Print Version
METROPOLITAN ECONOMIC STRATEGY
ELIMINATING POVERTY THROUGH MARKET-BASED
SOCIAL ENTREPRENEURSHIP
Muhammad Yunus
I have
chosen to discuss the most daring of all Millennium
Development Goals — halving poverty by 2015. I have chosen it
for two reasons. First, this is the most courageous goal mankind
ever set for itself. For the last two decades I have been
talking about creating a world free from poverty. I talk about
it not because it is unjust to have a world with poverty, which
is, of course, true. I talk about it simply because I am totally
convinced from my experience of working with poor people that
they can get themselves out of poverty if we give them the same
or similar opportunities we give to others. The poor themselves
can create a poverty-free world — all we have to do is to free
them from the chains that we have put around them.
I have chosen this subject secondly because a feeling is getting
stronger in me everyday that very few people are really serious
about reaching the goal of halving poverty by 2015. Leaders who
made this bold announcement went back to their other important
commitments feeling happy that they have captured the world's
imagination. They are expecting that as the decision has been
made at the highest level, actions will follow, and a well-coordinated powerful machinery will get activated to get the job
done. Unfortunately, so far it has not happened. Only the donor
agency officials, supported by the thriving consulting business,
are carrying the ball. What is emerging reminds us of the decade
of the 1990s when the global goals were put in the
form of ‘education for all by the year 2000’, ‘health for all by
the year 2000’, ‘everything else for all by the 2000’. My worry
is that these courageous Millennium Development Goals may degenerate into a
cut-and-paste job of the earlier edition, merely replacing the
‘year 2000’ with the ‘year 2015’, with appropriate changes in
the text.
Please forgive me if I sound too pessimistic. I assure you that
I remain a compulsive optimist despite all the bad signs that I
see. I keep hoping that these signs will change.
I am an optimist because I am convinced that poverty is not as
difficult a subject as the experts keep warning us. It is not a
difficult subject because it is not about space science, or
about an intricate design of a complicated machine. This is
about people. I don't see the possibility of a human being
becoming a 'problem' when it comes to his or her own well-being.
All the ingredients for ending a person's poverty always comes
neatly packaged within that person. A human being is born into
this world fully equipped not only to take care of himself
or herself (which all other life forms can do, too), but also to
contribute in enlarging the well-being of the world as a whole
(that's where the special role of a human being lies). Then why
should 1 billion plus people on the planet suffer through a lifetime
of misery and indignity and spend every moment of their lives
looking for food for physical survival alone? We must find some
explanations. This will help us achieve the 2015 Millennium
Development Goals.
Poverty is not created by
low-income people
Here is my explanation. Poverty is not created by people who are
poor. So we shouldn't give them an accusing look. They are the
victims. Poverty has been created by the economic and social
system that we have designed for the world. It is the
institutions that we have built, and feel so proud of, which
created poverty. It is the concepts we developed to understand
the reality around us, which contributed to the creation of
poverty, made us see things wrongly, and took us down a wrong
path, causing misery for people. It is our policies borne out of
our reasoning and theoretical framework, with which we explain
interactions among institutions and people, that caused this
problem for many human beings. It is the failure at the top,
rather than lack of capability at the bottom which is the root
cause of poverty.
The essence of my argument is that in order to reduce, and
ultimately eliminate, poverty we must go back to the drawing
board. Concepts, institutions, and framing conditions which
created poverty cannot end poverty. If we can intelligently
rework these framing conditions, poverty will be gone, never to
come back again.
In this article I will draw your attention to five issues which
need to be urgently revisited:
(a) widening the
concept of employment;
(b) ensuring financial
services even to the poorest person;
(c) recognizing every
single human being as a potential entrepreneur;
(d) recognizing social
entrepreneurs as potential agents for creating a world of peace, harmony, and progress;
(e) recognizing the
role of globalization and information technology in reducing poverty.
Let me narrate how I came to face
these issues in the real world and how they affected me.
I became involved in the poverty issue not as a policymaker or a
researcher. I became involved because poverty was all around me.
I could not turn my eyes away from it. In 1974, I found it
difficult to teach elegant theories of economics in the
university classroom in the context of a terrible famine then
occurring in Bangladesh. Suddenly I felt the emptiness of those
theories in the face of crushing hunger and poverty. I wanted to
do something immediate to help people around me. Not knowing
what I could do, I decided to find a way to make myself useful
to others on a one-on-one basis. I wanted to find something
specific that I could do to help another human being just to get
by another day with a little more ease than the previous day.
That brought me to the issue of poor people's struggle and
helplessness in finding small amounts of money to support
their efforts to eke out a living. I was shocked to discover a
woman borrowing US $0.25 under the condition that the lender
would have the exclusive right to buy all she produced at the
price the lender decided! What a way to recruit slave labor. I
decided to make a list of the victims of this money-lending
‘business’ in the village next door to our university campus.
When my list was done it had the names of 42 victims. The total
amount they borrowed was US $27! What a lesson for an economics
professor who was teaching his students about the Bangladesh
Five Year Development Plan with billions of dollars in
investments to help the poor. I could not think of anything
better than offering this US $27 from my own pocket to get the
victims out of the clutches of the moneylenders. The excitement
that was created by this action got me further involved in it.
The question that arose in my mind was, if you can make so many
people so happy with such a tiny amount of money, why shouldn't
you do more of it?
I have been trying to do just that ever since. The first thing I
did was to try connecting the poor people with the bank located
on the campus. It did not work. The bank said that the poor were
not creditworthy. After all my efforts over several months
failed, I offered to become a guarantor for the loans to the
poor. I was stunned by the result. The poor paid back their
loans every single time! But I kept confronting difficulties in
expanding the program through the existing banks. Several years
later I decided to create a separate bank for the poor, to give
loans without collateral. Finally in 1983 I succeeded in doing
that. I named it Grameen Bank, or village bank. It now works all
over Bangladesh, giving loans to more than 4 million poor
people, 96% of whom are women. The bank is owned by its
borrowers. Over the past two decades, the bank has loaned a
total of more than US $4.8 billion. Generally the repayment rate
has been nearly 99%. The Grameen Bank
makes profits, and financially it is self-reliant. It stopped
taking international donor money in 1995, and stopped taking
loans from the domestic market in 1998. It has enough deposits
to carry out its lending program. It gives income-generating
loans, housing loans, and student loans to poor families. More
than 620,000 houses have been built with loans from the Grameen Bank. Impact studies done on the Grameen Bank by
independent researchers find that 5% of borrowers come out of
poverty every year, children are healthier, education and
nutrition levels are higher, housing conditions are better,
child mortality has declined by 37%, the status of women has
been enhanced, and the ownership of assets by poor women,
including housing, has improved dramatically.
Now, the obvious question that anybody will ask: if poor people
can achieve all this through their own efforts within a market
environment, why isn't the world doing more of this? Some
progress has been made, but much more could have been achieved.
One difficulty may have arisen from confusion.
Grameen's banking methodology has become known as microcredit.
But gradually the label of ‘microcredit’ got into general use
for all types of small loans, including agricultural loans,
co-operative loans, savings bank loans, rural credits, etc.
This has created confusion in policymaking,
institution-building, and in designing regulatory frameworks. If
we now classify microcredit into different categories to sort
this out, I think we can come out of this confusion. (I think we
could have avoided the confusion, to some extent, if we had
called it ‘micro-capital’. That's what it really is. The Bangla-language
term that I use for it translates as ‘micro-capital’.)
Grameen-type microcredit has spread around the world over the
last two decades. Nearly 100 countries have Grameen-type
microcredit programs. In 1997, a Microcredit Summit was held in
Washington, DC, which adopted a goal to reach the 100 million
poorest families with microcredit and other financial services,
preferably through the women in those families, by 2005. At that
time the number of families reached with microcredit was only
7.5 million globally, of which 5 million were in Bangladesh.
This outreach crossed the halfway mark of 50 million at the end
of 2003. I am still hoping to double these results and reach our
goal of 100 million by the end of 2005.
But the biggest problem for expanding the outreach is not the
lack of capacity, but strangely, the lack of availability of
donor money to help microcredit programs get through the initial
years until they reach the break-even level. Beyond that level,
these programs can expand their outreach with loans from the
market or from savings deposits. In most countries, microcredit
NGOs are not legally permitted to take deposits. If microcredit
NGOs can open the door to taking public deposits, expansion of
their outreach could be very rapid, because this would free them
from the dependence on donor money. It is a very strange
phenomenon in many countries to see that conventional banks with
a repayment rate of below 70% are allowed to take huge amounts
of public deposits year after year, but microcredit institutions
with an unbroken record of over 98% recovery are not. It is
often argued that since microcredit programs do not come under
any law, it is highly risky to allow them to take deposits. This
always seems to me a strange argument. Why don't we pass laws
to bring microcredit programs under legal oversight,
establishing
special regulatory commissions to regulate them and allow them to
take public deposits? This will make local deposits in the
villages work for local poor people, instead of being siphoned
off to the big cities to finance big businesses. This is the
frustrating part of our experience. One feels like throwing
one's arms in the air and screaming in protest.
Self-employment is the quickest
way
The most important step to ending poverty is to create
employment and income opportunities for the poor. But orthodox
economics recognizes only wage-employment. It has no room for
self-employment. Yet self-employment is the quickest and easiest
way to create employment for the poor. I have been arguing that
credit should be accepted as a human right, because it is so
important for a person who is looking for an income. Credit can
create self-employment instantaneously. Why wait for others to
create a job for you? A person can create his or her own job.
And this is so much more convenient for women who would prefer
to work out of their homes. We are so much influenced by
orthodox economics that we forget that our forefathers did not
wait for someone else to create jobs for them. They just went
ahead in a routine manner to create their own jobs and incomes.
They were lucky. They did not have to learn economic theories
and end up with a mindset that the only way they can make a
living is to find a job in the job market. And if you don't get a
job, then march in the streets!
In developing countries, even if you march in the streets, there
is still no job for you. As a result the poor go out and create
their own jobs. Since economics textbooks do not recognize them,
there are no supportive institutions or policies to help them.
That's why the money-lending business thrives. The
money-lenders' business is as old as money itself. We read about
the cruelty of money-lenders in our religious books. We condemn
them as a part our religious duty. We read the great classics
about making payment with a ‘pound of flesh’ and get horrified
by it, but we had done nothing significant about addressing that
problem until Grameen credit came around.
While we keep hearing about the spread of microcredit around the
world, about its 98% repayment record, about poor people
getting out of poverty with microcredit loans, about women’s
empowerment, it has had no impact whatsoever on conventional
banking. These banks continue to practice the same old banking
as they have been doing from the very start of their business —
as if nothing new happened in the world! Probably they still
shield themselves by arguing that the poor are not creditworthy.
It is a very strange world.
A big step towards eliminating
poverty is to make sure that we offer financial services even to
the poorest people, that nobody is rejected by a bank on the
ground that he or she is a poor person.
Each person is a potential
entrepreneur
In some
important ways our designing of the theoretical framework of
economics or the misrepresentation of it is responsible for
perpetuating poverty. Its conceptualization of individual human
beings as ‘labor’ took the rest of the theory on a completely
wrong track. The role assigned to human beings in economic
theory is certainly not something a self-respecting person can
celebrate. Economic theory in its simplest form visualizes
people as providers of labor. They are born to take orders from
a small group of a very special kind of people known as
‘entrepreneurs’. These special people are the only people who
can think, organize, and act. All other people simply fill in
the work slots created by the thinking and driving people. The
level of well-being of the working people depends on the level
of their wages.
After
creating a world overwhelmingly populated by uninteresting
working people, economic theory gets busy with the interesting
people — the entrepreneurs — because they are the movers and
shakers of the economy. Taking their cue from economic theory,
powerful institutions are built, rebuilt, and improved; support
systems are created, detailed legal systems developed, policies
formulated, guidelines created, and research undertaken, all to
ensure that the movers and shakers of the economy find it
convenient to go in the direction they wish to go, and are able
to utilize every last bit of their talents without any
hindrance.
Try to
imagine how the economists would have built their theory if they
had started out with an axiom that all men and women are created
equal, that each of them is endowed with unlimited creativity,
and each of them is a potential entrepreneur. I am sure you'll
agree with me that with this as a starting point, they would have
built a very different economic theory, and we would have
created a very different, and definitely much better, world as a
result.
It will be an
uphill task to end poverty in the world unless we create new
economic thinking and get rid of the biases in our concepts,
institutions, policies, and above all, our mindsets created by
the existing orthodoxy. Unless we change our mindsets, we cannot
change our world.
Market economies missed a great
opportunity
Economic
theory took the second, and most damaging, wrong turn when it
came to explaining the driving force behind the competition
among entrepreneurs. It recognizes the profit motive as the only
motive behind this. Maximization of profit is the battle cry.
This explanation occupies such a central position in economic
theory, and everything else has been built in such intricate
detail around it, that nobody dares to question it. Accepting
this as the ultimate truth about capitalism, people who are not
interested in making money stayed away from business and the
market in a capitalist world. For the same reason, people who
enjoy making money headed straight for the market. So the market
became an exclusive club of the fortune seeker only. What a
shame for missing a great opportunity!
Economic
theory missed the most thrilling opportunity to change the fate
of the world by completely ignoring the number and power of
people who are more interested in social gains than personal
financial gains, and those passionately interested in making the
world a better place to live in, rather than remaining narrowly
focused on their own personal benefit.
By
restricting the driving force of the market to narrow
self-interest, economic theory also missed the greatest opportunity to
become a truly social science and escape from being a cut-and-dried
dollars-and-cents science. Nobody doubts that an entrepreneur
can set up a pharmaceutical company to make a big personal
profit. But it can be equally plausible that a person may set up
a pharmaceutical company to sell quality medicines at
the lowest possible price so that even the poorest family can
afford them. If economics could envisage two types of
entrepreneurs, personal-gain driven and social-objective driven,
it would not only be more realistic, but it would help
the world solve many of the problems that the profit-driven
market doesn't solve today.
Behavior pattern of a
social entrepreneur
The behavior
pattern of a social-objective-driven entrepreneur, i.e. a social
entrepreneur, is as follows:
1. He or she competes in the marketplace
inspired by a set of social objectives. This is the
basic reason for being in the business.
2. He or she may earn personal profit as
well. This personal profit may range from zero to a
significantly large amount, even larger than the
personal gain-driven competitors. But in this case,
personal profit is a secondary consideration, rather
than the prime consideration. On the other hand, a
personal profit-driven entrepreneur may contribute in
achieving some social objectives. But this will be a
by-product of the business, or a secondary consideration
in the business. This will not make him or her a social
entrepreneur.
3. The higher the social impact per
dollar invested, the higher will be the market rating of
the social entrepreneur. Here ‘market’ will consist of
the potential investors who are looking for
opportunities to invest their money in social
objective-driven enterprises. Social investment dollars
will move from low social impact enterprises to higher
social impact enterprises, from general impact enterprises to
specific and visible impact enterprises, from
traditional social enterprises to highly innovative and
efficient social enterprises.
Social-objective-driven investors will need a separate (social)
stock market, separate investment rating agencies, separate financial
institutions, social mutual funds, social venture capital,
etc. Almost everything that we have for-profit-driven
enterprises will be needed for social-objective-driven
enterprises, such as audit firms, due diligence, and impact
assessment methodologies, regulatory frameworks,
and standardization, only in a different context, and with
different methodologies.
Because of
the way the orthodoxy of economics has given shape to the
existing world, all the investment money now is locked up in
only one category of investment: investment for making personal
profit. This has happened because people have not been offered
any choice. There is only one type of competition: competition
to amass more personal wealth. The moment we open the door for
making a social impact through investments, investors will start
putting their investment dollars through this door, too.
Initially some investors will divert a part, maybe a small part,
of their investment money to social enterprises, but if social
entrepreneurs show concrete impact, this flow will become larger
and larger. Soon a new type of investor will be appearing on
the scene who will put all or almost all their investment money
into social investments.
Some of the
existing profit-driven entrepreneurs may start revealing another
dimension of their entrepreneurial ability. They may
successfully operate in both worlds, as conventional
profit-seekers in one, and as dedicated social entrepreneurs in
the other.
If social
enterprises can demonstrate high impact and creative enterprise
designs, a day may come when personal-profit-driven enterprises
will find themselves hard-pressed to protect their market share.
They will be forced to imitate the language and style of social
enterprises to stay in business.
I don't think
I need to work hard to convince anybody that there are millions
of investors right now who would gladly put their money into a
social enterprise if they can be assured that their investment
will at least retain its original value, while making a
significant impact on the lives of poor people, deprived people,
or any group of disadvantaged people. I receive many letters
from people around the world asking me if they can invest in the
Grameen Bank. Obviously none of them are looking for an
opportunity to make money by investing in the Grameen Bank. Why
has our business world failed to offer opportunities to people
who want to invest for the benefit of the people?
If socially
motivated people can dedicate their lives in politics to
bringing changes in their communities, nations, and to the
world, I see no reason why some socially-motivated people will
not dedicate their lives to building and operating social
objective-driven enterprises. So far they have not done so
because neither the opportunity nor the supportive framework
exists. We must change this situation.
A completely
new world can be created by making space for social
entrepreneurs and social investors in the business world. This
is a very important agenda for all of us. Eliminating poverty
will become so much easier if social entrepreneurs can take up
the challenge of ending poverty, and social investors can put
their investment money into supporting the work of social
entrepreneurs.
Who is a social
entrepreneur?
Let me define
social entrepreneurs in a broad way and then divide them into
two categories: market-based and non-market-based.
Anybody who
is offering his or her time and energy to address any social or
economic problem of a group or community is a social
entrepreneur. The problem addressed may be a small local problem
or a big global problem. The action of a social entrepreneur may
need money, or may not need money. It may be a personal campaign
for or against something. It may need cooperation and
coordination with others.
It may need
fund-raising. It may be organized as a sustainable business,
ensuring 100% cost recovery. It can generate very
attractive profits, although making profits is not the goal of
the enterprise. In terms of cost recovery a social entrepreneur
can work within a scale ranging from zero cost recovery to 100%
cost recovery, and even far beyond cost recovery. If a social
entrepreneur distributes food to the hungry, he or she is
operating at zero level of cost recovery. If he provides health
services and charges a fee which covers part of the cost, he
is operating at a positive point on the cost recovery scale.
Once she reaches 100% cost recovery, she becomes a market-compatible or sustainable social entrepreneur. This is the most
critical point on the cost-recovery scale. If a social
entrepreneur can stay on the correct side of this point he or
she can become a legitimate player in the marketplace. He can
grow as much as he wishes and has the capacity to manage. She
can draw on the resources of the market. The more that social
entrepreneurs are in the category of market social
entrepreneurs, the more powerful they become as a business
community. They can start gaining access to the trillions of
dollars of market capitalization money, part of which will find
market social entrepreneurs just the right kind of investment.
Social
entrepreneurs operating on one side of this critical point are
dependent on subsidies and philanthropy money to carry out their
noble mission. We may call them non-market social entrepreneurs.
The size of their operations will always be limited by the size
of the donor money they can obtain. Obviously, the total donor
money in the world is only a small fraction of the total
business money. In addition, uncertainty about donor money
always remains a big problem for non-market social
entrepreneurs. Donor priorities and procedures change
frequently, and put non-market social entrepreneurs into serious difficulties.
From non-market to market
social entrepreneurs
Given all the
limits of non-market social entrepreneurs, it must be recognized
that they have the longest tradition of social entrepreneurship,
almost as old as human beings on this planet. Market social
entrepreneurs have a lot to learn from them. Together both types
of social entrepreneurs can form a very strong coalition to
bring changes in the ways that people do things, that
policymakers make policies, and that institutions treat people.
Some social entrepreneurs may operate on both sides of the
scale, creating different types of socially-oriented programs.
Some non-market social entrepreneurs will continue to operate at
the same point on the scale all the time, because of their
philosophy, availability of funds, or other considerations. Some
non-market social entrepreneurs will find it advantageous
to move gradually towards self-sufficiency, to get a better grip
on their finances and reduce outside dependence. Some will make
deliberate efforts to cross the critical point and become
internally sustainable. Transforming from a non-market social
entrepreneur to a market social entrepreneur is almost like
converting a bicycle into a race-car; one can go so much faster
in reaching the goal.
But there may
be some cost to this conversion. You may gain some, while you
also lose some. Social entrepreneurs must be very innovative in
this conversion process in order to pursue the maximum extent of
their social agenda while gaining economic power to scale up and
ensure large outreach.
Global
efforts should be organized to help the interested non-market
social entrepreneur cross the critical point by giving him or
her legal support, access to business capital, marketing skills,
and technology, connecting him or her with mentors among the
successful market social entrepreneurs, and providing advisory
services.
Social
entrepreneurs are not characters in an economic fiction. They
exist in the real world. But we refuse to recognize them because
we have no place for them in our analytical framework. So they
carry out their mission as some kind of misfits or freak
characters. We should change that viewpoint immediately and turn
them into heroes of our economic endeavors.
The future of
the world lies in the hands of the market-based social
entrepreneurs. Leaving the business world exclusively in the
hands of the personal profit-driven entrepreneurs and investors
will create more and more social and political tension within
and among countries than ever before. With the advance of
technology the world is getting smaller, almost distanceless.
Businesses are getting bigger and more powerful, while
governments are shrinking in power and prestige. Through
globalization the whole world is turning into a gaming table of
the extraordinarily rich people and extraordinarily rich
countries.
We cannot
cope with the problem of poverty within the orthodoxy of
capitalism preached and practiced today. With the failure of
many developing country governments in running businesses,
health, education, and welfare programs efficiently, everyone is
quick to recommend ‘hand it over to the private sector’. I
endorse this recommendation wholeheartedly. But I raise a
question with it. Which private sector are we talking about? The
personal-profit-based private sector has its own clear agenda.
It comes into serious conflict with the pro-poor, pro-women,
pro-environment agenda. Economic theory has not provided us with
any alternative to this familiar private sector. I argue that we
can create a powerful alternative — a
social-consciousness-driven private sector, created by social
entrepreneurs.
Globalization and the
role of social entrepreneurs
The role of
social entrepreneurs becomes very important in the context of
the race for globalization. Globalization should not turn into
an open house for bulls to enter the china shop. I am an ardent
supporter of the process of globalization. I think globalization
can bring more benefits to the poor than its alternative. But it
would be naive to think that there is only one architecture of
globalization. We can easily divide all the options of
globalization into two broad classes: 'right' globalization and
'wrong' globalization, in the context of a set of objectives. If
one of our prime objectives is to bring the quick reduction of
poverty we must choose the global architecture which best ensures
this result. Unless
we go through this exercise and make serious efforts to build
it, the most likely architecture that will emerge is the
anti-poor people, anti-poor country globalization. This dreadful
outcome must be checked forthwith. That's what
anti-globalization demonstrations are trying to tell us. The
least the world should do is to set up a global regulatory body
to stop globalization from going in the ‘wrong’ direction, and
to encourage and facilitate it to go in the ‘right’ direction.
Globalization needs traffic rules and traffic police. Without
that, the highways of globalization will be littered with ugly
sights.
We should
initiate a global debate and generally agree on the features of
a ‘right’ architecture of globalization rather than drift into
terribly wrong globalization in the absence of a framework for
action. There may be many features of this architecture, but I
would like to emphasize some. They are:
(a) The creation of a level playing field
for the rich countries and the poor countries, and for
big powerful enterprises and small weak enterprises. The
rule of the ‘strongest takes all’ must be replaced by a
rule that ensures everybody a place and a piece of the
action without being elbowed out by the stronger
players. ‘Free trade’ must mean freedom for the weakest.
The poor must be made active players in the process of
globalization rather than becoming passive victims.
Globalization must promote harmony and partnership
between the big and the small economies, rather than
become a vehicle for unhindered dominance by the rich
economies.
(b) Globalization must
ensure the easiest movement of people across borders.
(c) Each nation must
make serious and continuous efforts to bring information
technology to poor people to enable them to take maximum
advantage of globalization. This is particularly
important for poor countries.
(d) Social entrepreneurs
must be supported and encouraged to get involved in the
process of globalization to make it friendly to the
poor. Special privileges should be offered social
entrepreneurs enabling them to scale up and multiply.
Social entrepreneurs, information technology, and
microcredit can play key roles in taking globalization
in the right direction, including cutting extreme
poverty in half by
2015.
Globalization, the knowledge economy,
Grameen scholarships, and student loans
Poor people are like bonsai
trees. They could have grown as giant trees if they were
supported by the right environment for growth. It is the size of
the pots in which they were made to grow that turned them into
sad replicas of the real trees. In a similar way, poor people
are sad replicas of the real persons hidden inside of them. They
cannot grow to their potential size because society does not
offer them the social and economic base to grow. Poor people are
condemned to survive as Lilliputians in the land of
super-giants.
We should look at the emerging
knowledge economy supported by the process of globalization as
an unprecedented opportunity for poor people and the poor
countries. The future of nations will no longer be decided by
the size of financial wealth of a nation, but by the quality of human
resources it has. Information technology and education will make
a big impact on the capacity of poor people and poor nations to
change their economic situation. A group of Grameen companies
have been created to bring both information technology and
education to the poor people of Bangladesh. Grameen Phone,
Grameen Star Education, Grameen Cybernet, Grameen Information
Highway, Grameen Software, and Grameen IT Park were created to
bring information technology to the poor and to build IT capacity in
Bangladesh.
Grameen Phone brings
internet-enabled mobile phones to the Grameen borrowers and
makes them ‘telephone ladies’ of their villages. Today there are
more than 21,000 telephone ladies selling telephone services in
half of the villages in Bangladesh. Many of these phones are
powered by solar power because electricity does not exist in
those villages. Soon these women can become ‘internet ladies’ if
we can design appropriate services for them. Technology is
already in their hands. While extending telecommunications
services to the poor, Grameen Phone also has done very well as a
business. It has expanded its services to become the largest
mobile phone company in South Asia within five years its
operations.
The Grameen Bank not only focuses
on giving financial services; it also promotes a strong
social agenda. The ‘Sixteen Decisions’ adopted by Grameen Bank
borrowers commit them to making many non-economic changes in
their lives, such as practicing family planning, sending
children to school and making sure they stay in school, breaking
away from the custom of giving dowry to the bridegroom's family,
making sure everyone drinks clean drinking water, etc. Because of the
Sixteen Decisions, Grameen borrowers have taken great care to
send their children to school. Today not only are all of them in
school, but some of them are also in colleges, universities, and
professional schools. The Grameen Bank hopes to see that the
second generation of the borrowers will grow up to take
advantage of the knowledge economy and permanently shift away
from poverty. The Grameen Bank offers nearly 4,000 scholarships
every year to students of Grameen families, and gives student
loans to 100% of students who are enrolled in higher education
institutions. Another Grameen company,
called Grameen Education, offers a scholarship management
service. If a sponsor gives a recoverable grant of Taka 100,000
(US $1,724), a scholarship of Taka 500 (US $8.62) per month, or
6% per year on the grant amount, is given to any poor
student, Grameen or non-Grameen, in perpetuity or as long as the
money is kept with Grameen Education. Grameen Education hopes to
find hundreds of thousands of sponsors for these scholarships to
prepare the poor boys and girls of Bangladesh
for the knowledge economy and globalization.
Information technology can be a
big help. Supported by microcredit, information technology can
open doors, providing opportunities for innovative financing,
connection with markets, and direct access to information.
Information technology and telecommunications can eliminate
layers of middlemen between the poor and the market. An
individual poor person is an isolated island. Information
technology can end that isolation overnight. A poor person can
be at the central shopping mall of the world, gaining access not only
to finance and the market but also to health, education, ideas, and
friendships. Information technology, with microcredit, can bring
dramatic results in eliminating poverty, if designed
appropriately for the poor. It can be easily and sustainably
done.
Yes, we can
Now, going back to the original
question — can we really reduce extreme poverty by half by 2015?
My emphatic, unequivocal answer is: yes, we can! We can do more
than that. We can set ourselves on a course to eliminate poverty
from the world for all time to come. We can get ready to put
poverty in the museum, where it belongs. Each human being is too
resourceful and intelligent to suffer from the misery of
poverty. Poverty and the human species just do not go together.
But in reality poverty has persisted because we created wrong mindsets
which did not allow poor people to know how much potential they
truly have. All we have to do is to remove the heavy crust that keeps
their abilities unknown to them.
Enabling people to explore their
full potential is an agenda we must take up seriously, to make
sure our efforts to reach the 2015 goal become a thumping
success. This goal of halving extreme poverty must be achieved by
2015 — if we pride ourselves to be sensible, sensitive, and
creative human beings.
Muhammad Yunus is the founder and Managing Director of the
Grameen Bank in Dhaka, Bangladesh, and a member of the Advisory
Board of Global Urban Development. Dr. Yunus is the author of the best-selling book, Banker to the
Poor: Micro-Lending and the Battle Against World Poverty.
His article is adapted from a lecture he delivered at the
Commonwealth Institute in London, UK, and is printed with
permission of the author.
Return to top |