It all started with a gift of $27.
In 1974, Muhammad Yunus was an economics professor at Chittagong University in Bangladesh when a combination of war, natural disasters and an international oil crisis toppled his country into a devastating famine. How could he simply teach elegant theories of the free market, he thought, while hunger and poverty threatened the lives of millions?
Venturing into the countryside to experiment with social programs, he found a woman in the village of Jobra who was borrowing from a local moneylender to finance her tiny business handcrafting bamboo stools. But she could borrow only at a very high interest rate and by agreeing to sell her work to the lender at a price he set, leaving her with almost no profit.
Yunus and his students found a total of 42 villagers trapped in the same kind of arrangement. He realized that he could release all of them from their economic bondage by reaching into his pocket for the equivalent of $27 and paying off all their loans.
Inspired by this example, Yunus created Grameen Bank to make low-interest loans to the poorest of the poor, people with no collateral or credit history. Today it serves more than 8 million people—97 percent of them women—in every village in Bangladesh, extending more than $100 million a month in loans averaging about $200. Grameen is also helping to spread the idea known as microcredit throughout the world—and in 2006, Yunus and the bank were awarded the Nobel Peace Price for their accomplishments.
Seeking new ways for the power of the market to help the poor, Yunus landed on the concept of “social businesses.” These companies operate like any other, competing in the marketplace to make a profit, with two big exceptions: The investors agree not to take any money from the company beyond their original investment, and the overriding goal is to deliver a particular social benefit to people in need.
Grameen now operates dozens of social businesses in Bangladesh. These companies provide affordable nutritious foods, extend telecommunications services into isolated rural areas, export hand-loomed traditional fabrics, and much more.
Their effects are being felt in Bangladesh’s improving poverty rate. But Yunus’ ultimate goal, at age 70, is to eliminate poverty throughout the world by 2050.
Yunus introduced his ideas about social business in a 2007 book, Creating a World Without Poverty, and expands them in the recently published Building Social Business.
In a conversation with the AARP Bulletin, he discussed his ideas and how they apply to older Americans.
Q. How could social businesses address the problems that older people face?
A. Old age can be an attractive area for social business. In Eastern societies, a family not only takes care of its own old members, but the old remain important members of the family. In Western countries, the young people move away and old people are left alone. When they cannot take care of themselves, they are sent to old-age homes. Through their social businesses they can participate in activities where they will remain surrounded and admired by young people all the time.