In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of $27 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty.Against the advice of banks and government, Yunus carried on giving out 'micro-loans', and in 1983 formed the Grameen Bank, meaning 'village bank' founded on principles of trust and solidarity. In Bangladesh today, Grameen has 1,084 branches, with 12,500 staff serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 94% are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system. Grameen methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.In 2006, Yunus and the bank were jointly awarded the Nobel Peace Prize, "for their efforts to create economic and social development from below.
Muhammad Yunus: There is only one kind of business in the world that we all know about, because in economic theory, the way business is presented, business means business to make money. Profit maximization is the mission of the business, so you continue to focus on that. So anybody who comes into business, that’s what he or she does. And to me it is kind of a very narrow interpretation of a human being. I see that as human beings as a money making machine; as a kind of robot-like performance that you . . . the only thing you do is to maximize money; not that you . . . you have no other thoughts. But in real life a human being is much bigger than that. You want to make money. You want to do good to people. You want to make a difference in the world. You want to solve the problems that you see around yourself. But those things are not included in the business world. So I’m saying that in order to justify the totality of the human being, you need to create one more kind of business besides the existing type of business of making money. The other type . . . The second type of business would be business to do good to people without any idea of having benefit for yourself. The first type of business – profit maximizing business – that business is all about you. You want to make money and everything has to come to you. You are the center of everything – all your activity in the business. The second type of business – the social business – is business where you don’t feature at all. Everything is about others. Everything is to help somebody other than yourself. So these are the two types of business, and people have all these elements into yourself . . . into himself. The human being is a multidimensional being. It’s not a single dimensional being, like make money and that’s the only thing you do. But multidimensional aspect can be accommodated by creating that type of business, the social business. And it’s a non-loss, non-dividend company with a social objective. So that’s a case I’m presenting – that this is what is missing in the political framework of capitalism. So that is why we have created so much of a problem around us, because these issues about environment, about poverty, about diseases, about healthcare, about nutrition – all these are ignored because the type of business we are involved with do not pay attention to that. By its very nature, by its very definition it doesn’t pay attention. So we need to have another type of business which will address these issues.