With just $27, he forever changed the lives of 40 individuals. Since his initial project, the number grew into 8 million.
Muhammad Yunus emphasized the power of microcredit and social business at Elon University’s Spring Convocation Tuesday. A Nobel Peace Prize Winner and founder of Grameen Bank, Yunus has gained international acclaim for his work to alleviate poverty in rural Bangladesh.
The system we created is flawed. To get rid of it, we have to change the system. The same system that created poverty cannot cure it.
-Muhammad Yunus, Nobel Peace Prize Winner
Yunus worked as an economics professor in the United States and Bangladesh, his home country, for more than 20 years, but a field trip to a small Bangladeshi village halted his teaching career. After spending some time with the residents, Yunus realized the strength of poverty’s grip.
“Seeing how people are dying outside the classroom of hunger suddenly takes away the enjoyment of teaching,” Yunus said. “I tried to see if I could be of some assistance. I specialized in doing tiny things. I’d feel very happy if I helped just one person, even for a day.”
With the equivalent of $27, Yunus provided loans to about 40 villagers so they could start small, sustainable businesses. He described the effect as profound.
“The sensation it created in the village got me to the next level,” he said. “If you can make so many people happy with such a small amount of money, why not do more of it?”
Yunus then spoke to various banks in Bangladesh in the attempt to provide more financial loans to poor villagers. Because the villagers didn’t have good credit, no banks agreed to take the risk.
“The logical thing to do is to loan money to the people who don’t have a lot of money,” Yunus said. “I looked at the conventional bank and how they do their work, and once I learned, I did just the opposite. It worked. They go to the rich; I go to the poor. They go to men; I go to women. They go to the city centers; I go to remote villages.”
Yunus established the Grameen Bank in 1983. It was the first microfinance institution to provide collateral and interest-free loans to women from poverty-stricken villages in Bangladesh. The women invested the loans in entrepreneurial efforts, which eventually fostered their self-sufficiency. Money gained from investors was cycled back into the bank rather than the pockets of its founders.
Today, Grameen Bank supports nearly 8 million active borrowers worldwide, and loan repayment rates remain at more than 90 percent. But the borrowers are not to blame for their unfortunate financial circumstances, Yunus said.
“The poor people (didn’t create poverty),” he said. “The system we created is flawed. To get rid of it, we have to change the system. The same system that created poverty cannot cure it.”
The current emphasis on for-profit business rather than social business only exacerbates existing problems within the system, Yunus said.
“There are two types of business: business to make money, and business to solve problems,” he said. “Money business is the means, but social business is the end. All of the world’s problems can be dissolved by recognizing the power of social business.”
Yunus charged the student audience with the task of pursuing practices reflective of his business approach.
The power to affect change is in the hands of the younger generation, Yunus said.
“You are the most powerful generation in human history because of the technology that you hold,” he said, addressing Elon students. “You can do it if you believe that you can do it. Everyone can change the world, not as a group but as an individual.”