Microfinance and socially responsible business
Dr Muhammed Yunus, 2006 Nobel Peace Prize winner and microfinance
pioneer, has perhaps done more than anyone over the past 30 years to
increase financial inclusion for the poor. Originally an economist,
Yunus founded Grameen Bank in 1976 with the goal of making loans to
poor Bangladeshis, and to women in particular.
The idea was simple: people living in poverty do not lack the ability
to improve their own lives; they just lack the opportunity. By making
small business loans, Grameen Bank helped the poorest citizens of
Bangladesh to set up small businesses so that they could make profits
with which to look after their own families rather than relying on
charity.
Grameen is also noted for developing group lending, or "solidarity groups" as the bank calls them. Small, informal groups apply together for loans and its members act as co-guarantors of repayment and support one another's efforts. MicroLoan's model involves a similar lending style, enabling clients to come together and encourage each other with their business plan and their repayments.
Social business
Having done so much to raise the profile of microfinance globally, Dr. Yunus has now set his sights on promoting another, related concept: the social business. In his words, this involves "a new type of social entrepreneur" who is not interested in profit-maximisation.
Some microfinance businesses (including Grameen and MicroLoan Foundation) already structure themselves as social businesses. The business plan is sustainable in the long-term, but does not have the ultimate goal of returning a profit to shareholders. Instead the focus is on providing services that benefit the communities served. "Dr. Yunus has inspired many of us of who have got involved in microfinance," says MicroLoan Founation's Founder and CEO, Peter Ryan. "I have certainly learned from his experiences and am also drawn by his recent campaigning on the subject of social business. The MicroLoan Foundation is currently exploring this concept and its potential within sub-Saharan Africa."
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