“World’s income distribution gives a very telling story. Ninety four percent of the world income goes to 40% of the population while 60% of the people live on only 6% of the world income. Half of the world population lives on $USD2 a day. Over one billion people live on less than $USD1 a day” – 2006 Nobel Peace Laureate, Prof. Muhammad Yunus.
What Is A Social Business?
In his Nobel Lecture Prof. Yunus introduced to the world the concept of a social business and challenged the free market economy. He said because of the restrictions placed by capitalism and motivation to maximize profit, we have forgotten the social and emotion needs of human beings. In-fact the motivation to maximize profit has resulted in the increase poverty in the world today.
I was watching his lecture on my Mac (Power Book G4) and was thinking about the rapid expansion of micro-credit schemes in PNG. By the way, just in case you are not aware, Grameen Bank is a micro-credit Bank. Over 97% of its borrowers are women!
Micro-credit banks have become successful in lending money to the rural people because they have targeted a need.
We talk about improving the quality of life for our rural people, well, give them chance and the opportunity to do exactly that! And the micro-credit banks are booming because there is a niche for such services in the smaller towns and rural areas. Bank South Pacific Bank now has over 52% of the domestic market (they forgot to mention in the urban areas!) so they are now targeting other pacific islands countries, and my guess is that they will consolidate their market in the Oceania region than open a branch in New Zealand or Australia. I am not banker but by studying how they are moving, that is my prediction.
Back to social business. From the words of Pro. Yunus, “social business will be a new kind of business introduced in the market place with objective of making a difference in the world. Investors in the social business could get back their investment, but will not make any dividend from the company. Profit will be ploughed back into the company to expand its outreach and improve the quality of its products or service. A social business will be a non-loss, non-dividend company”.
The challenge he said was to innovate business models and apply them to produce desired social results cost-effectively. The areas which social business can get into are – health care for the poor, financial services for the poor, information technology for the poor, education and training for the poor, marketing for the poor and renewable energy.
An Example Of A Social Bussiness – Grameen’s Social Business.
The Grameen Bank, which Prof. Yunus helped established has a social business. You can read about it here.
Information Technology For The Poor – The Grameen Bank Example.
Information and communication technology (ICT) is shaping the world and will continue to do so as far as we can predict. Grameen Bank saw that the rural and poor people also have a need for ICT and created a mobile phone company – for the poor!
What they did was they gave loans to village women to buy mobile phones to sell phone services in the villages. And they saw the synergy between micro-credit and ICT. The phone business was a success and became a coveted telephone business for Grameen borrowers. Village women who own mobile phones and were selling the service were known as “telephone-ladies”. These telepphone-ladies quickly learned and innovated the ropes of the telephone business.
Today there are nearly 300, 000 telephone ladies providing telephone service in villages in Bangladesh. Grameen phone has more than 10 million subscribers, and is the largest mobile phone company in Bangladesh. The telephone-ladies generate 19% of the revenue of the mobile phone company and 4 telephone-ladies are board members.
We Create What We Want!
I will end by quoting Prof. Yunus exact words because if I para-phrase them, they will not have the same effect as his own words.
“We get what we want, or what we don’t refuse. We accept the fact that we will always have poor people around us, and that poverty is part of human destiny. This is precisely why we continue to have poor people around us. If we firmly believe that poverty is unacceptable to us, and that it should not belong to a civilized society, we would have built appropriate institutions and policies to create a poverty-free world. We wanted to go to the moon, so we went there. We achieve what we want to achieve. If we are not achieving something, it is because we have not put our minds to it. We create what we want. What we want and how we get to it depends on our mindsets. It is extremely difficult to change mindsets once they are formed. We create the world in accordance with our mindset. We need to invent ways to change our perspective continually and reconfigure our mindset quickly as new knowledge emerges. We can reconfigure our world if we can reconfigure our mindset”.