Social Business is Possible in the New World of Three Zeroes
Prof. Muhammad Yunus is a Bangladeshi social entrepreneur, banker, economist and civil society leader who was awarded the Nobel Peace Prize in 2006 for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance. In 2008, he was rated number 2 in “Foreign Policy” magazine’s list of the “Top 100 Global Thinkers”. In February 2011, Yunus together with Saskia Bruysten, Sophie Eisenmann and Hans Reitz co-founded Yunus Social Business – Global Initiatives (YSB). YSB creates and empowers social businesses to address and solve social problems around the world. As the international implementation tool for Yunus’ vision of a new, humane capitalism, YSB manages incubator funds for social businesses in developing countries and provides advisory services to companies, governments, foundations and NGOs.
In 2017 Yunus published the book “A World of Three Zeroes: the new economics of zero poverty, zero unemployment, and zero carbon emissions” that eventually became a platform for his concept of the new green global economy.
In 2021, Yunus was awarded the Olympic Laurel in Tokyo, for his extensive work in sports for development and as well was awarded the United Nations Foundation’s Champion of Global Change Award. He was given the UN award in recognition of his enlightened leadership and innovation to enhance human dignity, equity, and justice.
A year earlier, on his birthday on June 28th, 2020 he suggested the idea that all COVID-19 vaccines should be declared а global common good. 156 global personalities have signed the pledge, including Nobel laureates and celebrities.
Dr. Yunus, when capitals are given in epic but not effective way to people who lack entrepreneurial spirit, is it possible to have sustainable economic result for society?
When we talk about making finance available to the vast number of people who are not served by the traditional banking system today, we are not talking about throwing money at them. We are talking about creating financial institutions which know how to bring financial services to the unreached people in economically sustainable ways. When banks told us that they cannot serve the poor because the poor are not credit-worthy, we raised a counter-question to them. We told them that it is not the issue of people not being credit-worthy, the real question is whether banks are people-worthy. Ever since we have been building people-worthy financial institutions.
Microcredit programmes have shown globally that they are financially sustainable and their repayment rate is as good as the traditional banks’, or even better. Additionally we remind policymakers that the microfinance organizations should be created as social businesses, not profit-maximizing businesses, so that they do not go into loan sharking direction.
Twenty years ago, there were many cooperatives and companies for microcredits in Bulgaria. Today most of them are out of business or had been sold to banks. Is this the natural way of how finance system improves or it is a signal for weakness of microcrediting in Bulgaria?
The usual problems which lead the microfinance institutions to fail are the following: they are left to NGOs to run them because mainstream banks do not wish to come anywhere near them, banks feel that the microcredit doesn’t earn them maximum profit; NGOs were never given chance to become social business microfinance banks with a legal framework of their own; NGOs were left to the donors to find money to lend money – as a result, they cannot plan ahead of time because donor money remains unpredictable.
We need to redesign the financial system by allowing the creation of social business microfinance banks, with full authority to mobilize deposits. Once law allows them deposit-taking power, they’ll have a continuous supply of funds to grow. Governments have to step in to create laws to facilitate the creation of social business microfinance banks.
NGOs cannot run financial institutions because the law doesn’t allow them to be business organizations. They are supposed to remain dependent on donations. Sometimes conventional banks lend money to NGOs to lend money to the poor. Banks impose their own rules on NGOs to protect them from regulators. These are not suitable for microcredit organizations. On top of it, they charge interest rates that are higher than deposit rates, pushing interest rates up for the poor.
Is it possible in the near future for all financial mediators to follow ethic principals instead of classical market effectiveness?
Of course, it is possible if you abandon the goal of profit maximization and become social businesses where owners don’t take any dividend from the business. We have seven principles of social business which are to be followed by all social businesses. Social and ethical principles are built into these seven principles.
Do you plan to open branches of Grameen Bank in Bulgaria?
Regarding setting up of Grameen microfinance programme in Bulgaria, we’ll be happy to provide all technical support, even become a management partner, if someone wants to start a social business microfinance bank in Bulgaria. We do it in many countries, including in the USA. In the USA it is called Grameen America. Since we could not get a banking license we work as an NGO in the USA. But still, it works beautifully. When I keep saying that it should be a social business microfinance bank, I mean it would be a business that doesn’t give dividend to its owners. It is a non-dividend company to serve people. Ethics becomes central to these banks. They have to follow the seven principles of social business.
What would be your advice to people from the poorest three regions of EU which are along the Danube river (North-West Bulgaria, North-Central Bulgaria and Teleorman Romania)? They desperately want to escape poverty and unemployment.
I’ll explain to them that poverty is not created by poor people, it is created by the system that we have built around them. They are the victims of the system. To get them out of poverty we’ll have to change the system. Banks are the core part of that system. We’ll have to create social business microfinance banks, social business venture capital funds, etc. We’ll have to create an appropriate legal environment for these institutions to grow. We have to tell everybody, particularly the young people that all human beings are born as entrepreneurs, not job seekers. Job is a wrong direction dictated by the existing system to help few people to become super-rich. Financial institutions are designed to create super-rich by denying financial resources to the poor.
Finance is the oxygen of entrepreneurship. Entrepreneurship doesn’t wait for education or skill. They can be hired. But entrepreneurship cannot take any step forward without finance. We’ll have to create social business financial institutions to make finance available to every single citizen, young, old, woman, man, educated, uneducated, anybody. We have to teach in schools that every single student is an entrepreneur. Tell them where to find the money, and how. We introduce the students to financial institutions. Teach them the rules and procedures of the financial institutions. Let them try small business projects while in school. Tell them that they don’t have to finish school to become an entrepreneur. They can run businesses while they are still in school. Or take off from school for a few years to set up their businesses and then come back to schools for the things they want to learn about. We’ll let them know that they can create social businesses as well as profit-maximizing businesses, according to their own choices.
If it is possible, would you visit Bulgaria in near future – for academic speech or anything else?
I’ll be delighted to come to Bulgaria and answer your questions. I can share my experiences with you. Through Yunus Centre I can be associated with your social business activities. We can send our experienced colleagues to help you create legal frameworks, create social business banks and funds to support entrepreneurs. I can of course be available virtually to work with you.
Because of our communist past, some of Bulgarians still remember the times when the state put a hand on private property. How can we prevent the state to take the money from entrepreneurs?
State is created to serve the interest of the people. If the state sees that giving legal support to social businesses solves problems of unemployment, poverty, health, old age, education, technology etc., it will definitely come forward to support them. State’s objectives and social business objectives are the same. The state will feel relieved to see that citizens can solve problems the state was traditionally asked to solve. I don’t see any conflict of roles between the state and citizens. Citizens would be happy to pay their taxes if their problems are solved by the state in collaboration with people through social businesses because social business money keeps on growing, unlike the government’s traditional programmes where the money goes out but doesn’t come back.
What are your expectations for 3ZEROCLUB initiative in near future?
I firmly believe that the future of the planet depends on the present generation of the youth. They have to take the responsibility of protecting the planet and building a sustainable future because the powerful among the older generation miserably refuse to change their thinking process and work-habits. Young people have to get ready to be the pilots and navigators of this spaceship earth.
I encourage young people to create 3ZERO Clubs. Each 3ZERO Club is formed by five young people by going to our website www.3zero.Club. Each club is encouraged to network with other clubs around the world to exchange ideas with each other on how to bring their creativity and entrepreneurial ability to initiate small steps to make new roads to create a 3ZERO world and a new civilisation.
How do you assess the results from COP 26 in Glasgow?
COP 26 was very frustrating. It failed to capture the opportunity to redirect the world in the right direction. It missed the opportunity to convince the world about the enormity and urgency of the problem of climate change. We are at the critical moment of history with the last chance to save the planet. We can save the world only if we invest all our creativity and energy to address the issue. We did not take this opportunity with a global determination in Glasgow. Leaders who met in Glasgow were busy saving businesses in their respective countries rather than saving the planet. They forgot that saving the planet will continue to become exponentially difficult each coming month.
How would you assess the results from Global Social Business Summit 2021?
Our Global Social Business Summit is an annual gathering of social business activists to share our experiences of the past years and present ideas for the future, to save the planet from global warming, wealth concentration and unemployment. This gathering is very inspiring for us all. We go back from this gathering with our batteries fully recharged to accomplish the great challenge that is ahead of us.
Professor Yunus answered these questions after his interview for Bulgarian National Radio in November 2021.
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