From Microcredit to Social Entrepreneurship

Call him the Gandhi of our times. The Mahatma ended colonialism using non-violence. Nobel Laureate Muhammad Yunus is lifting millions out of poverty with microcredit (lending small amounts to the neediest). Now he's onto another revolutionary idea, "social entrepreneurship" (you invest not to make a profit but to do good, while still recouping your principal). Yunus, like Gandhi, is humble in manner as well as dress: a simple long cotton kurta, shirt and vest. And wise, witty and patient. When colleagues at his Garmeen (Village) Bank in Bangladesh grumbled that only 12,000 of the 100,000 beggars it lent money to had given up panhandling, Yunus responded: "Give them time; they are restructuring their business. They know which houses are good for begging and which ones are good for selling. They are into market segmentation." The American-trained economics professor came to his calling by accident. In the 1970s, he loaned $27 to some destitute craftspeople, and witnessed two miracles: All used it well and none defaulted. Garmeen Bank was born. Today, it lends about $1 billion a year (average loan: $160), to 7.5 million borrowers (97 per cent women), without collateral, and boasts a 99 per cent repayment record. Garmeen inspired a worldwide microcredit movement. Toronto philanthropist Martin Connell was an early convert, establishing Calmeadow Foundation (I was once a director). On Monday, Connell had Yunus speak to Canadian philanthropists and bankers. There Yunus outlined his vision of a world without poverty. "It's not utopian. The United Nations Millennium Goal is to reduce poverty by half by 2015. If the world believes that we can do that, it's just another step to eliminate poverty altogether." When he called for more entrepreneurs to invest in socially responsible businesses, "people told me, `You are crazy. Why would anyone invest in a company that won't make money?' I said, `People are even crazier. They just give away their money.' Charity has only one life, whereas social entrepreneurship creates a cycle." He got French food company Danone to make nutritional yogurt for Bangladesh kids. Garmeen gave local milk suppliers credit. The supply chain is working and Danone has recovered its investment. Similar projects are underway with German, British and American companies. Garmeen has 26 such enterprises. Among them: a mobile phone company (the largest in Bangladesh); a solar energy company (installing 7,500 home panels a month); and a clean water company. He envisages a universe parallel to the capitalist free market: a new stock market for social businesses; a Social Wall Street Journal; business schools producing social MBAs. Last year, he was urged to be a candidate for prime minister. The last two elected Bangladesh leaders, Sheikh Hasina and Begum Zia, both women but both facing corruption charges, had left a vacuum for the military to fill. Yunus agreed but then withdrew. Why? "I thought I'd form a corruption-free political party. I tried all my friends - professors, journalists, and business people. They all said, `No, it's a corrupt world.' And the ones who did want to join me were corrupt. So I gave up." His fame has not saved him from being harassed at times at American airports. As a Muslim, "you don't have an easy path. You are looked at differently. My name, Muhammad, doesn't make it easy ... But there are also lots of people of goodwill who are friends." What does he make of the war on terror? "You cannot stop terrorism by military means. How did the terrorism originate? Because of a sense of injustice? Did you deny people their political rights? Took over their land? "We must go to the root causes, rather than throw some bombs and think that's the solution. That's no solution. You can suppress it for sometime but it'll only come back with a vengeance." --Haroon Siddiqui

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