Social business is business that focuses on solving the problems of the less fortunate and the deprived and instilling in them a confidence to aim higher on their own creative expertise, said Professor Muhammad Yunus, founder of Grameen Bank in Bangladesh, the Yunus Centre Foundation of the United Nations and winner of the Nobel Prize in 2006 for his initiatives in micro-financing.
In this, Bahrain could be the hub of the region by offering itself as a location for the youth of the entire region to conglomerate with their own ideas . Bahrain could be an incubator, he told the media.
Delivering the keynote address, of the Social Business Week inaugurated this morning at the Bait Al Tijjar, the professor told a huge gathering that social business is about changing society. “Nobody that has contributed to the social cause gets a profit from being in this line. The investment ploughed in to promote any cause, returns to the investor. The advantage here, though, is that the investor still retains the business but minus the dividends,” said the professor sounding a note of caution. Contrary to conventional business where profits are at the root of any business, in social business the initial funding is to benefit the deprived and they alone are the beneficiaries, he added.
Taking a leaf out of his own initiatives and experience in Bangladesh to prove this point, the professor said, “Bangladesh lives in its villages and only about 15 per cent of its population is urban. In the villages there was no electricity. After sundown these villages would live in the light of wick lamps. I formed a company to tap the renewable energy. Bangladesh could use solar energy. Initially it met with stiff resistance and it was difficult to sell even five solar home systems in a month. We surpassed that and today we have over a million solar home system sold in a day,” Prof Yunus said.
Helping this line of business are micro-credit and micro-finance , he added. Micro credit and micro financing, he added, are two tools that go into banishing poverty. Citing an example, Prof Yunus said, a lady entrepreneur obtained micro finance as seed money to launch an enterprise. Over a period of time she paid back the seed money taken and from the excess she generated her daughter went to medical school and became a professional in Bangladesh, he said.
It’s all about perceptions, the professor said. The mother would have been a doctor were she to have the finances. Conventional banking failed here, he said. In conventional banking the poor are not credit worthy. In micro-financing the opposite holds true, “the bank has to be people worthy,” said Prof Yunus.
He said that this perception has resulted in the Grameen Bank now having 8.5 million borrower families (about 40 million people) and of this 97 per cent are women. Turning to the creditworthiness, he compared the banks in New York with the Grameen Bank in New York. When the banking system went under, he said, all the guarantees and promises gave away. The credit-worthiness the banks talked about did not stand. However, in the Grameen Bank in New York, 99.3 per cent repayment was reported, he added.
The credit worthiness of this line has resulted in big companies around the world partnering us and creating social businesses with the funding from their corporate social responsibility allocation. It is also helps the youth design their own social business. Social business thus is all about creative power. The success of this initiative has resulted in Grameen Bank now having 2,600 branches in Bangladesh alone.
Earlier, welcoming the gathering, Minister for Social Development Dr Fatima Al Beloushi called the even a strategic one for the Kingdom of Bahrain. Organisaton of this event would surely have a regional echo, she added. The minister said that social business resulted in the establishment of the Family Bank – which provides the funding for the investors.
He told the Bahrain News Agency that going forward, he was explaining on what can be done in raising the level of income generation and thus the livelihood of the poor and deprived. It is upto the people to take the direction. “We are looking at the creation of social business centres in the universities so that they become a part of the curriculum. We then plan to connect one university with another to help exchange ideas and concepts,” said the professor.
Asked about the payback in the conduct of the business, he said, “It’s a non-dividend company. Over a period of time the investment that was brought into the venture is taken back. Once the investment made has been returned the dividend payment stops, but the company still belongs to the one that funded it. It is solely dedicated to the solving the problem it was. “