Banker to the Poor

As I caught sight of him in the foyer of the Grand Ballroom at Toronto's Royal York Hotel, it struck me how differently attired he was from those he was talking to. Muhammad Yunus, Banker to the Poor, Nobel Peace Prize winner, was in town today today to talk to Canada's Top100 employers. Dressed in a blue kurta and white pyjamas with a cotton waistcoat he looked so different from the blue suited gentry surrounding him. And, after I heard him, I realized that his approach to business was just as different from the majority of the audience as his attire.

He talked for about an hour without any intellectual pretensions, straight from the heart. "After the liberation of Bangladesh, I came back from the United States where I was teaching, to teach Economics at Dhaka University...then, in 1974, the famine struck in Bangladesh...I saw how people living around the University were dying...it occurred to me that instead of teaching elegant theories of economics I should do something as a human being to help the people around me..."

Talking and mingling with the people who lived around the University he realized how much they were in the grip of loan sharks. It shocked him further when a quick survey that he carried out revealed that the total debt carried by about 42 people in his sample was about $27. Paying interest rates that could reach 1000% these people were crippled by the burden of debt. So, his first attempt was to get the banks to loan money to these people.

As he tried to do this the truth of the adage that a successful banker is one who gives you an umbrella when there is no rain and takes it away when it rains, came home to him. None of the banks were willing to lend to these people, and, when he offered to co-sign documents for the small amounts they needed, they told him that he was kissing his money goodbye.

The rest is now history. Yunus' trust in his borrowers was fully borne out. He had 98% repayment. And all this, as he says, without a single lawyer on his team. He told us how a woman who was given a loan of $20 or so took the money with trembling hands. She had never seen that much money given to her on trust. Slowly the Grameen movement built up, and, they started giving student loans for children to study thus setting off social change. Interestingly a large number of Grameen's clientele are women.

What Yunus spoke of is a very different model of doing business, a very different language from profit maximization. It is deeply spiritual. He talked of how traditionally poverty has been fostered by what he calls "the Bonsai approach." You take the same seed as that of a tree that will grow well, confine it in a limited space and you have a stunted tree. "Cute to look at," he says, "but, not one that enables everyone reach their potential. " I think he used the words, 'cute to look at" intentionally, summarizing our approach to poverty, particularly the western world's approach to poverty in places like the Indian sub continent and Africa...

As he finished, the suited-booted audience rose to their feet and gave him a standing ovation. The language and the business model of Social Business Entrepreneurship (SBE) that he spoke of was different, like the clothes he wore. However, I think some in the corporate world are beginning to see the merit of what he is saying. Danone, has established Grameen Danone in Bangladesh to provide Yoghurt and help deal with malnutrition among children. Another French company is setting up plants to purify the water of arsenic. All based on models of SBE. He is now calling for a Social Stock Exchange where the effectiveness of companies will be measured by their contribution to long term social sustainability...

Yunus spoke of the interest free loans Grameen has been giving to beggars of Dhaka. These are interest free and he talked of how they have transformed the lives of the beggars. Now, while they still make the rounds for begging they also hawk vegetables and so on. When some of his colleagues get frustrated since they are still begging, Yunus tells them, with a touch of his humour, "They are restructuring their business model...give them time..."

I do not know how religious a man Muhammad Yunus is. Listening to him, I realized that he is giving a socially relevant twenty first century perspective to the Koranic injunction of not taking interest...one that is helping millions find meaning and will one day hopefully confine poverty to the museums, which is the only place where he wants to see it...