He was shocked that the difference between a life in slavery and a life of self-determination was as little as $2…
Choosing the winning candidate for a Nobel Prize is never going to be easy. You are always going to encounter criticism and contraversy.
Few would, however, argue with the rationale behind the 2006 winner - Muhammad Yunus - founder of the Grameen Bank in Bangladesh despite Yunus operating a for-profit commercial enterprise.
I was aware of his name and work indirectly through news coverage and promotion by leading political figures such as Bill Clinton. It wasn’t until I read Stephen Covey’s “The 8th Habit - from effectiveness to greatness” that I really became aware of the magnitude of this man’s work.
Yunus’ story makes most corporate efforts to address “social responsibility” through ethical policies and community projects as nothing more than paltry. Perhaps, it’s because these adjuncts to business see their social responsibility as a necessary PR cost (read evil) of being a global corporation. In Yunus’ case social responsibility and making a profit were not mutually exclusive.
Yunus was an assitant teaching professor at Chittagong University in Bangladesh during the famine of the early 1970s. Coming out of the university after teaching macroeconomic theory to his students he saw people starving in the street emaciated and skeletal. At that point the penny dropped and he realized that if economics was going to make any difference it wasn’t in the classroom.
Taking one of his students out to the remote villages Yunus set out to discover exactly what the problem was whereupon he met a local artisan who was weaving the most beautiful chairs out of wicker. He was shocked to find that the woman earned less than 2 cents a day from her 14 hour a day effort. It cost the woman more than 20 cents to buy the raw materials from the trader who as a precondition of the loan forced the weaver to sell back the chairs to him at unprofitably low price.
Yunus and his accomplice toured the whole village to find similar stories - women in near slavery because of the lack of access to capital. What if I could lend them the money he asked themselves? He was shocked to find that the total sum required to finance the whole village was less than a mere $20 a month.
Stephen Covey relates the story in his book the 8th habit. It continues to describe Yunus’ battle to institutionalize lending to the poor - or microfinancing as it is called. Bankers refused to lend money to those without “collateral” or those they believed to be without recourse to repay the debt. Yunus had to finance it personally.
The only route to making this work was to apply for a banking license and after a 7 year wait, Yunus finally was able to establish the Grameen Bank - a for profit organization with a social conscience.
Since its establishment, the bank has lent over $5.5 billion in loans of around $20-$100 to nearly 7 million Bangladeshis. Interestingly 97% of the recipients were women.
This is what I took away from the story:
* No-one who achieves anything great actually sets out with a grandiose mission statement. In reality, they “find it out” (or in many cases, the mission statement finds them)
* The third level of sustainable value creation of success is through institutionalization (where the first is passion and the second is discipline). Insitutionalizing the effort after identifying the need is critical to creating a legacy beyone one man’s lifetime.
* Life is cheap. $2 or 1 pound is a joke for us, but the difference between poverty and independence for a large number of people on this planet. If you are interested in looking further into this I can recommend reading about Muhammad Yunus, microfinancing or donating to a charity aimed at giving people hope in the developing world such as World Vision
Message from Graham: If you are interested in Microfinancing, please consider the following organization - if you are in business yourself it is a rewarding and stimulating way to contribute meaningfully… http://www.kiva.org
