JB: Yunus's approach was to look at conventional banks' behavior and do just the opposite. Can you give some examples?
HM: One of my favorite lines in the film is when Yunus says that he just looked at what the conventional banks did and he did the opposite. They lend to the men, he lends to the women; they lend to the rich, he lends to the poor; they work in the cities, he works in rural areas. Since he had not come from the banking industry, he was not stuck with their mentality of how things had to be run, so he was free to create his own system that worked on behalf of the poor. After all, his motive was to help save people from starvation, so the whole mindset around the work has been totally different from those working from a mindset of profit maximization.
JB: Simple yet profound. Yunus has an unconventional view of the poor as well. According to him, poverty is the fault of an environment/society that has kept people from reaching their potential.
HM: I think since Yunus is an economist and also a teacher, he was able to see things through a different lens than someone who had always been working in business. His first efforts at microcredit came by having his students work with him to try to help those suffering from the famine, so he went in with a researcher's open mind. First, they tried to improve crop yields, but with that effort, when the day laborers came to do the husking, they told him that this didn't really help them.
It was then that he realized that the farmers were actually doing fine and that they needed to do something for the day laborers who were working so hard but living hand-to-mouth. They were the ones that needed help, so he decided to work with what he calls the poorest of the poor. These people work very hard, but they are at the mercy of job opportunities that come and go with the seasons.
He also saw that they were often selling products in an indentured servitude way, for instance, where if they were making wooden stools, they would buy wood from the same person they sold them to and they were stuck paying the highest price for the raw materials and then getting the lowest price for their finished product. In the town they worked in, his students did the research and found that just $27 given to 42 people would get them out of this cycle. When they paid him back, his role in microcredit was born.
Also, when you look at the lives of the poor, they often have to spend more time doing more work; they just aren't benefitting from the higher salaries. One of the benefits often found through microcredit is the families finally have some leisure time. All of their effort isn't put into where the next paycheck is coming from. I know I saw a lot of the poor in Bangladesh doing back-breaking work that we have machines to do here.
JB: It was predicted that Grameen would never collect on their loans to the lazy poor, yet the recovery rate has been an astounding 97%.
HM: In creating what became the Grameen system, they had the groups meet every week and pay back a small amount. This really kept the loan manageable for the borrowers. On top of that, it gave them a support system. If anything is going wrong, others will know and help out, or offer advice and try to fix their problems. There is a lot of trial and error, as there is in any business, but by having group solidarity, they are able to have a very high rate of recovery.
JB: Beyond microlending, Yunus also developed social business. How did this concept evolve?
HM: Initially, Yunus began with microfinance, but immediately he saw that just as the poor lacked access to financial institutions, they also lacked access to so many other things that are basic needs, such as education, healthcare, energy, etc. From the beginning, they would have the borrowers pay a few cents to bring a teacher to the villages to help educate the people. Then, they began Grameen Shikkha as a separate company to provide education.
As they studied why people couldn't pay back loans, he saw that most people that couldn't pay had health issues, which is not surprising because, in the US, over 60% of personal bankruptcies are also due to health issues, where you spend all your money trying to get better. So, they started a health company to try to prevent a lot of health problems that could be avoided with the right care.
For example, he saw the kids suffering from night blindness. He asked doctors about why this happened and found it was simply due to a vitamin deficiency. So, he decided they should sell seeds and encourage everyone to plant their own kitchen gardens to take care of their nutritional needs. Not only did they become the largest seed seller in the country, but they were able to eradicate night blindness among children. Other groups may have come in and provided Vitamin A tablets to get rid of night blindness, but Yunus saw the power of using business solutions to really get to the root of the problem.
So, he kept coming up with business solutions to solve these needs. And over time, he realized that he had created a business model which he now calls social business. Social business is a business created to solve a social or environmental need that is a non-loss, non-dividend company. The company wants to cover their costs to stay in business, pay decent salaries and grow, but they keep any profits in the company so what they can really do is help people have access to the things they need to live decent lives.
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