The transformation of global economy is desperately needed if we want to continue to serve the needs of all humanity. This can be done by combining the talent of the young and the old to bring peace and prosperity to the world. Dr. Muhammad Yunus, an economist, who watched as the world economic system exploited the current masses through an existing economic order designed to serve the rich, while the lower strata of society were not able to enjoy the same economic opportunities, could not resist himself from looking for answers. He saw how the current economic system places roadblocks in the path of the poor people.
Dr. Yunus studied the economic system and exposed the shortcomings of the traditional banking system which denies its services to those who need the most. He formulated a plan to tackle interrelated problems faced by the poor. He identified them: Lack of institutional services, lack of clean drinking water and sanitary facilities, lack of healthcare, inadequate education, substandard housing, no access to energy, neglect in old age, and many more. He looked at the conditions of low-income people in the world’s richest nations and discovered that they are also suffering from many of the same problems.
He seriously examined the rising tide of wealth concentration which is responsible for rising inequality and ever-expanding gap in the individual wealth, a condition that is getting worse with time.
The rise of inequality has led to social unrest, political polarisation and growing tension among groups. Muhammad Yunus felt that a fundamental change is necessary in handling economic problems and to challenge the ways it promotes inequality. He discussed the economic system and the problems it creates with different people who felt disinherited and without prospects for the future. They were becoming increasingly disenchanted and angry.
Although many countries around the world have enjoyed economic success through economic reforms and have experienced rapid economic growth, some countries still have millions and millions of people in poverty – a condition that is widening the divide between the haves and the have-nots. He analysed the social media activity and the tsunami of data about widening inequality and income gap, and found that the free markets and the ideology of free enterprise are responsible for the divide. They have fooled so many people for so long and have failed and failed miserably, even though we are living in a very prosperous age unlike any other in history, an age when society has enormous economic resources, unprecedented technological tools, freedom and cooperation than humans ever experienced. He saw these markets in their current form are exacerbating world problems, including poverty, disease, pollution, crime and inequality. In the absence of proper oversight and guidelines, Muhammad Yunus did perceive that these free markets are highly destructive.
Dr. Muhammad Yunus genuinely examined the present economic situation in the world, and perpetually and actively engaged in acquiring awareness and knowledge about the present condition in his home country Bangladesh. He envisioned a new course that he felt is needed to be charted to a better future for millions of people in Bangladesh. His first attempt focused on present economic system and its failures and a need to create a new civilization not only for Bangladesh but for the entire world to bring an end to income inequality. He strongly felt that by energising and empowering the young people of the world, and by unleashing the powers of technology for the benefit of mankind, he could create a new civilization capable of liberating millions of people from the clutches of those controlling the present economic system.
Dr. Mohammad Yunus says that global trade is like a hundred-lane highway, with no stoplights, speed limit, size restrictions, or even lane markers, making it easier for the world’s most powerful economies using giant trucks to take over the highway. He strongly feels that the global free market is Financial Imperialism. He challenges the so-called free-market fundamentalists who argue that the idea of a business without profit has no place in the existing ideology of capitalism. He further analysed the contention by capitalists who insist that all business must make maximum profit, treating this as some kind of axiomatic truth. This assumption manifests itself into the creation of a world that ignores the multi-nature of human beings.
Dr. Mohammad Yunus started thinking about ways to create a new civilization based on a new type of business that pursues goals other than making personal profit, a business that is totally dedicated to solving social and environment problems. He concluded that by setting up a Social Business to recognise the multidimensional nature of human beings and pursuing specific social goals, it would help solve the problem.
Being a witness to a famine in Bangladesh and the sufferings of the people made him realise that he cannot remain a spectator and began to search for answers to mitigate their sufferings. His first-hand observance of the money lending operation and the extremely harsh conditions imposed on borrowers and their treatment proved it was equivalent to slavery. He studied the banking system and discovered that not only banks but also the various types of other financial institutions are intermediary instruments through which wealth concentration occurs, making rich richer and allowing the poor and needy to suffer. When Yunus discovered that banking institutions believed that the poor are not credit-worthy, and made it difficult for them to obtain loans, it disturbed him and touched him in a deeply personal way. He established the Grameen Bank (Village Bank) after formulating the Social Business programme and proved that poor people are highly creditworthy and can be trusted to repay their loans.
The Grameen Bank was the direct result of the redesigning the present borrowing system and economic reinvention. The bank operates exclusively in the villages of Bangladesh. Seeing that the conventional banks serve mostly men, he created the bank to serve women, making them entrepreneurs and family bread earners. The bank is owned by the poor women who are its customers; poor women make up its board of directors and decide its policies.
Dr. Muhammad Yunus founded the bank and also created the financial system known as microcredit system for the people of Bangladesh. He designed, planned and formulated the microcredit system that has “unleashed the entrepreneur capabilities of over 300 million poor people around the world, helping to break the chain of poverty and exploitation that have enslaved them.”
In Bangladesh, he introduced a new programme of offering new-entrepreneur loans from Grameen Bank to support their efforts to create businesses. He called this nobin udyokta which means “new entrepreneurs” in the Bangla language. The Yunus Centre developed the system for operating the Nobin programme that included the basic methodology, reporting formats, daily monitoring system, accounting procedures, and identification and assessment procedures.
His idea was to make the youth realise that they are not job seekers but on the contrary they are job creators. His social business projects were presented to young people who understood community needs and preferences and were ready to start small, bottom-up companies. Some of the companies funded through the Nobin programme include a widow receiving fund to expand her late husband’s tailoring business; an expert at plant propagation to launch his own nursery business; a skilled weaver of jamdani, – a fine muslin sari textile, to expand her home-based company; a young woman, who was physically abused by her husband, received funds for a business making palm-leaf hand fans; an experienced rice mill operator got funds to create his own rice mill business; and a trained beautician received funding to expand her business. Each project received funding in the range of US $1,000 to US $3,000. This gave these social business creators a first taste of the excitement of entrepreneurship and independence while providing useful goods or services to the community.
The world is a witness to the social business as to how it puts human qualities and capabilities to work and enthusiastically encourages for the blossoming of these qualities, helping those working hard to transform from one-dimensional human beings to multi-dimensional human beings.
Muhammad Yunus also introduced a new programme of providing education loans for higher education to children from poor village families. He later reported that thousands of students who took education loans have become graduates, doctors, engineers and professionals.
The concept of social business has gone from an obscure idea into a worldwide movement. In universities, the social business concept is being studied and taught and on top of that, many universities are opening social business centres. He has created funds to provide seed money to the college social business centres to help would-be entrepreneurs turn their dreams into realities.
As of 2016, Grameen Bank has lent out over $205 billion a year to 9 million poor women on the basis of trust only with an amazing repayment rate of 98.96%. At the same time, microcredit banks running on the same principles are operating successfully in many other countries, including the United States. Grameen America has 19 branches in 12 US cities with 86,000 borrowers, all women, who receive business start-up loans around $1000 and the repayment rate is 99%.
Muhammad Yunus has proved that the Real Man is a better and very different creature than a Capitalist Man. Yunus is a Courageous Man who has taken his concept and implemented it in the very heart of the Capitalist Man’s country.
The Yunus Social Business Centres are very active in the poorest part of Europe especially the Balkan states, including Slovenia, Croatia, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia to put an end to unemployment, poverty, environmental degradation, declining social institutions and wars following the breakup of Yugoslavia.
Muhammad Yunus raised a question and asked: does the world have a destination? If not, should it? He provided an example and said that ‘a technology genius always has two basic options. For example, he can dedicate his work to creating a medical breakthrough that will save thousands of lives – or he can develop an app that will let people amuse themselves. In most cases, the technology genius will be pushed to develop a product that has the potential to create millions of dollars in profit. Profit is the North Star of conventional economics. Lacking a collective destination, the only highway sign we follow is the North Star for profit. We need to lead the world towards a collective desired destination.’ Then he went ahead and created organisations and developed Sustainable Development Goals (SDGs) to define an immediate destination. Many people and institutions have made commitments to travel in the direction of SDGs and Millennium Development Goals (MDG).
Some of the basic underlying causes of the dysfunctional economic system which decrees that any product that can’t be sold for a price established at the industry-average profit level must instead be discarded or destroyed should be removed and the economic system should be made more functional by introducing the workable solutions of the social business. He designed businesses as income-generating companies, formulated plans to ensure that the products and services they provide reach more and more poor people on an ongoing basis.
Many international companies in several countries expressed desire to adopt the social business concept and became eager to seek Muhammad Yunus’ advice in launching a joint venture using the Muhammad Yunus business model.
He found that the assumptions and attitudes that are instilled in young people during their college studies are the core problems of the existing economic system, including the one saying that a job is your destiny. He went ahead and envisioned a new civilization that in the long process brings about a change, recognises, honours and empowers human desires and abilities. His work has yielded results. Many universities around the world added social business courses to their academic programmes.
The Yunus Centre assumed the responsibility and established Yunus Social Business University Centres at Lincoln University, Christchurch, New Zealand; Glasgow Caledonian University, Scotland; La Trobe University, Melbourne, Australia; Becker College, Worcester, Massachusetts; the University of California at Channel Island; the Chinese University of Hong Kong; King’s College, London; National Centre University, Taiwan; Renmin University, Beijing; the HEC business school, Paris, France and Montreal, Canada; the University of Florence, Italy; Azerbaijan State University of Economics; the Asian Institute of Technology, Khlong Luang, Thailand; a group of universities in Barcelona, Spain; and various other institutions around the world, from Germany to Japan, Malaysia to Turkey.
Each of these Yunus Centres is unique, placing more emphasis on the local issues coupled with national economy. For example, the Yunus Centre in Glasgow and New South Wales place a special focus on healthcare issues. The Yunus Social Business Centres at Kasetsart and Lincoln Universities have a focus on agriculture. The Yunus Social Business Centre and SSM College of Engineering in Tamil Nadu, South India teaches social business opportunities for graduate students in the engineering and technology discipline. Glasgow Caledonian University offers Master of Science degree in social business and microfinance.
He proved the suggestion of the capitalists that all business must necessarily be profit maximising, was based on a false premise. His social business programme recognised the real human being and his/her multifaceted needs. He studied the capitalists ‘phony claim that everything must revolve around free market in order to achieve optimal results through personal gains. He saw the success of the free market that never allows anyone to express doubts about its shortcomings and/or about our own assumptions.
This made Muhammad Yunus look for a new type of business that pursues goals other than making personal profit and at the same time a business totally dedicated to solving social and environmental problems. A man, who felt a renewed sense of excitement about his idea, went ahead with it saying that he could provide a greater value for the people of Bangladesh and by extension to the entire world through his Social Business Programme. A man, who continued to analyse the present economic system, banking system, the roadblocks placed by capitalistic system, and the untrustworthy methods the capitalists use to maximise profits, came up with solutions to change the character of capitalism radically to solve social and economic problems within the scope of the free market. His idea of creating a social business, a business that would be a non-loss and non-dividend company serving poor people, has yielded results.
To improve the quality of life of human beings, he said the contributions and efforts of non-profit organisations are helping but not much, and he also proved those people wrong who assumed that government can solve social problems. Muhammad Yunus translated his vision into reality through his actions for the benefit of human beings, improved lives of millions of people in his native Bangladesh, inspired countless young people to devote themselves to social causes all over the world, and provided tools for the poor people that gave them the power to help themselves.
[MOHAMMAD YACOOB is a retired industrial engineer and engineering proposals analyst who lives in Los Angeles, California]