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Microfinance and Social Business
Part of the microfinance dialot

Rick Wartzman, Drucker Institute, Interviews Muhammad Yunus, Grameen Bank 2008

race to mobilise bottom up knowledge networks before economic meltdown Re: please circulate this mobile healthcare article if its of interest christopher macrae to LondonMostofa, naila, estelle.eonnet, olivier.maurel, 'Halima, G.Kulothungan, rick.wartzman, ed, zasheem, shafichowdhury, Samantha, cbarraquand, Holly, melanie, gthaley, alexmsimon, lesley.williams, nazrulgb, Soledad, me, lilly3653, Matthew show details 6:32 AM (4 hours ago) WHO WILL LEAD MOBILISATION OF KNOWLEDGE NETWORKS what's going on in dhaka- battle for gramen bank or battle for grameen telecom?

either way few knowledge processes can be more urgent for micro up than:

at one level A) a foundations and corporate responsibility/sustainability survey of all major mobile telecoms as well as those who made billions from them (carlos slim yunus mexico partners; mo ibrahim who runs africa's largest transparency prize) it shouldnt be that difficult to list the worlds biggest mobile operators and start a league table of whose foundations are sustaining the world with mobiles capacity to end digital divides - it wouldnt surprsie me if iqbal quadir out of MIT is a world ahead in this in which case some way to bridge friends of yunus and friends of quadir most be discovered if youth and yunus vision of exciting 2010s is to be more than a dream ; in africa, I would expect googles Ory to hub other more of the bottom up leaders of mobile than anyone ; in china, if we had gotten to know jack ma's friends by now they could have mapped who to linkin to

- with economics falling apart at speed of light those who are trying to linkin bottom up mobilisiation of net generation job creation cannnot afford wasting another second in not trusting each other

at another level B) would expect that those who apply mobiles have sector knowledge of whats being down bottom up with health being a sector that all yunus contacts should be world knowhow leader of (intel vidars world congress netwirk of extremely affordabe solutions where mobile knowledge changes configuration of expert in city and nusres or kalyan and gramweb.net data collectors in village)

both A & B are core areas journal of social business should be practioners place of choice to contribute to; moreover if 5 business schools were chosen to partbner in accelerating SMBA of same quality of HEC they should be the number 1 collection of case srudies in these sorts of areas; one would also have thought these were highly promising area to search out a lot of the 3000 mst exciting youth correspondents of yunus 2010s

who in grameen world is going to linkin knowledge networks of this sort if its not Grameen Solutions?

from 2011 structurally yunus cannot plan that his future while hasina is around can directly linkin to vilages so its all the more important to map the knowledge networks that those who connect bottom up and open source applications of mobile can network together -mobiles are the tool that can be configured in 2 opposite types of value chains

1 those that empower at local level and multiply value in use (para professional in village)

2 those that power over and take a toll befrore every life critical piece of knowledge is reused (top-down professionals where cities extract from vilages)

grameen solutions is about the open economy if 1 wins out as the paradigm of net generation; gates solutions is about the big brother end game if 2 is the way ahead

we need to ensure 1 wins if knowledge age is to make human beings 10 times more productive with abundant job creation- this was also the challenge of both druckers and dads work on what would knowledge co-working be structured around;

Rick is centre of drucker institute in claremont as well as first public interviewer of yunus social buisness book in Los Angeles - see 2008 transcript below; gladius has been assembling review compendiums of drucker in different langauges with a particular motivation of understanding which cultures are doing what to map what drucker meant by knowledge networking

chris

Ory Okolloh http://www.fastcompany.com/women-in-tech/2011/advocates/ory-okolloh

Policy Manager, Africa for Google

@kenyanpundit

In 2006, Ory Okolloh co-founded Mzalendo.com ('patriot' in Swahili) to keep an eye on the Kenyan Parliament. The site tracks details about MPs, such as debate contributions and attendance history, keeps a record of motions made on parliamentary bills, and makes the bills themselves available, allowing Kenyans to stay abreast of legal developments and discussions as they happen -- not weeks or months later when TV and print media finally sort out the mess.

Okolloh's work is stunning in its singularity of purpose: using technology to ensure that the voices of African citizens are heard. Okolloh represents hope for those that believe the Web can help foster accountability and reform in governments that need it, and by taking on one of Africa's biggest, she is facing formidable systemic corruption.

Kenya's history of corruption is so notorious that the controversial 2007 presidential election was met with outbreaks of violence all over the country. In the time of crisis, the Harvard Law alumna co-founded Ushahidi ('Testimony'), a website for citizen journalists to report incidents of both violence and peace efforts they witnessed via the web, mobile E-mail, SMS, and Twitter. The site then uses Google Maps to plot a visualization in a process that has become known as 'activist mapping.' When it surpassed 45,000 users in Kenya, the tool's merits became clear.

Since then, Ushahidi has evolved beyond just one site, and is now a nonprofit tech company that develops open-source software platforms to be customized and implemented for a variety of citizen journalist applications. It's the kind of technological creativity that can answer critics' insistence that Twitter is just for Ashton Kutcher to tell people what he had for lunch. Most recently, the Ushahidi platform and its Web-hosted counterpart Crowdmap have been used to launch humanitarian initiatives after the devastating 2010 earthquakes in Haiti and Chile, coordinate volunteer efforts in the wake of Russia's wildfire outbreak, and to map roadblocks and detours related to snowstorms in Washington D.C.

A regular speaker on citizen journalism, technology in Africa, and the role of young people in activism, Okolloh has spoken at conferences like TED, World Economic Forum, Poptech, CGI, Techonomy, Mobile Web Africa, and the Monaco Media Forum. On December 23, 2010, Okolloh announced on her personal blog, KenyanPundit.com, that she will be stepping down as Ushahidi's Executive Director to become Google's Policy Manager in Africa. In the new role, she'll be working with government leaders to drive the development of the Internet in Africa.

As her influence spreads, so does the potential for her citizen activism to catch fire in other developing countries with Internet access, like Brazil and India, where bureaucracy too often stifles progress. If other major world economies come to expect this kind of accountability from their representative governments, it's only a matter of time before the U.S. follows suit. —Chris Dannen

LA Booktour Conversation Jan08 podcast:
Rick Wartzman, Director Drucker Institute Claremont (RW) & Muhammad Yunus, Grameen (MY) RW
I want to talk quite a bit tonight about your new book (title) and this idea ‘social business” as a way that might put poverty where it belongs – as you say a museum. But this concept really grew out of your whole development of microcredit and Grameen’s work – so I want to start with that foundation. What is microcredit all about? Why not tell us what size of loans grameen makes and what the loans are for
MY
Microcredit are loans for people who never get a loan from a conventional bank. Another way to look at it is for the poorest people, without collateral with any legal papers or anything for income generating activity and which is repaid in small installments weekly or fortnightly. Usually it will be starting from anywhere, it could be as small as $1 – as my story goes it started with $27 given to 42 people. Even today after 31 years of our work, we have loans that start at $10 or 15. It could be bigger as we go along: the average right now at Grameen Bank is $150. We lend out over half a billion dollars a year to over 7 million borrowers
RW
and what are these loans typically used for- you talked about income generating activity – what does that mean?
MY
Meaning anything that will make you earn some money. Our borrowers – 97% are women. So we are a very women-focused program. The poorest women get in almost – almost destitute. The only thing she may be familiar with is raising a few chicken : selling eggs so that would be her enterprise – or processing paddy. Buy the paddy from the market, pound them and make clean rice and sell it. She knows how to do it and immediately she gets an income. This is another familiar thing. If she is bold enough she will buy a cow, sell milk and pay back the loan and become owner of assets.
RW
To get to the punchline, can you talk about the dramatic difference these loans have made in the aggregate. You have lifted lots of people out of poverty – what do the numbers look like?
MY
Well I haven’t lifted anyone out of poverty! People lifted themselves out of poverty. We try to keep track of the situation so far as her income is concerned and how many of borrowers are getting out of poverty. This is an annual routine. 2006’s figure is the borrowers that have been with Grameen Bank for 5 years or more – 64% of them have crossed over the poverty line. So each year each day each month, more and more are coming out. There are World Bank studies that are done multi-year, multimillion dollar research focused on Grameen Bank’s performance and impact of the people – they tell that on average 5% of Grameen borrowers get out of poverty every year. So that’s another way of looking at it. Besides we also see whether the children are going to school – so one of he things we tried to encourage right from the beginning : to send the children to school. Because these are all illiterate people, the women who join Grameen Bank are illiterate, their parents are illiterate , their husbands are illiterate. But we wanted to make sure that the generation that will come out after they joined Grameen Bank are literate and go to school. That has happened. Nearly 100% of the children of Grameen families are at school. And many of them are in higher education now. We have encouraged them with scholarships and we give them student loans. Right now there are more than 21000 students in medical schools, engineering schools, universities – several of them have PHDs. So this is an amazing generation coming up from totally illiterate families – families where literacy never entered ever in history. Now we have a completely different generation - a new generation coming up . So this is one aspect also, not only the income goes up but you create a new generation where the cycle of poverty will not continue as it has been over the years
RW
So the catalytic effect of these loans, what it allows people and generations to do- one more bigger picture to talk about is what has it done in terms of overall poverty rate of Bangladesh ..?
MY
Bangladesh was known when it was born as a basket case. This country would never make it and get out of rut it was in. It was identified as the poorest country in the world. But poverty has been declining steadily in Bangladesh. It declined on average of 1% year during the whole decade on 1990s – so 10% in the nineties. In the first 5 tears of 2000, the poverty has declined at 2% a year – so at that rate if we continue Bangladesh is right on the track to achieve the millennium development goal to reduce poverty by half by 2015; but our expectation is that the rate of decline in poverty will be faster than 2% as we go along , so if it becomes faster then we will be reaching millennium goal before 2015. So that is very exiting thing for us.
RW
Grameen has done its banking part while running a successful business – on business terms yes?
MY
Again Grameen is owned by the borrowers – meaning that these women who are taking loans from Grameen Bank, they are the owners of the Grameen bank. With the 31 years of the work, only the initial 3 years the bank lost money. Ever since we have always earned profit so we have no problem of making profit– and profit goes back to the borrowers
RW
And you have stopped taking any outside donation?
MY
Yes that’s right. We began with our own money. We had never taken money from outside,. First it started with a little money from my pocket. And then I became a guarantor to the banks – i was signing papers, taking risk, taking money from the banks, giving it to the people, and offered myself to help facilitate getting ,money to the bank. So that period continued until 1982 We began in 1976 – so the first 6 years there was no external money or anything. Only in 1982, one agency IFA Intl Fund for Agriculture & Development – they insisted we should take some money. We said we don’t need money – we have plenty of money. But they said we want to participate – its such a great idea what you are doing- so at their insistence we took some money. So that was the beginning of us taking money from outside. And since them we have taken external money from NORAD, SIDA, CIDA, KfW, ... – then in 1995 we decided not to take money from anybody. And since then we haven’t taken money from anybody because there is plenty of money within the bank because the bank takes deposits – and it lends the money to the people. Each branch actually is independent financially. It doesn’t borrow from head office or another branch, it just mobilises deposits and lends money to the poor people in the same locality. It’s local money going to local poor people and building the local economy
RW
Which means that people are not defaulting – they are paying on time regularly – you have a great repayment record?
MY
yes our repayment record has always been good – not only Grameen repayment record has been good but wherever microcredit idea goes over the world- repayment is absolutely not a complaint. Its amazing because there is no collateral, no guarantee, no legal papers, and so on but still people pay back
RW
and I want to come back to that point as i think it is really crucial and defies a lot of assumptions that people made originally about how the poor would behave
MY
not only the poor will behave anyone will behave!
RW
yes , I think there were stereotypes
MY
look at what happened to subprime!
RW
well yes exactly , exactly they could use Grameen’s skill for sure
RW
This is a good place to go back to the beginning. It is 1974 – Your home country has fallen into the grips= of a terrible famine, brought on by some natural disasters and the war for independence. You were teaching economics at the time- but seeing a very different economic reality outside the university’s gates from what you were telling your students in the classroom. Could you tell us a bit about that disconnect? MY You see the reality of life is so different than the classroom where you have all the elegant theories: every economic problem has beautiful solutions. But you walk out and people are dying of hunger. There are many many ways of dying but the dying of hunger is very unusual because death comes at a very slow pace- each day you are inching towards death and nothing can be done. Other people are eating, enjoying but some people are dying – this is an amazing situation. In that situation, you feel kind of empty, impotent, useless person- you cant be of help to anybody. So I was trying to get out of that feeling that I had- so I thought maybe I don’t know what to do with this whole big problem but I can at least try, try on one person if I can be of some help to one person – that is something I feel comfortable if I have done something at least for one person. So that’s what I was doing in the village going round talking to people trying to do something. And then I see the problems of loan sharks- and I try to make the list of people borrowing from the loan sharks RW Tell me you first met this woman Sofia Begum – tell me her story MY She was making bamboo stool. As I walking buy in the village, I saw these beautiful bamboo stools and the woman making them. And the contrast between the beautiful stools and the tattered clothes and the rundown shack behind her – it didn’t match. So I was wondering what happened to her. So I tried t talk to her – it is not easy to talk a woman as a stranger I came form the outside. So anyway I tried to make it easy for her to talk – in the conversation I found that she only made 2 pennies a day. I couldnt believe why anybody should make only 2 pennies a day making such beautiful stools. I tried to make some notes on how much money she spent on making things – I thought she didn’t understand – but after I had made the records 2 pennies was still the result, that’s what she gets. Because she didn’t have the money to buy the bamboo, so she had to go to a trade to borrow money from., and the money she needed to buy the bamboo was 25 cents. So the trader gave her money but the condition was whatever she makes she has to sell it to him, and he decides at what price he will buy. So I said this is a situation of converting someone into slave labour, she is really a slave labour. All these transactions sound like business- but are actually something else. So that’s what pushed me to looking into moneylending in the village RW This was I think a 22 cent loan you made to her as an initial loan .And then you surveyed the rest of the village to see who was using moneylenders. And this is where you found the 40 some people and it took $27 in loans to break this cyvcle MY Yes RW Amazing. Its hard for us – I think for me and people sitting out there – to wrap our minds around te depth of poverty you are talking about in a place like Bangladesh and much of the developing world- I mean read about half the world living on $2 a day and a billion people living n $1 day or less. I cant fathom what that means – can you talk about what life is really like in a village – first in the absence of microcredit and then what difference microcredit makes if people can start to lift themselves in terms of amount food, they can get, what kinds of things they eat , the rhythm and what their life is like MY One way to look at this is that Bangladesh has right mow 150 mn people , when we started we had 75 million people. RW and this in the area the size of Wisconsin MY Yes. ..At the start, not many people could own land because its in short supply. Half of the population were landless people. So if you didnt have land, you don’t have a livelihood really because the land provides you the food and you can take care of yourself. Those who do not have land; they have to find other sources of income. So the employment didn’t have that much opportunity for half of the population for the country So their only survival is whatever odd jobs they could do –and that’s the only way they cold survive- very seasonal agricultural jobs. So life was extremely difficult- so what we tried to do was instead of sitting around see if we could get a little money to start self-employment which we supported with credit –so that we lend money to create your own income generating opportunity. And move on from there – if you are successful in that you can move on hiring other people and start a business RW You write both in banker for the Poor and in your new book very passionately, and I think persuasively, about the wrong headed assumptions that lots of development officials make in places like the world bank and those running traditional anti-poverty programs that government officials make that most economists make – we were joking today that Peter Drucker (whose work I am involved with) in all recorded history there has not been one economist who had to worry about where there next meal would come from . I think that’s something you could relate to. Tell us about some of what you call economic blindspots and why they have been so counter-productive in tackling global poverty. We have touched on one that the poor are a bad credit liability - that has certainly proven to be untrue. What else have you run up against as assumptions that are backward or just wrong? MY The traditional way poverty is looked at – you create jobs, if you create jobs then poverty will be taken care of. So the question is how do you create jobs. The only way they could think of creating jobs is building infrastructure – investing in highways etc. So world bank and others specialise in infrastructure , big projects –hoping that these projects will build the economy, a lot jobs will be created and the poor will be moved out of poverty. So they singlemindedly pursued that kind of policy, even today they pursue the same policy creating a structural environment but there they don’t look at the people. This is known as trickle down theory you build an economy that gradually reaches down to the poor but in reality the economy moves in a different direction. It is the top people who gain, not the poor people, from the economy moving. They become richer and richer but it doesn’t flow into the poor people. This is the kind of thing that is happening in China right now; China is moving very fast 10-12 %. The top is moving up, the poor moving down, the income gap is getting bigger RW I know another area that has been pursued a lot and has been a traditional area that has been pursued in this country is jobs training and skill training, and I know you are not a big believer in that. Tell us why MY Many of the poverty programs look as poverty as part of the work because they assume people are poor because they don’t know what to do, so you have to tell them, train them how to do things. So you come up with great ideas on training this or training that. In most of the cases people go to this training programs, not because they need the skill but because most training programs also come with some financial benefit –some kind of daily allowance. So people come to pick up the daily allowance. It doesn’t matter what you are teaching them , and they have no use for whatever they have been taught. So you go home and nothing changes because it is not followed up with something to be supported - by a credit facility or marketing facility or whatever. So just assuming that you train them and somehow they will change their lives, it doesn’t work out. In contrast, our work started out by saying that people have an enormous amount of idle capacity. They already know what to do but they don’t have a opportunity to translate it to work because the financing isn’t possible. Just this example of the lady who is making the bamboo stool – she knows what to do but she doesn’t have the money to do it. And someone else took advantage of her situation and made the money himself instead of letting her make the money. Many of the things that you see around done are done by poor people . Just one familiar example =- a repair man who repairs car, equipment , ... he know his job very well but the repair shop is not owned by him.. He works for the repair shop and the shop attracts customers because he is there. But the guy who owns the repair shop doesnt know a thing about the equipment, all he does he has the money, runs it, so the profit comes to him. So if this repairman, if he had some money, some sources of financing if he had gone for himself he would have made money himself, but just because he doesn’t have the money he cannot do it. Many of the taxi cab drivers don’t own the taxis, it is the owner of the taxi that makes the money.. In Bangladesh if you go to Dhaka City you will see hundreds and thousands of rickshaws on the street. It s a very simple gadget – 3-wheeler rickshaw, it costs very little. But the rickshaw puller is not the rickshaw owner. Some guys somewhere owns the rickshaw, the puller is just a daily labourer, he makes a little money out of it and the income goes to someone else. Or he rents the rickshaw, where he has to pay a lot until he has earned enough to pay the rent, he can not touch any of the money, so only above the rent he has to pay, that’s his income. But if someone had financed him to buy the rickshaw the entire income would have come to him, instead of giving it to someone else to pay the rent he could pay back the loan and the rickshaw would be his. So this is how the ability is there ,but he cannot make use of it for his own benefit RW Why credit should be a human right as you put it ... you are a big believer that women more than men make the best borrowers at least for Grameen and your strategy MY we had a little controversy with the conventional bankers when i was trying to persuade them to lend money to the poor people. I was arguing with them about 2 things: 1) they were unjust because they refused to lend to poor people, 2) another complaint was that conventional banks rejected women. As evidence I was showing the figures of the borrowers they had -not even 1% were women. SO I said there is something wrong in your system,. So when I began I wanted to make sure that half the borrowers in my work were women because I had been complaining about that issue a lot. When I went to the women to persuade her to take money she said no: dont give it to me . Give it to my husband, because I don’t know anything about money- literally she hadn’t used money for anything so she doesn’t have any confidence in that. So it took us a lot of effort to build confidence in the women to take the money. And finally after 6 years of our work, we made it to 50 50. then we noticed that the money that goes to the women benefits the family more than the same amount of money going through men RW why is that it MY Women have a lot of features which at time I though was Bangladeshi but it is basically universal.. Women paid lot more attention to the children in the family than men do. So this is one finding very clearly demonstrated in our work – for example poor families as a coping mechanism, if they cannot feed all the children in the family they give away the children to other better off families so they can work there, they can be fed by those families in exchange for their work. So they become a kind of slave labour themselves- they work day and night just for food. When a mother takes a loan and starts earning some money, you see in that house these kids start coming back but you dont see that when the father is the borrower. So you can see the difference of the attitude of the mother to the children and the father. Also if you look at the way woman behaves, when she makes extra money and income from the work she is doing, if you look at who should she direct her attention to with this money that she got – if you make a list it will start always with children , children becomes first beneficiary of whatever she earns, then household, the others and so on and if you see whether she is in the list herself – probably she will be the last item on the list, But if you look at the men’s list it will start with him, and goes down the other way. It’s a kind of quality of self-sacrifice that is built into woman unlike men; men doesn’t behave the way woman behaves. Even the way money is used after it is received. Traditionally, when a man receives a wage cheque the first thing he does is go to the pub , enjoys himself. In the same situation women don’t do that. Also women have a longer vision of some kind to get out of poverty. Men were more casual about it, men didn’t think about tomorrow, they more enjoying today. Women wanted to get out of the situation because poverty weighs much more heavily on the woman in the same family as it does on man. So women wanted to get out of situation as fast as she could and she wants to build up something, she is looking forward to reach some place which you don’t see in men. So seeing all these things coming up, we changed out policy and asked ourself what’s so good about 50 50, and focused more on women – as a result we now have 97% women RW Does microcredit have a role in the US – eg New Orleans after Katrina, and if so why hasnt it caught on more here? Are there institutional barriers MY Katrina is a disaster situation so of course you need all the help you can get, and microcredit can be very helpful in building houses and livelihoods all over again. But in general if you look at the US situation, millions of people in this country dont have bank accounts because bank will not accept your account because you are too small. They dont want to handle small accounts, so you are out RW Payday loan racket? MY Yeah. And if you receive your cheque from your employer and if you want to cash it you cant put in your account and get the money because you dont have a bank account. You go somewhere else , and that’s why you have the cheque cashing companies all over the country and they rip you off. Even a government cheque which is as good as money,you cant get $1000 dollar cheque, you get much less because somebody else makes money. So you need something – this is a microcredit situation meaning that the banks don’t give you the service- you have to find another way of building that banking. And the payday loans you just mentioned, you need a small amount money between your two payday cheques- nobody will give it to you so you go to the payday people who will charge you an enormous interest, typically 40%. And you see pawn shops everywhere, huge big signs in any big city. So this indicates the system doesnt work at the bottom, very clearly very loudly, boldly but nobody notices because those who matter they have their bank accounts so they dont have to pay attention to it. This in the richest country in the world, the most sophisticated banking system – for whom, millions of people dont get to it. RW But there are some problems with microcredit , why it doesnt take off here? institutional barriers about deposits? MY What I would say that microcredit problems operating in the States have problems because they are not allowed to take deposits – because NGOs are not supposed to take deposits. This is the same law everywhere not just the USA. So you need to have a banking license, a new banking law to create microcredit banks. People say why dont you take the usual banking law and create a bank and lend money to the poor people. My point is yes you can do that but to create a bank in the USA you need a huge lot of capital requirement that is buitt into the law itself. So the conventional bank is like a supertanker , it can go into deep sea carry lots of cargo that’s a huge thing, but microcredit is like a dingy boat! It goes into shallow water. So if with the architecture of a supertanker you build a dingy boat , it wont work , it wont float, it will go down. You need a new architecture. You need new piece of legislation so this can be done. Then another problem is the welfare law. Welfare law extends right into the middle of it. You cannot lend money to a welfare recipient – these are the people you want to reach, so that they can get out of welfare. But the law says no way you can’t do that. The law requires that if the welfare recipient earns a dollar, he has to report it to the welfare authority so that the dollar will de deducted. Its a funny law- you are supposed to encourage people to earn money when you are on welfare so you get out of welfare. But the law is made in such a way that they want to keep you there, they have no interest in getting you out RW Let’s move on to your broader concept of social business – Grameen has expanded is much more than a bank now – you have expanded into a network of 26 companies, is that right? Gotten into all kinds of things: Healthcare , education , fish farms. fabrics – there is one venture that I think is particularly interesting because it underscores the importance of info technology and its power in helping the poor lift themselves out of poverty and that is Grameen Telecom – could you touch on what that company is about and has been able to achieve MY I was very enthusiastic supporter of bring information technology to the poor people. I was arguing that microcredit was very important to poor people to change their life because it creates income , creates their saving habits and so on. At the same time the new technology that is flooding the world and changing the whole world could be very effective for changing poor peoples lives if we could bring the technology to the poor people in the right manner. While I was arguing that I had no way I could demonstrate it, and really test it out. One opportunity came when the government of Bangladesh was issuing licenses for private companies to provide cell phone service. So we applied we thought why not, let’s apply for a cell phone licenee and we will cerate a new company. So we applied and called our company Grameen phone. Our idea was to bring cell phone in the rural areas because at that time when we applied the only telephones you had for the city, and then only half a million phones in the whole country. So we will create this cellphone company and bring the cellphones to the villages, and give loans to Grameen borrowers to buy herself a cellphone and sell the service of the cell phone and she will make money. Everybody said this is crazy. These women never saw a telephone in their life ...who she’s go to call! RW Ha! Again a lot of assumptions – right! So who she call? MY So I was trying to convince them I am not doing it for her to call someone. I am creating it so that others will need to come to her as she’s the one with the phone. And she will make money This will be her new cow!, her cash cow! Nobody believed that! Anyway finally we got license and started the work in 1997, and immediately it became a big success. It became a roaring success for Grameen borrowers to have a telephone- once you have a telephone you get out of poverty in a couple of years. Absolutely guaranteed because you make so much money renting out the telephone. The telephone service expanded very rapidly because of people’s eagerness to communicate. Today Grameen phone is the largest cell phone in the country – it has over 17 million subscribers. RW You were told you would sell about 250,000 telephones- that’s what all the experts predicted? MY Yes when a consultant was hired to estimate its potential – he estimated 250,000 subscribers by 2005. In reality we reached 8 million by that time – so that’s the kind of consultant’s imagination. So today Grameen phone is very successful, telephone is everywhere, and also today Grameen telephone is also the largest taxpayer in the whole country so you can imagine how big the company is RW Fantastic – so let’s talk about social business- what is a social business and how is it distinguished from this whole notion of Corporate Social Responsibility -what’s different about your idea? MY The idea i was arguing for is : now in economic theory you have only type of business- business to make money, and the mission of this business is to maximise profit. That’s what the theory talks about – there is no other kind of business in the whole world. The first objection i had that theoreticians that built this theory had assumed that all human beings are some kind of money making machines . Otherwise, you wouldn’t have only that theory RW One dimensional! MY But the real human beings are different, real human beings multidimensional, there are so many things one wants to do , achieve enjoy not just making money. Making money is important part of human life but there are other things you want to help other people, you want to change the environment you live in ,.... those things are not considered within the business framework. I am saying this has a very narrow interpretation of the human being which has distorted the entire economic structure of the whole world ...and that’s why we have created a lot of problems. If we are to include the totality of human being – as real human beings are, I am arguing we need at least 2 types of business; One business to make money, profit maximisation; another business to do good to people, and to do good to the planet -this can be another type of business because this in your heart the way you think: this will be non-loss, non-dividend company with a social objective. The profit maximising business is all for serving yourself, the person who runs the business- its all aimed at oneself. The other one is aimed at the others, nothing to me but everything to the others- in that way it is completely the opposite system. So we can create non loss non dividend company to address all kind of social issues. Like the poverty – microcredit is a good subject for social business- microcredit is not an area where you want to make money – you dont want to get rich like the moneylender who is maximising his profit instead of letting Sofia Begum make a living. He wanted to maximise his profit so in the process he didn’t let the borrower get any benefit of it. That’s the profit max principle What i am saying microcredit should be a social business: a business to help people get out of poverty not to make money for myself. It could be a water company , there are many countries where safe drinking water is not available, -polluted waters, in Bangladesh, there’s arsenic contaminated water. So we can create a water company which brings safe drinking water at a very affordable price so every body can drink safely and avoided diseases and health hazards. So this is what I an arguing RW But this social business is a business?- it’s non loss so lets’s start there : it needs to be self-sustaining, it needs to makes money, and if its a water company it needs to compete against any other water company that may be a profit maximising business – correct , so its a level playing field MY Its a level playing field- you are giving more options to people, you are bringing more competition in the market – you are fulfilling all the conditions of the free market, and at the same time you are addressing the issues that remain unaddressed by the profit maximiser. There are many things that the profit maximisers will never do. For example, there are many vaccines available for very important diseases but these are not produced because profit maximisers dont find them attractive enough in terms of making money, so they dont produce that vaccine, and people die. So there is a case where you can create a social business where you produce the vaccine to save the people and you run it a business RW You produce it profitably, you just dont produce it as profitably as Wall Street might demand – and in terms of no dividend: so all the money you do make instead of being paid out (though if you are an investor, your initial investors get their money back) but once they are even everything goes back into the business. Fascinating. This is like all your things more than theory; you have started a joint venture with Danone- the yogurt company – can you talk about that as an example of a social business at all the levels it works on – from where you have located your factory, to the supply chain and so on MY When I was arguing about that, people didnt understand- very difficult to touch it what it is that i am talking about. So I was trying to demonstrate cases – one of them was an interesting one that started with a chance meeting with the chairman of Danone in Paris. He invited me to lunch and brought his top officials. He wanted to know about Grameen bank – he was very curious so I answered all the questions. Then I asked him about what does Danone do –so he explained what Danone do . So he explains what Danone does globally. He wanted to know about Grameen , I wanted to know about Danone. Then I said well why dont we create a company with the name Grameen Danone in Bangladesh. He said to do what? I said you said your yogurt is very delicious everybody loves it – why dont we produce yogurt. The idea is that millions of malnourished children in Bangladesh – we can produce this yogurt and bring all the micrornutrients which are missing in the children –the iodine, vitamins, iron – fortified yogurt and then we sell it to the poor children and make it so cheap that they will find it a very attractive snack. He immediately agreed, let’s do that. I said i am not finished yet. I said it will be a social business. He said what is a social business? So i explained you invest and we invest it will be a joint venture – over time we can take back our investment money but no dividend after that because it will be all for the achievement of the goal that we have set which is to bring nutrition to the children and have healthy children. He immediately said i agree. Then i thought he didnt understand my English! So I sent him an email elaborating everything i said. And he wrote back right away, and said i understood everything,, we agree let’s go and do it. And we did it. Now that company is operating and that plant has been set up. And we wanted to have a very small plant set up in the village. And the designer of the plant was shocked because he had designed all the big plants in Brazil and Indonesia, mega-plants in China and India – huge pants. So i said make the smallest possible plant because we want to have a tiny coverage area. He couldn’t understand why i am saying that. He was unhappy , spent a few days in Bangladesh, and suddenly he appeared to me – and said Dr Yunus I did it and I am so happy it is acute little le plant _ I have fallen in love with this plant, because i have used all the state of the art technology into this plant that I have not even used it yet in a big plant – so this will work beautifully. And it is working beautifully RW Why did you want it small? MY I wanted it small for several reasons: so that the area of coverage is small, it will be the local milk going back to the local children, and so that they know the whole process. The economy has become so disconnected, where the milk comes from where the chicken comes from you dont know , you just buy it , you dont know each other and so on. Another thing is the smaller the area of service, you avoid the cold chain which is a very expensive thing. So you have yogurt you can consume in 48 hours and you dont have to spend a lot of money keeping it cool. And iw as insisting te cups be biodegradable. So they found something from China. I said ca I eat it? They said no you cant eat it. I said no we should have something we can eat – an edible container. I gave the example of ice cream – I said when I buy ice cream I eat the come and I love the cone. Why cant you do that because after all the poor people are paying for it- why should they have to pay for something that they have to throw it away. So you have to look at all possible ways where you cut down the cost- if you are a profit maximiser you are into frills, the more frill you add the more profit come- so you dont bring simple things, you are always adding colour, flavour, container or something big – the real thing is so small but you spend so much on the frills of it so people are paying for that. In case of social business you dont have to because you are doing it to serve the people to address whatever the social goal is. Qs 56.55 Q My question has to do with the loansharks – I am sure as you developed microcredit opportunities for women, they must have objected –can you tell us more about that MY Yes they objected , they didnt like it, they spread rumors – but the loan sharks were not the only ones who objected to our work so in the whole crowd they got lost- there were s many who objected to us! Men objected to us - because we lent to women – that was quite aggressive. Then it took a religious shape. Religious people saying that what you are doing is against religion – it must be stopped. That became stronger than the moneylenders, stronger than anyone else. So we had to go on arguing with the religious people, and we had to draw on the history of Islam and what Islam was all about –how women did everything in ten original period of Islam. And also to remind them that the Prophet Muhammad, he started his career working for a business woman. He worked as an employee of a business woman and later he married her. So I said if you want to be a good Muslim , you look for a business woman. So we had to go through all these kinds of things. Academicians didn’t like it- this isn’t development – giving tiny loans you are fooling everybody, you are destructing things. I said look I am not taking anyone’s money away, this is a business- why are you objecting to it? So the moneylenders were just one of the pieces of the opposition we had to move. Q Is charging interest a problem in an Islamic country? Has the bank expanded outside Bangladesh? What do you mean when you say the owners of the bank are the borrowers? MY Yes the bank charges interest and there was opposition because of the conflict with religion. But that didnt last very long since all banks in Bangladesh charge interest so we were not the new ones in charging interest. But since we do it in the villages – banks dont work in the villages – we can close to the people who were very sensitive to the religious issues. Then we had help from many Islamic scholars they said dont worry about this accusation because what you are doing is perfectly all right with Islam. So I said can you explain how we defined ourselves. They said very simple because Islam is opposed to interest as an instrument of exploitation. But what you are doing is not an instrument of exploration because this bank is owned by the borrowers. The owners cannot exploit themselves. So no matter what its called in the eyes of Islam yours is not the interest that the religion bans. So you are completely safe, the interest is entirely inside. It is not somebody exploiting from the outside. Many people who are a great fan of Grameen bank they will still whisper can you change the name: interest – call it something else, because they feel very sensitive to their religion. On ownership: Yes the borrowers buy the shares. Within Grameen bank not only we lend money, we collect savings. Even a tiny penny whatever it is. Every week as you pay your installment put a little penny or whatever you can into your saving account. And that grows al lot. When you have more than a dollar fifty cents – as that’s our share price – whenever you have a dollar fifty cents in your saving account you may authorise us to buy yourself a share. It is up to you- you are entitled to a share, you may take it or not –its up to you. But it because so popular to buy one share because it gives a lot of prestige, facility and so on.- so everybody buys a share. So we have 7.5 million shareholders. They elect their board members – that’s one of the occasions they see how important they are because they elect their members out of themselves – and she can become a board member. That’s a very important position – you are running the biggest bank in the country coming from the village, and our board consists of those borrowers who got elected by the borrowers who voted for them . There is a big contest every 3 years to elect the board. So that’s how they become owners of the bank. Yes the Grameen Bank idea has spread all over the world. There are many cases where people wanted our help to do it. We have a program called : Build Operate transfer. You give us a contract: we go to the country where you want to set up the Grameen program. We send our staff from Bangladesh to set it up as if we are opening another branch in Bangladesh, we do it, set it up, let it run and bring to a profitable level, and then you tell us who do we hand it over. Or you can let us continue with it. Run in 7 different countries the build-to-operate. And now many other countries are approaching us to set it up. China has become the most important and very eager country to have build to operate. Each province in China is allowed to negotiate with us. So the idea has spread, and is spreading more and more Q I want to know where you get the idea – is it spiritual one – because you talk about giving tge person the tools where she can feed herself for life but social business sound like a terrible thing in the United stares so i want to knw if you see it as working in the states where socialism and other isms dont work MY This one will work! This is just the beginning. We are talking about it and I am sure some =one will start a social business here. There is so much scope here. Like in my book I mentioned warren Buffett who donated some 36 billion dollars to the Bill Gates Foundation. I was saying before he decided to give this money to the Gates Foundation, I wish I had a chance to talk to him. I will talk him out of it and say why dont you keep at elast some money a and start a social business. And this social business will be to address al the 47 million Americans who dont have health insurance. Because you are insurance man, you know the ins and outs on insurance. So while you are doing a good job, why dont you design an insurance program with your money, start it, and then be remembered in history that you started something that nobody else could do, not even a government could do – you did it. So this is the kind of opportunity available and this could be a beautiful social business to provide health insurance to 47 million Americans RW With the creation of social business , there is still a role for philanthropy? MY I am not taking away anything. Just ading one more piece. If you are interested you can take advantage of it . It come from the business side, business people can create social business . It could come from the philanthropy side, foundations can create social business. I am encouraging foundations to create a social business fund within their foundation so that can support wherever social business comes from . Q Will you talk about your beggars program? My This is a program we started about 4 years up because there was lot on controversy on one issue saying that microcredit is a fine idea but that it only works for the entrepreneurial poor. This is one statement I can never stand. Because to me all human beings are entrepreneurs. So there is no entrepreneurial poor and non-entrepreneurial poor. All human beings, rich, poor, or anybody are entrepreneurs because it is part of human being- you cannot take it out, because that’s how we came to this planet- that’s how we survived on his planet – our entrepreneurial capability, creativity. So we wanted to demonstrate it. One way we thought we could demonstrate it by lending exclusively to beggars. So we started a separate program to lend to beggars. So we sat down with the beggars, talked them and find out at what point he or she became a beggar. What was the tipping point because after all she was a normal human being living her life, at on point she was pushed and pushed and became a beggar, and stretched her hand for survival and taking care of her kids or whatever. Once we went through this stuff, we made one suggestion: as you go from house to house begging would you care to take some merchandise with you and sell. And it appeals to them because we made it clear we are not asking for anything extra. You do it anyway, you go to houses to beg. All you do carry a little basket, a little bag carry candy, sweets, toys for the kids whatever people will like. And people will have options – they will not just shoo you away- sorry I cant give you something to day; you can say i have got something to sell would you care to have a look at it. Then give them an option maybe people will lie something. And the beggars started liking this Initially we thought we would have 2000 beggars in the program. And we will see what happens to those beggars: can they really run the business? People say you know you’ll need to train the beggars they dont know want a business is. I said look I am not a training guy, I am not interested in training – so let’s see what happens. It became very popular not only among the beggars but among our staff. We have 27,000 staff –everyone wanted to serve beggars. So i said no only one beggar per person – because at that time I had no idea how this was going to work out. I didnt want to mess up the whole thing because everybody wanted to go for the beggars. But there is a tremendous pressure coming in: they want to have 10 persons per beggar. I said no ten is too many but I started to yield one , two, three now four – now we have come up to four so we have more than 100,000 beggars in our program. And in the last 34 years, what is amazing more than 10,000 beggars have given up begging completely – they have just become door to door salesman. And some of them became very successful personal shoppers because women in Bangladesh cant go to the market, so they ash their husbands to bring this bring that and husbands are husbands they always forget, they cant remember” oh i see tomorrow I will bring it tomorrow, and tomorrow he forgets again. So now it has become very convenient, you just tell the personal shopper bring me this and you pay her and she brings it. The remaining 90000, I would say they are just about part –time beggars because they are mixing selling and begging at the same time. My colleagues are getting very impatient: why cant they join like the other10000 have done – stop begging and concentrate on the selling. I said look they are trying to close down their begging division, they are in the process of restructuring their business , they need to strengthen their sales division so give them time. Amazing thing the loan they ask for – typical 10 to 15 dollars- with 10 to 15 dollars if you could change the live of a beggar into a dignified a salesman that now you are not afraid because you are selling something – I ask when I meet the beggars how does feel to you – one common answer I get , they get very excited not about the money now when I knock on the door, they immediately open the door and let me in. When I was a beggar nobody would open the door, they will just give whatever they give through the window. Now they give me a stool to sit, that changes completely now I am a respected person, and the kids come around and ask what did you bring today, they want to see what they can buy because it is a person who is coming with things they like. And I am also reminded by this, that if Grameen Bank gave $15 to all these 100,000 beggars as a grant as a charity – we could do this buy what would have changed anything? Nothing. They would probably enjoy some food, and a couple of weeks, hey would come back and ask can we get some more. They will still remain beggars, but we designed it as a loan, we said this is an interest free loan. You don’t have to worry, This money will never grow the 10$ will always be 10$. And there is no time limit, so you dont have to worry about paying back in a month or a year. Its up to you, the condition is you pay it back you can take another bigger loan – whatever you want, the door is open. All the money we have lent out in the last 4 years – more than 60% of it has been paid back. So this is really something to see how people can take things seriously and challenge themselves. --- On Sun, 7/8/11, Mostofa Zaman, London wrote:

From: Mostofa Zaman, London Subject: Re: please circulkate this mobile healthcare article if its of interest To: chris.macrae@yahoo.co.uk Date: Sunday, 7 August, 2011, 23:07

The health survey of major mobile players: of Bangladesh? Or of the world to survey?

On Sun Aug 7th, 2011 11:16 AM PDT christopher macrae wrote:

>some questions raised by this: > >have we coordinated survey of all major mobile players on what they are doing bottom up- if not how much would it cost to get a student or telecentre surveyto do the interviews? I think we could share the analysis and see if we could form a club suggesting to the cpompanies who was doing the most economic stuff > >last month vodafone announced a social entrepreneur prize http://www.vodafone.com/content/index/about/foundation.html > >I see vodafone has partnership with unfoundation on childrens health > >http://www.vijaygovindarajan.com/ > > Vijay Govindarajan > >

>Vijay Govindarajan is the Earl C. Daum 1924 Professor of International Business at the Tuck School of Business at Dartmouth. His most recent book is The Other Side of Innovation. >Vijay Govindarajan

>Note: This blog was co-authored with Justin Chakma, an undergraduate student at the University of Toronto. >One of the notable differences between emerging markets and the developed world is the ubiquity of mobile phones in emerging markets. Citizens of poor countries already use mobile phones to make payments, transfer money, and otherwise fill in the voids created by a poor banking infrastructure. An even bigger opportunity for mobile services may lie in the realm of healthcare. >Many communities in emerging markets receive their front-line primary health care from community health care workers. In South Africa, for instance, 50 percent of all health care providers are community workers. But the training and certification of these workers is spotty — some are highly trained professionals; others have very rudimentary training. Mobile phones are proving useful in filling these institutional voids. >One pilot program allows community health workers to input clinical information into their mobile phones, access patient records, and receive recommendations for standard care. The Vodafone Social Investment Fund is funding this program; Vodafone's Group R&D and Vodacom, in collaboration with a local healthcare IT firm, GeoMed, manage it. Managers can identify services that are most regularly given in each district, which allows them to better allocate resources and prepare community workers. A platform allows providers to track and respond to common clinical performance issues associated with community health workers, as well. >The technology is helping to save money, standardize quality of care, and overcome institutional voids in medical training and irregular training standards. It has fed into the establishment of a 'Vodafone common health platform,' which can be licensed for use by health providers at a monthly service cost in any country. A parallel pilot project is ongoing in the UK. In fact, Vodafone spun out the work through the creation of a Mobile Health Unit in January 2010. >Businesses looking for ways to innovate in emerging markets — and to practice reverse innovation — should think about how they can fill institutional voids such as the lack of an entrepreneurial ecosystem, insufficient regulatory oversight, and unstandardized educational certification. The opportunities are rich, and growing — and mobile phones are often the medium for making that happen. > > >How Mobile Phones Can 'Reverse Innovate' Health Care >10:54 AM Thursday June 9, 2011 | Comments ( > > 8) > > > > > >FEATURED PRODUCTS > > >How P&G Tripled Its Innovation Success Rate >by Bruce Brown, Scott Anthony >$6.95 >Buy it now » > > >The Productivity Paradox: How Sony Pictures Gets More Out of People by Demanding Less > >by Tony Schwartz > >$6.95 >Buy it now » > > > addthis_pub = 'harvardbusiness'; > addthis_options = 'twitter, linkedin, facebook, google, buzz, digg, newsvine, stumbleupon, reddit, delicious, friendfeed'; > addthis_brand = 'Harvard Business'; > > > > >Email >Share >Print



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