The GreenMoney Interview: Muhammad Yunus

Grameen Bank founder interviewed by Holly Mosher,
producer of the films Bonsai and Pay2Play

Muhammad YunusWhen award-winning filmmaker Holly Mosher read about 2006 Nobel Peace Prize winner Muhammad Yunus and the story of Grameen Bank’s microcredit for women in Bangladesh, she was fascinated. Why had an economist and a bank won the prize for peace and not the prize for economics? And how had one man gone from loaning $27 to 42 people, to helping one out of every 1,000 people on earth? With these questions in mind, she embarked on a film about his work.

However, when she realized in Bangladesh that Yunus was also operating over a dozen other companies, all aimed at ending poverty, she knew she had a completely different film on her hands.

Mosher’s emotionally compelling documentary, Bonsai People – The Vision of Muhammad Yunus, highlights Dr. Yunus’ philosophies and the affect of his work on the people of rural Bangladesh. It is the first comprehensive film looking at his whole body of work.

Bonsai People can now be seen at select screenings and will be available on DVD soon. For more information and to watch a trailer from the film go to www.bonsaimovie.com

Like Dr. Yunus, Mosher has received international recognition for her work on behalf of positive change. When we asked her to consider interviewing her friend and film subject Muhammad Yunus for GreenMoney Journal, she readily agreed.

We hope you enjoy this insightful conversation. This is the full expanded version of the interview – available only here on greenmoney.com

HOLLY:  People are mostly aware of your work with microcredit. However, you are currently running dozens of companies. What made you decide to start so many companies?

YUNUS: Whenever I have come across a problem, I would ask myself if I could start a business to try and solve that problem. And that is what I have been doing for the past 35 years.

HOLLY:  In order to run all these companies, you must have a very good management model. Can you share your management style?

YUNUS: My goal has been to create an environment where people are empowered to try things. Things are tried; if they work, then we continue; if they do not work then we try something else. The other thing that has been emphasized is to not lose focus of what we are trying to do. We are here to serve the poor and we should not forget this fact.

HOLLY:  Do you have “go-to” questions that you always ask yourself in order to push the envelope of feasibility? For example, Ashir, from your partnership with GramWeb.net, told me that you loved their healthcare kiosk, but you pushed him to make it both mobile and a tenth of the price.

YUNUS: Yes, of course. First of all, the question of need arises. Do the poor actually need this service or product? Will it make their lives better by providing them with this new thing? If not, then there is no need for it. Then it has to be affordable enough for the poor; otherwise the poor will not be able to access it. The other thing I have always asked is how to take the product or service to the doors of the poor, hence the emphasis on mobility. The people we serve are constantly trying to earn enough for daily survival, so they cannot afford the extra time to go and get the product or services that they need; so rather than them coming to us, I have always said that we should go to them.

HOLLY:  Several of your businesses are actually owned by the poor people they are helping. Is there a best way to include them in management and turn the company over to them?

YUNUS: When I started Grameen Bank, I insisted that this new bank should be a different kind of a bank. This bank would not only exist to serve the poor, but that it should also be owned by the poor. And that is what happened. Today the borrowers of Grameen Bank effectively own 97 percent of the bank. They sit on the Board of Directors helping to create the policies. This is the best way; by taking the responsibility and, most crucially, the opportunity, they proved to everyone that they are very capable of owning and running Grameen Bank.

HOLLY:  With Grameen Fisheries, you took a failing business that was supposed to help the poor and made it profitable. Can you share how you turned that around, especially when you had no experience with the fishery business?

YUNUS: This happened because the local communities were involved in the projects. Whenever these projects made profits, they were shared with the local communities. Not only that, we also hired people from the local communities to work on these projects. So we involved them very closely, and they became interested in insuring that these projects were successful.

HOLLY:  Why do you feel it’s so important to create and run self-sustaining models?

YUNUS: If you are dependent on donations to run your activities, there are two consequences. First, you have to spend a lot of your time raising funds to finance your activities. And second, you are at the mercy of the priorities of your donors. So if your donors change their focus, then you, too, have to change your focus or you risk losing your funding. If you are self-sustaining, you don’t have to spend any time on fund raising, nor do you have to worry about what your donors are thinking. You can go on with your activities so long as there is a need for it. This is why I place so much emphasis on sustainability and efficiency.

HOLLY:  Within your companies, how many years does it take to have a social business turn a profit?

YUNUS: Making a profit is not the goal of these companies. The goal of all of these companies is to serve a specific need of the poor. We do not measure the performance of the companies on how much profit they make, but rather how well they have been able to serve their target markets. But many of our social businesses are now making profit, which helps to expand their operations, which is an exciting development for us.

HOLLY:  What additional challenges do entrepreneurs face when trying to create a social business instead of a for-profit business?

YUNUS: A challenge that anyone will face in creating a social business is trying to explain why they are doing it. Our economic theories have constantly stressed that humans are self-centered beings who go about serving their own self-interest. We have been taught this as a fact for hundreds of years. Now we have an alternative, a selfless business where operators do not profit for themselves but benefit others. This can come as a shock to people. Explaining this is a challenge. Another challenge is to ensure funding to start up social businesses. How are people to access investments for their social businesses? Where will the money come from? We are working on finding solutions to this. One solution can be the Social Business Funds, acting as incubators for potential social business start-ups.

HOLLY:  Is a social business more challenging to start and operate than a for-profit business?

YUNUS: No, I do not think that starting a social business is any more challenging than running a for-profit business. Running any business requires effective business skills, all of which are applicable. The difference being that a social business is a business geared towards solving social problems – a business that benefits society, as opposed to a for-profit business that benefits the owners.

HOLLY:  With all your partnerships, can you share the lessons on creating a successful partnership?

YUNUS: Effective communication is the key to a successful partnership. In any partnership, the different parties have their own wants and goals. The main thing is to create bridges to arrive at a common goal. And communicating effectively is the way to achieve this. It is useful to seek partners who have the same or similar goals as you. And it also helps to find partners who have special skills, abilities or technologies that are required to do the things that you are trying to do.

HOLLY:  A lot of your partnerships are with large corporations.  Are you choosing to work with large corporations over small start-ups for a reason?  Is it easier for them to turn a part of their work to a social business compared to a start up?

YUNUS: What we are doing by working with large corporations is creating examples of what social businesses can look like. We are bringing companies who would have never thought of investing in Bangladesh and we are together setting up completely new social businesses here. We hope these examples encourage people to think of setting up social businesses of their own. The real power of social business lies with everyday people, who will become the real driving force behind social business. They know what problems exist in their communities better than everyone else. Then they use their creativity and ingenuity to design a social business to solve those problems. The real potential of social business is to unleash peoples’ latent creativity and ingenuity.

HOLLY:   From all your experience with starting social businesses, what words of wisdom would you give to people who are trying to start one on their own?

YUNUS: I advise anyone interested in social business to start with a piece of paper. Make a list of all the problems in your community and find the ones that are most pressing. Try to find a business solution to help solve that problem. Think of all the things that you will need to make that social business a success and implement those things. The main thing is to simply begin, and you may be surprised at the results!

HOLLY:  Can you tell how you have turned Grameen Kalyan (Healthcare) into a nearly profitable model and provide insurance to a family of 7 for $1 a month?

YUNUS: With Grameen Bank, the aim was to provide access to finance for the poor. However, I soon learned that it is not just financing that the poor need, but also a host of other services that were not being provided to them at a reasonable rate. So Grameen Kalyan was started. Currently it provides access to healthcare to people in rural Bangladesh through 54 health clinics. In the beginning Grameen Kalyan depended on outside funding to support its activities. The advantage that Grameen Kalyan has is that it does not need to make a profit, but it just needs to cover its costs. And it is well on its way to achieving that.

HOLLY:  You have scaled up several of your companies successfully. Is there any special advice to scaling up?

YUNUS: Starting small is the key. By starting small, you allow the company or business time to prove itself and its model. Once the company has proved its model to be effective and sustainable, we then scale up that business model. This is what we have done time and again.

HOLLY:  How long do you spend in research and development before really running with the business model?

YUNUS: This really depends on the sector involved. For example, with Grameen Bank, I experimented with it for a number of years before finally getting the laws passed to start the bank formally. During that time, you get the feeling whether something will be successful or not. In other cases, with Grameen Danone for example, it was quick.

HOLLY:   Now that you are working with Grameen America, are there any challenges in particular to doing business in the US compared with Bangladesh?  Any lessons learned for America in general?

YUNUS: While working with Grameen America, we have realized that the American banking system has left behind so many Americans. The citizens are deprived of access to financing and the whole host of benefits that come along with being able to have access to credit on a timely basis. We have had to learn what the particular needs to our borrowers in America are. For example, we have had to learn what size the loans to our American borrowers should be, what should be the interest rates and what should be the repayment schedules, etc. The one great lesson learned from Grameen America is that even in the industrially developed world, there is a class of people that the traditional banking system has left behind. So from this we can extrapolate that microfinance can have a place even in the richest countries in the world.

HOLLY:   What do you see as the difference between a social business and a social enterprise?

YUNUS: The definition of a social enterprise is very broad. A social enterprise can be any initiative to help people. The initiative can be economic, non-economic, for-profit or not for-profit. The distribution of free medicine to the poor can be a form of social enterprise. On the other hand, a social business is a very particular type of a business. It is a business with a social goal, and not a monetary goal. You can say that a social business is a subset of social enterprise.

Interviewer’s Note:

I would like to close with a note about past events. In November of 2010 a Norwegian documentary came out called, Caught in Micro-Debt, which looked at cases of microcredit gone wrong. After the film aired, the Prime Minister of Bangladesh publicly stated that Dr. Yunus was “sucking the blood of the poor.”

Since then, a government probe showed that the Grameen Bank actually has the lowest interest rate of any Bangladeshi microcredit program. However this finding did not deter the Bangladeshi Bank from forcing Yunus to retire for being too old.  There is a bank ordinance that says that all bank workers should retire at the age of 60. He is currently in his 70s.

Although the future of Grameen Bank and Grameen Companies is uncertain, Yunus continues to run over 30 companies and partnerships – all aimed at serving the poor.

Yunus is one of seven people in history to receive the Nobel Peace Prize, the Presidential Medal of Freedom, and the Congressional Gold Medal.

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