MUHAMMAD YUNUS, GRAMEEN, AND THE ROOTS OF SOCIAL BUSINESS
There is one name that is synonymous to Social business. A figure who is paramount and a leading example in many conversations at the SensAbility conference. A pioneer of microfinance and microcredit, Dr.Muhammad Yunus.
Originally from Bangladesh, Dr.Yunus obtained his doctorate from the Vanderbilt-University and later became a professor at the Chittagong University in Bangladesh in 1972. During which he was both socially and politically active.
But soon, he became tired of his work at the Cittagong University and in 1976 discovered how small loans could make a disproportionate difference to a poor person. Microcredits provide such people the opportunity to make small investments into their businesses which in turn helps to generate higher future incomes. Dr.Yunus once said that in his experience, poor people are the world's greatest entrepreneurs. Every day, they must innovate in order to survive. They remain poor because they do not have the opportunities to turn their creativity into sustainable income.
His first customers were 42 women from a small village to whom he provided a $27 loan. Before being offered microcredits they financed their bamboo furniture production through loans with horrendous interest rates that only led to future damage. Inspired by the initial success, Dr. Yunus continued to secure loans from banks for the poor in Bangladesh. In 1982, his project had 28,000 customers and in 1983, the project became a full-fledged bank providing microcredits alone and was renamed Grameen Bank. A symbolic name, Grameen meaning "village".
But Dr.Yunus did not stop there. Several projects initiated by the Grameen Bank became separate organizations, just like the fishers project Grameen Motsho and the agricultural project Grameen Krishi emerged. This outstanding success inspired similar projects in more than 100 developing countries. Dr.Yunus’s greatest recognition was the Nobel Peace Prize awarded in 2006.
With success came many critiques. One of the firsts was a Danish documentary criticizing microcredits in 2010 and questioning the effectiveness of microfinance for the poor. The government of Bangladesh proceeded to turn against Dr.Yunus too, accusing him of "sucking blood from the poor". This led to Dr.Yunus being laid off as a Managing Director of Grameen Bank in 2011. Dr.Yunus claimed this was politically motivated but did not win in court.
Yet, Dr.Yunus still remains one of the most important members in the history of social business. He went on lead talks in world renowned universities, visit US talk shows and was later was honoured with a Congressional Gold Medal in 2010. Dr. Yunus remains to be a pioneer in microcredit theory and development economics creating a legacy as both an economist and social entrepreneur.
His first customers were 42 women from a small village which he provided with $27. Before they were offered a micro credit they had to finance their bamboo furniture productions through loans which had horrendous installments.
Yunus continued to secure loans from banks to give it to the poor in Bangladesh. In 1982, his project had 28,000 customers and in 1983, the project became a full-fledged bank providing micro credits only and being renamed to Grameen Bank. The bank’s name is very symbolic since grameen means "village". To ensure repayments "solidarity groups" are applying together for a bank loan and act as co-guarantors. But Yunus did not stop there. Several projects which were initiated by the Grameen Bank became separate organizations, just like the fishers project Grameen Motsho and the agricultural project Grameen Krishi. This outstanding success inspired similar projects in more than 100 developing countries. Yunus’ highest recognition was the Nobel Piece Prize which he was rewarded with in 2006.
Sadly, Yunus' success with the Grameen Bank did not last. A Danish documentary first criticized micro credits in 2010 questioning the effectiveness of microfinance for poor persons. The government of Bangladesh proceeded to turn against Yunus, too, accusing him of "sucking blood from the poor". This led to Yunus being laid off as a Managing Director of the Grameen Bank in 2011. Yunus claimed that his layoff was politically motivated but did not win in court. Still, Yunus remains one of the most important persons in the history of social businesses.