See a Problem? Start a Business

Social businesses—enterprises founded to address global problems—can improve poor people’s lives, Muhammad Yunus, recipient of the 2006 Nobel Peace Prize, told a capacity crowd at Tufts University on April 20. Yunus shared the prize with Grameen Bank, which he founded to provide microcredit to poor people in Bangladesh.

Acknowledging that governments and nongovernmental organizations certainly have a role in aiding the world’s most vulnerable citizens, Yunus pointed to his experience as a “serial business starter” to demonstrate how companies with a social mission can also be agents of change. “When I see a problem, I start a company. Now I have more than 50 companies,” he said.

“Anyone can create a social business,” he said, even if it is simply one that hires five unemployed people. “If I create a business that employs five people, I have discovered something. I have discovered a new seed, a miracle seed.” And with that knowledge, he added, he could plant thousands of such seeds, offering jobs to hundreds of thousands of people.

Among the firms Yunus started is a joint venture with the German chemical company BASF to manufacture low-cost mosquito nets that “even the poorest of the poor can afford” to lower their risk for contracting malaria. The company created jobs and saved lives. He founded another company to sell low-cost solar-home systems to provide energy in remote areas. When the business began, he said, it was very difficult to sell five solar systems a month. Now, 15 years later, they sell 1,000 per day, and have brought electricity to many thousands of poor people. “This is a business with no intention of making money for anybody,” Yunus said. “All the intention was to solve the problem of energy, so that people don’t have to sit in darkness and use kerosene lamps.”

Another firm he started, with Danone, the French yogurt maker, produces low-cost, high-nutrient yogurt for poor people in Bangladesh, greatly aiding the fight against childhood malnutrition. Danone makes no profit; in fact, Yunus said, the company asked its shareholders to contribute from their regular dividends to launch the social business. Stockholders responded by chipping in far more than was expected.

All Yunus’s social businesses are strictly nonprofit. The dividends they pay are intangible: the knowledge that the company is creating good in the world. He added that he makes it a point not to own a stake in any of the companies.

Game Changer

Yunus didn’t start out as a social entrepreneur. A native of Bangladesh, he earned a Ph.D. in economics from Vanderbilt University in 1970, and taught at Middle Tennessee State University before returning home to teach at Chittagong University. He was struck by the discrepancy between economic theory and what he saw each day on his way to work: local women borrowing from loan sharks. He decided to lend them money so they could pay off their debts.

He found that contrary to prevailing banking ideas, impoverished borrowers were not high risk; they diligently paid their loans on time. “The poor are as good as anybody else at paying back money,” he said.

He tried to interest banks in lending money to poor people, even without collateral, but was rebuffed. He eventually founded Grameen—or Village—Bank, which makes loans to small-scale entrepreneurs, especially women. The bank also lends money for higher education, and even provides interest-free loans to beggars in Bangladesh, who use the funds to start modest businesses selling snacks and household items.

Yunus’s focus is always on helping the poor. “Poverty is not created by poor people. Poverty is imposed on the people from outside,” he said. “A poor person is as good as anybody else. Simply, society never worked for them.”

He cited a meeting he attended with Grameen shareholders—many of them former borrowers who had been among the poorest of the poor. He talked with two women who looked like mother and daughter. It turned out the daughter was a physician, and it got Yunus thinking: but for the fact that the mother was born into poverty, she could have been a doctor, too. “There’s nothing wrong with her mind,” he said. “Society never gave her a chance. So whose failure is that? The person’s, or the society’s?”

The difference in this case, Yunus said, was that Grameen Bank gave her a loan, so she was able to start a business and earn enough to educate her daughter.

Yunus stressed that he’s not the only one who can make a difference. “Each one of you,” he told the Tufts audience of mostly students, “has the power to change the world. If you don’t use your power, it’s wasted.”

Taylor McNeil can be reached at taylor.mcneil@tufts.edu.