Nobel winner at UVa: Bank on those who truly need it

Muhammad Yunus, the Nobel Peace Prize-winning Bangladeshi banker and economist, on Sunday encouraged a crowd of roughly 1,000 people — mostly University of Virginia students — to form “social businesses” that target the problems of poverty, hunger, disease and more.

Yunus, founder and CEO of Bangladesh’s Grameen Bank, pioneered the practice of “microfinance” by which banks make small, collateral-free loans to entrepreneurs who are too poor to qualify for conventional bank loans.
The concept of microfinance has gone on to help millions of people in Bangladesh and elsewhere to lift themselves out of poverty. Since the bank’s creation in 1983, Yunus’ bank has lent $8 billion to nearly 8 million people in Bangladesh and had a payback rate of 98 percent.
“You cannot deny the fact that banking can be done with poor people,” he said.

More recently, Yunus’ company has been partnering with corporations interested in “social business,” a concept in which companies are interested primarily in fixing a social problem as opposed to maximizing profits for shareholders.
In one example, Grameen partnered with French food company Groupe Danone (known as Dannon in the United States) to produce nutritious and affordable yogurt for poor and malnourished children in Bangladesh.
In another case, a well-known shoe manufacturer approached Yunus in the hopes of forming a socially conscious joint venture. Yunus suggested that the
company make its goal to ensure that no one in the world has to go without shoes. He asked if the company (which he did not identify) could produce high-quality shoes that would retail for less than $1, making them affordable to even the poorest people. The company, he said, will unveil its $1 shoe in Johannesburg in July.

In yet another example, Grameen and BASF formed a partnership to produce specially treated and low-cost mosquito nets that kill mosquitoes on contact, reducing the chance that people will be infected with malaria.
Yunus told the crowd at University Hall that they ought to establish similar businesses that tackle the social problems they see in their own backyards.
“We are the ones who are responsible for changing the world,” he said. “No one is descending from heaven to change the world. It’s going to be done by you and me.”

Yunus said young people, such as the UVa students, will be the pioneers of social business and have the potential to make the world a better place.
“You can look at a problem. Homelessness. Can you create a business that helps homeless people? Of course you can,” he said.
Small ventures that focus on fixing a single social problem, he said, can be replicated on a larger scale — much like the concept of microfinance — to help thousands of people in multiple countries.
“The idea of social business is to develop a seed,” he said. “If you can develop a seed, you can plant it anywhere.”
Yunus called for the creation of a new stock market that focuses solely on social businesses, thereby allowing investors to easily find and support companies that emphasize helping people over making money.

Social businesses, he added, can help more people than charities can. With traditional charities, he said, a donation is given and the money goes to help people. With social businesses, he said, the money is recycled within the business and can help many more people.
Yunus visited UVa at the request of Gowher Rizvi, UVa’s vice provost for international programs. Rizvi called Yunus “one of the most transformational human beings on our Earth.”
“We have in our midst today one of the most remarkable men of our times,” Rizvi said.