Thursday, September 2, 2010
Business, when not solely focused on profits, can be a driving force behind addressing some of society’s most daunting challenges, a Nobel Peace Prize winning banker and economist says.
Dr. Muhammad Yunus, who won the Nobel in 2006 and is a 2009 recipient of the Presidential Medal of Freedom, spoke recently at the Townsend Center for Performing Arts at the University of West Georgia.
Yunus, who is from Bangladesh, talked to a packed auditorium about microcredit, the extension of small loans given to entrepreneurs often considered too poor to qualify for traditional bank loans.
Yunus’ first loan consisted of $27, which came from his own pocket, and he went on to formally create the Grameen Bank in 1983. This practice eventually led to him being known throughout the world as the “Father of Microcredit.”
“I was just trying to solve a local problem, which was people in the area becoming slaves to loan sharks,” Yunus told the audience. “I had no idea it would end up taking off like it did.”
Yet the bank was wildly successful, despite the fact that he had to start it from the ground up since no other banks in the area would help him. Yunus said one of the main reasons for the bank’s success is that it is focused on helping society, not making a profit. Though the bank does make money, the proceeds go back into strengthening the business and helping greater numbers of people.
“Our initial loans are often $30 or $40,” he said. “That may not seem like a lot of money, but it’s an enormous amount to those seeking to borrow it.”
Not to mention that even though loans are not collateral-based and no lawyers are involved with the bank whatsoever, nearly 100 percent of customers pay back their loans. Yunus went on to discuss how the organization also focuses on area children, emphasizing the importance of education by providing student loans so they are able to go to school.
“When I see a social problem, my first instinct is to create a business to solve it,” Yunus said. “I’ve created many of them over the years, but never a single one to make money and I don’t own shares in any of them.”
Some of those businesses include a yogurt company that feeds malnourished children cheaply, as well as a water company that furnishes clean, inexpensive drinking water to areas that desperately need it.
“Businesses often exist solely to make money rather than solve problems,” he said. “Those businesses will never devote themselves to solving social problems because they don’t smell money in it. That is why social businesses are so desperately needed.”
For more information on Yunus and his work towards creating a poverty free world, visit www.muhammadyunus.org.