Five years ago when Indian microfinance industry was undergoing its worst phase with suicides and media glare pinpointing at the highhandedness of microfinance institutions, some of them modeled after Muhammad Yunus Grameen Bank in Bangladesh, Prof. Yunus realised the excessives were giving way to the very foundation of the concept.
Soon, he too faced problems with the Bangladesh government, which forced him to quit based on allegations, which the funders in the Netherlands too refuted. Once he realised that any business once takes off will result in personal greed, he proposed the concept of Social Business.
Once clarity on social business became widely accepted, the big global companies too started evincing interest in it. In social business, a social entrepreneur will set up business to reach out to the poor and help them come out of poverty within their limited means. The income generation from a social business could be achieved with subsidization from big companies or by selling the goods at high rates to the rich and diverting profits to provide same goods at concessional rates to the poor.
Muhammad Yunus’s new concept has already reached many social business enthusiasts and the latest to join the idea and a joint venture with Grameen Bank is Japan’s Uniqlo. The new project to be set up in Bangladesh, will manufacture clothes, especially winter clothing, for the poor children all over the world. Since Bangladesh is already known for its massive export zones of clothing for the multinationals in the world, expertise is not a problem.
In his interview with Nikkei Shimbun, Prof. Yunus said: "We go step by step to reach our goal, which is to make inexpensive clothing for children and poor people. We have a long way to go."
He further explained that the new JV could make warm clothing for the poor children even it means they lose money on it. "We can cover the cost by selling other products to high-income people. This is one formula that we can follow," he quickly added.
Grameen Bank, which has worked with many multinational companies like Danone and Veolia to set up social businesses, will now concentrate on cross-subsidization model now. What is new in it is that mostly governments were behind such enterprises till now and even private enterprises can be roped in to such noble cause, going by Muhammad Yunus’s social business model.
"If you start a small social business, its impact is sympathetic. Look at Uniqlo. It’s a mega-business. And look at Grameen Uniqlo. It is a tiny thing, but you are talking about it. This excites us; that even a big business can start doing good for the people," said Prof. Yunus.
Grameen Bank is more than willing to provide free consultation to world companies on setting up such businesses in Bangladesh, Vietnam, Uganda and India. "We are very happy to help you design a business. We are not charging you with anything. We just help by giving advice on creating a social business," he said.
Unless social business is given due consideration now, the future is beset with explosive consequences, said the Nobel Peace Prize winner of 2006, who is also father of Microfinance model in the world. "All the wealth is in the hands of a few people, and it induces a lot of explosive situations. This consolidation of wealth is a ticking time bomb, and it is getting worse every day," he explained.
Finally, he said people should devote part of their lifespan for social business. In his typical appeal to all entrepreneurs around the world, he said: "Make a pledge: we will work for ourselves for the first 50 years and take care of us, and after that, we will work for everybody else. People create social businesses to solve the world’s problems. Only then can we undo the consolidation (of wealth in few people). Otherwise, the world will be a very dangerous place."
Read full interview in Nikkei Shimbun: http://asia.nikkei.com/Business/Companies/Muhammad-Yunus-sees-lots-of-possibilities-in-Uniqlo-venture?page=1