E-mail a friendMuhammad Yunus
airdate January 24, 2008
Founder of the Grameen Bank Project in his native Bangladesh, Muhammad Yunus was the first economist to win the Nobel Peace Prize. In 30 years of operation, Grameen Bank has disbursed more than $6 billion in low- to no-interest micro-loans, primarily to poor women. Yunus is also author of Creating a World without Poverty and a founding member of Global Elders. He holds a Ph.D. in economics from Vanderbilt University and was an assistant professor of economics at Middle Tennessee State University.
Muhammad Yunus
Tavis: Muhammad Yunus is the founder of the Grameen Bank and the recipient of the 2006 Nobel Peace Prize for his efforts to provide small loans to people who otherwise could not get any credit. His extraordinary efforts and groundbreaking principals of social responsibility are the subject of his new book, "Creating a World Without Poverty: Social Business and the Future of Capitalism." He joins us tonight from New York. Mr. Yunus, what an honor to have you on the program, sir.
Muhammad Yunus: Oh, it's such a pleasure to be on your show.
Tavis: We are delighted to have you with us. Let me start with some terms. To have this conversation there are a few words that people I think might want defined for them to make the conversation a bit more meaningful. So when we say social business, we mean what?
Yunus: We mean a new, different kind of business. The only business we know so far is the business to make money. Profit maximization is the goal of business. I'm saying that something is missing in the business structure. This is because a human being is much bigger than just moneymaking all the time. A human being wants to be associated with making a difference in the world, being caring human being, and so on.
That aspect is missing from the business world, so I'm putting another kind of business and I'm calling it social business, which is business to do good to people, business to do good to planet. It's a nonloss, nondividend company. I run this business, whoever runs it, not for himself but for others. Conventional business, profit maximizing business, is all for me. But social business is all for others, nothing for me.
Tavis: Social business is the subject of the new book "Creating a World Without Poverty," but this is an outgrowth of your pioneering work around the notion of microcredit. So another word I want to define, when we say microcredit, what do we mean?
Yunus: Microcredit is lending money to the poorest people without collateral, without guarantee, without any lawyers in between, so that people can take money and create income-generating activity and improve their income situation and get out of poverty. And it is for income-generating activity, so people are using this money to create income for themselves. And mostly it's focused on women. It started in Bangladesh; now it has spread all over the world.
Tavis: To your point now Mr. Yunus, 97 percent of your borrowers, these microborrowers, are women - 97 percent. Why is that?
Yunus: Yes. We have 7.5 million borrowers in Bangladesh and 97 percent are women. When we began 31 years back in 1976 we wanted to make sure half of the borrowers in our program are women because I'm criticizing the conventional banks in Bangladesh by saying that they are not doing justice to women because not oven 1 percent of their borrowers happen to be women.
So I wanted to correct this in my work and we concentrated on having that 50 percent as women. When we arrived at position, 50 percent of our borrowers are women; we started noticing that money going to the family through women brought so much more benefit to the family than compared to the same amount of money going to the family through men.
Seeing it repeatedly, we changed our policy. We said, "Why don't we focus on women, because they bring so much benefit to the family." And in fact, it's so much better. So we started focusing on women. As a result, we started going to 70 percent women, 80 percent women, and 90 percent women, and 97 percent women now.
Tavis: You mentioned Grameen Bank, your bank. Tell me about Grameen Bank and whether or not these women are paying back these loans.
Yunus: The repayment has been always high and wherever that microcredit idea, Grameen Bank idea has spread around the world it's 98 percent, 99 percent, we have no problem. And nobody who is doing it around the world has any problem that they have reported that we have problem paying back.
Tavis: What do you make of that, because there are so many banks who are always chasing people to pay back the loans that they offered? What do you make of the fact that where your microlending is concerned, the majority of the money gets paid back?
Yunus: Yes, despite the fact we don't have collateral, we don't have lawyers, still money gets paid back. One major reason, my feeling, my experience is, poor people never get a chance. Never get a chance to have access to financial service. For the first time they're getting through microcredit programs like Grameen Bank and they don't want to mess it up.
They don't want to close out the door. They want to keep the door open. This is one reason they want to keep the door open by paying back regularly. Even if somebody stops paying back for a while, she feels that she maybe done a smart thing. But soon she realizes she has done the dumbest thing possible and she comes back again. She says, "No, I want to get back again, I want to repay the loan, I want to take more loans so that I can move forward in my life."
Tavis: What kind of amounts are we talking about here?
Yunus: Well at the beginning when for the first time a woman joined Grameen Bank in Bangladesh, loans could be started something like $30, $35. Gradually when she pays back the first loan, she wants a $50 loan because she is now more confident, she wants to expand her business. And then she goes to $100 loan or something like that.
Gradually, step by step, it increases. After 31 years of our work, today average loan in the whole of Grameen Bank would be something like $150.
Tavis: It's amazing to think that a loan of that size can actually make the difference in the life of someone.
Yunus: Tremendous difference, tremendous difference. Many, many families of Grameen Bank have crossed out of poverty. They moved out of poverty, and their children are going to school. Nearly 100 percent of the children of these families are in school, although their families themselves are illiterate. And many of them are going to higher education and Grameen Bank gives them student loans so they don't have to worry whether the parents can pay for their higher education.
The bank provides the money for higher education. At this moment, over 21,000 students are in medical school and (unintelligible) school and universities. So a whole new generation is coming out of these illiterate families to create a new generation completely so that the wave of poverty or the cycle of poverty can be stopped. It doesn't have to continue with the new generation.
Tavis: See, your wonderful work, Nobel-recognized work notwithstanding, it still begs the question as to why you think we really can create a world without poverty.
Yunus: I think we can create a world without poverty, that's what I'm arguing. All we need to do is rearrange our institution a little bit, fix up our institution a little bit, rearrange our conceptual framework a little bit, because that's where the root of poverty is. The root of poverty is not in the poor people. Poor people are not creating our poverty.
Poverty has been imposed on them by the system so we have to go back to the system to fix it. That's why we say why don't we fix the financial institutions so that they become inclusive systems so that nobody is excluded from that. Today almost two-thirds of the world population are excluded from the service of the financial institutions.
Tavis: But do you think financial institutions and other money-making corporate multinationals can get interested in, much less make use of, this notion of social business?
Yunus: Some day they will, because they will see the benefit in it. Like for example, we started a joint venture social business company in Bangladesh in collaboration with Dannon. Dannon, as it's known in the USA, which makes yogurt. We created this company, Grameen-Dannon Company in Bangladesh, which produces yogurt which is fortified with the micronutrients which are missing in millions of malnourished children in Bangladesh.
And we make it very cheap so that the poor children can afford to buy it and eat it so that they can regain their health. And the whole purpose of the company is to reduce the malnutrition among the poor children and improve the health condition, not for making money for the company themselves. So this is a nonloss, nondividend company.
The companies will own the new company, can take back the investment money, but never more than that, no dividend whatsoever. All of the profit stays with the company and the company expands and reaches out to more and more children who are suffering from malnutrition. So the bottom line for social business is how many people are you reaching with your service and for the benefit of it?
Not the bottom line traditionally we see in the corporate world - how much money you are making by your investment. These are two different questions and two different kinds of business you run.
Tavis: I only have a minute to go here, but anyone who is doing the kind of remarkable work that you are doing in love and service - love and service to other people, whose work has been recognized with the Nobel Peace Prize in 2006, I'm curious as to your upbringing. Tell me right quick about your life as a kid, about your back story.
Yunus: As a kid, I came from a low-middle-class family in Bangladesh. My father is a very religious person; my mother is a very religious person. They sent all our brothers and children to school, so we grew up in a big family with seven brothers and two sisters, and we played with the kids around the neighborhood. And we saw a lot of poor families around us.
And we are not too rich, either. We are just a low-middle-class family. But we saw the difficulties that poor families have gone through and my mother took a lot of interest in the poor families. She always helped poor families and poor children. So that's where probably it has impacted on me in seeing how helpful she was, and that has carried on with me.
And when I grew up, I tried to do the same, to be helpful to the other people, and that led me from one work to the next work and finally the work that I have done with credit called microcredit and created the whole Grameen Bank. Now I'm talking about social business. I think if we put the social business into the theoretical structure of capitalist theory, then the real world will become a much better world than we have created so far.
Tavis: What a wonderful life it is of love and service to everyday people in Bangladesh and around the world. He is the winner of the 2006 Nobel Peace Prize. His name is Muhammad Yunus. His new book, "Creating a World Without Poverty: Social Business and the Future of Capitalism." Again, an honor, a delight to have you on. All the best to you, safe travels back to Bangladesh.
Yunus: Thank you very much. It's a great pleasure being with you.
Tavis: Thank you, sir.
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