Thursday, 24 November 2011

Don't mind the gap, stand in it - what Yunus inspires us to do

I was fortunate to hear Muhammad Yunus speak yesterday; in terms of global social entrepreneurship, there really isn't an equal. He is the founder of the Grameen Bank, an institution that provides microcredit (small loans to poor people possessing no collateral). Grameen helps its clients establish creditworthiness and be financially self-sufficient; the total amount of money loaned to the poor by Grameen since its inception, is Tk 684.13 billion (US $ 11.35 billion). Out of this, Tk 610.81 billion (US $ 10.11 billion) has been repaid.

Yunus spoke powerfully yesterday of the moment he realised that he needed to challenge the status quo in finance through meeting Sufia Begum - who he says taught the economics professor real-life economics. Everyday, Begum crafted beautiful stools made of bamboo that could have been sold for a significant profit. However, Begum, couldn't afford to make the stools out of her own pocket so she borrowed money from a lender every week; the problem was the lender only lent her the money on conidtion that she sold him the product at the end of each week for a fixed price well below market rate. Begum in reality was not an entrepreneur but an employee trapped in poverty earning 2 pennies a day.

After taking a week to interview everyone in Begum's village in Bangladesh, Muhammad Yunus learned that 42 families could be saved from abject poverty with a total (low interest) investment of $27. So, Yunus reached into his pocket and providing the $27. He was surprised when everyone went out of their way to pay him back - it was the start of microcredit; the banks wouldn't lend so he did.

Yunus's message, like that of many social entrepreneurs such as Wendy Kopp at Teach for America/Teach for All who is challenging the status quo of teaching in inner city schools and John Bird at The Big Issue which gives homeless people the dignity of work, could be summed up simply:

Don't mind the gap, stand in it.


If only more of us followed their examples. Below is a video of Yunus outlining the Grameen model




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