“True generosity consists precisely in fighting to destroy the causes which nourish false charity. False charity constrains the fearful and subdued, the ‘rejects of life,’ to extend their trembling hands. True generosity lies in striving so that these hands-whether of individuals or entire peoples-need be extended less and less in supplication, so that more and more they become human hands which work and, working, transform the world.” – Paulo Freire
Growing up, my best friend from 1st through 5th grade was Bangladeshi. I spent countless afternoons playing computer games with him. One of the most vivid memories I have of that time was how insistent his parents were that we eat apples and bananas every day while we played our games. For anyone who emigrated from Bangladesh in the 1970’s, the memory of famine was etched on their minds. The famine of 1974 that lasted a year left 450,000 dead and a country reeling.
When most people are confronted by consistent poverty, they either shut down emotionally as a defense mechanism or they rationalize the circumstances of those who are poor. Few people, or rather, few adults, ask why anyone needs to be poor. After the famine of 1974, that was precisely what Dr. Muhammad Yunus, then head of the Economics Department at Chittagong University asked himself. Dr. Yunus began visiting rural Bangladeshis to figure out what he could do to help in the aftermath of the famine. Acquaintances in the villages soon became friends and he realized that almost all of his friends were under the thumb of local loan sharks. A researcher from the Economics department worked with Dr. Yunus to identify everyone in one particular village that was captive by the loan shark. They identified 42 people, whose combined principal amounted to $27. The astonishment that so many people’s lives could be held captive by so little money led to Dr. Yunus’ founding of the Grameen Bank.
Dr. Yunus learned best practices from the leading banks in Bangladesh and then turned them upside down. As Dr. Yunus remarked, “They go the rich, I go to the poor. They go to the city center, I go to the rural countryside. They ask for collateral, I ask for no collateral. They are staffed with lawyers, we are the only bank in the world without lawyers.” Twenty-eight years after the formal founding of Grameen in 1983, the bank now employs 25,000 people who lend $1.5 billion annually to 8.4 million borrowers, 97% of whom are women. Grameen Bank lending is entirely financed by savings deposits and the borrowers own 97% of the shares in the bank.
Founding the concept of microfinance and winning the Nobel Peace Prize was just the first step for Dr. Yunus. Since then, the bank and Dr. Yunus have launched a network of companies serving the poor in Bangladesh. These include Grameenphone, the market leading Telecom with over 40 million mobile subscribers; Grameen Shakti, which provides solar power to rural villagers; and Grameen Healthcare, a new venture that relies on mHealth to provide healthcare services to the poor. The network also includes joint ventures with western multinationals including Grameen Veolia Water providing drinking water to rural villagers, Grameen Danone providing nutrient infused yogurt to solve chronic malnourishment, and a new venture with Adidas to develop one Euro branded shoes.
All of the Grameen companies are run as social businesses, a term coined by Dr. Yunus to describe businesses that achieve social objectives through the operation of the company, must cover all costs and make profit, and pay no dividends to investors beyond the initial investment. One can easily dismiss the concept of social business and many have arguing that such businesses cannot cover their own cost of capital. If one looks at the results; however, it seems that social businesses can often uncover markets and provide better results than many of their for-profit peers. Beyond brand recognition, customer loyalty and retention for a business that solely exists to provide service to the poor is likely higher than its competitors.
Dr. Yunus likes to say that the poor are like Bonsai trees. If you put them in a small pot, they will remain stunted. There is nothing wrong with their seed; the problem is with the pot. In the aftermath of Katrina seven years ago in New Orleans, the only trees that consistently survived were Oak trees. Oak trees root together, locking themselves in the strength of those around them, thereby providing a network of support that can survive the worst of circumstances. I think the poor, and in particular the Bangladeshi poor, are more like Oak trees than Bonsai trees. Dr. Yunus is the seed that built the forest.