDAS.
Many of the stories about these new partnerships are captured in Yunus’ new book Building Social Business, but the meeting at the Yunus Centre today was a great chance to learn more about those that have developed but received much less attention in the mainstream media.
Grameen partnered with a Japanese agriculture company called Yukiguni Maitake that produces mungbeans in rural parts of Bangladesh to help increase the incomes of rural farmers. They sell the beans throughout the country, and then export the surplus back to the Japanese markets.
Another interesting partnership with a Japanese company is Grameen Yuniko—a Japanese clothing company that utilizes heat-tech material to create clothes that warm body temperature by 3 degrees. It may seem like a trifle problem in comparison to the rampant child malnutrition, but Bangladesh’s winters actually get very cold, and those living on the streets die in vast numbers during this time. Grameen Yuniko derived out a spotted need to sell warm clothing at a price point these demographics can afford.
Grameen describes the need for social business comes from the fact that current economic theory only postulates a single dimensional human being—the profit maximize. Therefore, their answer is that social business is the missing piece to combine the market with the fight against poverty and other social ills, believing fully in that human nature is to care about other people and the environment in our actions—especially for the protection of future generations.
This thinking began with Grameen Bank, with the goal of spreading financial inclusion to those who did not qualify for credit from traditional banks—labeling credit as an essential human right, next to other basic needs such as shelter and education. Their first precursors were Grameen Shakti (provides energy to those who are off of the government’s current grid for an affordable price—which disgustingly is 80% of the country) and Grameen Shikka (Grameen’s education-based sister company). Advocating for both financial sustainability and social impact they moved into partnerships with Danone and Veolia. This trend towards social business emanated out of the realization that the poor don’t only need access to capital. They need access to communication technology, healthy food, clean water, sustainable and cheap energy…etc
One key aspect of the social business model is that all companies run on a sustainable matter. The goal is to free them from having to seek donations to run their operations, which protects them against economic crises and fluctuations in donations, allowing them to continue operations as long as the social need exists.
With many companies gaining interest in moving in the social business, Dr. Yunus took create care to draft a clear cut definition of what they are, to fully separate them from traditional profit-maximization companies.
Def: A social business is a non-loss, non-dividend company designed to address a social problem. The profits are used to expand the company’s reach and improve the products and/or services.
He also created a set of social business principles that are given to potential partners who approach Grameen with interest.
In order to officially enter into a partnership they must agree to the following:
1. Business objectives are to overcome poverty or related problems…not profit maximization
2. Has to be financially and economically sustainable
3. Investors get their initial investment amount back only…does not account for inflation. No dividend is given beyond investment money
4. When investment amount is paid back, company profit stays with the company for expansion and improvement
5. Environmentally conscious
6. Workforce gets market wage with better working conditions (benefits, healthcare, maternity leave, childcare, overtime etc)..provide more for their workers than traditional profit maximization companies do
7. …do it with joy
Sharif gave us a diagram of the cycle of social business that looks as follows:
Identify a social needàfind investor for initial investmentàproductàsalesàprofitàrepay investor investment amountàfurther profits reinvested into the cycle of social business
There are two types of social businesses: Type 1 refers to a social business that focuses on providing a product and/or service with a specific social, ethical and/or environmental objective (Ex. Grameen Danone);Type 2 is a profit-oriented business that is either owned by the poor, or provides the poor with direct dividends or some indirect benefits (Ex. Grameen bank, or a manufacturing factory that is owned by poor or uses the profits to create services that benefit the poor, such as MOJO, Moms without Jobs).
Another great example of a flourishing partnership between a traditional company and Grameen is their partnership with BASF, a German chemical company. It is located in Chittagong, Bangladesh—a region that deals with mosquito-borne diseases such a malaria and dengue. BASF uses the same technology as their mainstream products to treat mosquito nets that will instantly kill mosquitoes upon touch, but that is safe to the human touch. They sell in the Chittagong region to the poor who suffer most from these diseases disproportionately. One key benefit of selling is that the poor’s living conditions are highly prone to bugs, and these nets are killing the bugs while simultaneously allowing them to get a better night’s sleep. Currently nets are being produced in Thailand, with plans to produce them locally in Bangladesh. Utilizing the same cross-subsidization model as many social businesses throughout the world, such as Toms Shoes, BASF is able to provide lower prices to the poor, as they sell the nets to the urban communities at a slightly higher price. By subsidizing the cost these cheaper nets are able to reach those who need them the most in communities throughout rural Bangladesh—sustainably!
(If anyone is still reading) Here are examples of existing social businesses beyond Grameen Bank
Danone: Market: Bangladesh
Goal: Fight malnutrition among children and women by offering affordable products for poor, by capturing new market segments
Product: affordable yogurt (2 a week can help a child recover from malnutrition)
Challenges: 1. the target market—how to ensure that the poor get the yogurt
Solution: Grameen hired poor women in regions throughout the entire country, who work on commission selling the yogurt door to door.
2. How to ensure participation of local suppliers (farmers, local community)
Solution: They opened a factory in Bogra, and provided microfinancing to farmers in the district to set up small dairy farms. Grameen Danone then established collecting points all across Bogra, where farmers can come and sell their milk. Staff weigh the milk and test the quality, and then farmers get 26tk per liter—providing the farmers a steady source of income, and Grameen Danone a reliable supply of milk.
3. Lack of general infrastructure: poor road quality and unreliable power supply
4. 2007 food crisis—the increase in the price of milk forced Danone to increase the 5tk cup of yogurt to 9tk, causing sales to drop in rural villages up to 80. Once again Grameen pushed the cross-subsidization model and sells the yogurt for 12tk a cup in Dhaka, while selling it for 7tk in the villages.
Example #2—Grameen Veolia—problem: lack of access to clean drinking water
Veolia creates water treatment plants in rural Bangladesh, and organizes distribution to provide arsenic free water to poor communities. They supply the clean water through taps at fixed points, and then allow the people to buy water from these distribution points. It is typically sold at 3tk for 10 liters, but 2 key problems are challenging Veolia’s current success. 1. The poor are not habituated to paying for water, and the cost of water is too high. They are now selling bottled water in 20liter jugs to offices and homes in urban markets to subsidize the price for the poor, with the goal of bringing the price down for the poor to .5-1tk. Veolia wants it to be so cheap, that no poor person would ever have to consider whether or not they want to buy water or food. Their most daunting problem to date however, is the pressing lack of awareness about arsenic and its effects on the body. Arsenic is an ambiguous problem, especially to remote villages who have not been educated about the issue. One can’t taste, smell or see arsenic, and its effects are not instantaneous but rather take 5-10 years to set in. Therefore they will not fall sick or die immediately, leading people to not realize that they are in fact drinking poison. Sharif explained that the arsenic builds up in people’s hands and feet, causing them to turn black and eventually rot away. Veolia is trying to overcome this by running awareness campaigns, and organizing shows to teach communities about the problems of drinking arsenic water.
Example 3: GC Eye care Hospital: Provides access to affordable eye care for rural Bangladeshi to eliminate needless blindness. Sharif said that it is by far the most successful social business started so far, as it was started in 2008 and broke even in only 11 months. Started in Bogra, a second hospital has been started in the south, and the first hospital has expanded to a third and fourth floor. Following the model of Aravind Eye Hospital in India, this hospital provides affordable treatment for cataract surgery to the poorest of the poor, by charging slightly higher prices to those with the capacity to pay. Aravind has become known as one of the finest healthcare facilities in the world, with a model that ensures quality and equitable services for both groups of patients regardless of their payment. However, contrast to Aravind in India, GC Eye Care is having difficulty ensuring that doctors remain at hospitals, as the amenities are so poor throughout many regions of Bangladesh that doctors do not want to stay in a place such as Bogra, and often try to leave after their contract expires. Therefore, the hospital is constantly having to provide additional incentives to get them to stay.
After discussing different social businesses Grameen is involved in and their current states, we moved on to talk about one of my favorite subjects associate with the field: social business funds. In my opinion I think one of the key reasons many people hesitate from starting a social business is not because they would rather make money and ignore the realities of the world, but more out of a fear that the pilot project will fail or they are unable to raise enough seed money. Social business funds are the future of the sector, and one of the key priorities of Grameen’s Yunus Centre. The concept of a social business fund is very simple. It seeks to provide seed capital for potential social business start-ups in a pre-determined sector or location. Sharif explained that they see these funds as the most important tools they have right now to promote. Designed as an incubator for social businesses, social business funds allow people or companies to apply for seed money in the form of either loans or equity. They actually function as social businesses themselves, as once the business is up and running, they repay the loans, and the interest from the loans is used to cover the fund’s costs of administrating them. It is also used to generate additional funds as well. It should be noted that prior to expansion or replication, the funds have to repay their investors that supplied the initial investment that it re-lent out to new social businesses.
Many funds are currently in operation, including the Yunus Fund Monaco (that is active in Africa), and another called Grameen Credit Agricole Microfinance Foundation (which is based in Luxemburg and serves primarily the agricultural sector in Africa). The centre is actively working to spread these funds throughout the world.
The centre’s other initiatives include promoting the need for social business regulations worldwide that currently do not exist. It presently is not legal in the US to set up a social business, so the centre is working with the US government to introduce legislation and bills to enable US citizens to set up a SB. They currently are working with the EU government as well.
The centre is also actively trying to support Social MBA courses, to teach about social business as an alternative to profit maximization businesses. They want to support universities that have embraced the social business model, such as Northeastern University’s Social Enterprise Institute (SEI) that currently help to support Kelly and I during our internship here in Dhaka. The Assistant Managing Director gave me his business card and genuinely urged me to have SEI contact him as they are always looking to partner with new people. This is really exciting and I hope to help make it work, as I noticed on the map provided that they currently only work with one or two universities in the states, including UPENN—and if there is any student body and staff that deserves a formal partnership with Grameen it is my dedicated and bright peers and SEI family back home.
Today in the office we also had meetings with Grameen Trust, which helps organizations replicate the Grameen micro-credit program throughout the world, and Grameen Shakti, a Grameen sister company that sells affordable technology and products to rural villages left in the dark by the neglectful national electricity grid. However, that will take an extra 6 pages of writing, so hopefully I will post up a summary in the upcoming days.
Life away from the field and in the office is a horrible Yunus stalker tease. The staff who I find myself in conversation with are constantly leaving because they have a meeting with Dr. Yunus, which makes me smile like I’m 5 and just heard Santa was on the roof. I’m excited and terrified to bump into him. One, because it would be a dream, and two because I have absolutely no idea what I would pick to talk to him about in that brief, fleeting moment.
G’night my loves! Another day in the office manana
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