A Lesson on Social Entrepreneurship by Prof. Muhammad Yunus

Devvrat Raghav, Class of 2019

Among the several eye-catching events on April 6 2017, one of the most eagerly anticipated was an address by Prof. Muhammad Yunus at the invitation of Ashoka’s Centre for Entrepreneurship (CfE). Speaking in the context of his recent book, titled “A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions”, he illustrated the ideological and operational challenges faced by social entrepreneurs.

Needless to say, Prof. Yunus has enjoyed a long and successful standing as a social entrepreneur, perhaps best reflected in his role as the founder of Grameen Bank — the biggest micro-finance banking institution in Bangladesh. By turning it to a non-profit ‘social business’, he was able to revitalize the future of thousands of economically-marginalized households in the country. This culminated in both him and the bank receiving the Nobel Peace Prize in 2006.

Drawing from these experiences, he illustrated how traditional banking systems had effectively excluded a large mass of people from gaining access to much-needed credit, thereby condemning them to a cycle of poverty. The need for collateral and security had limited both entrepreneurial spirit and economic mobility. He argued that any change in this system must come from those who seek not profit, but economic equity.

After all, that is the core principle of social business — profit eschewed in favor of enabling social improvement, such as by allowing poor people to engage in self-sustaining employment. “But this is not the same as charity” said Prof. Yunus. In the case of charity, there must be people who are ready to keep giving unconditionally and with no expectation of a return.

On the other hand, he said that social business does not require such giveaways. Rather, it depends on the basic trust between individuals that ensures the investment’s return. According to Prof. Yunus, this was the real reason behind the Grameen Bank having a 99% recovery rate of loaned funds.

This trust allowed the Bank to establish over 2,600 branches and lend to nine million people, 97% of whom were women. As a result, thousands of small-scale enterprises were created and operated by poor people who had finally gotten a chance to break the cycle of poverty and unemployment. On a larger scale, he said that this shows us a possible path to reaching two of the ‘three zeroes’, namely ‘zero poverty’ and ‘zero unemployment’ — something which a profit-focused market system cannot ensure.

In fact, a broader point that Prof. Yunus stressed upon was the inadequacy of how human behavior is perceived within the economics curricula. He attested that the notion of a selfish, utility-maximising individual is belied by empirical observation of the Grameen Bank’s debtors, who had repaid the principal and validated the Bank’s trust.

Having shared the Grameen Bank’s story, he further called upon the next generation to join the wave of social business, rather than to restrict themselves to the contemporary capitalist system. Not only would that expand the scope and scale of social business, it would also allow poor people across the world to gradually move into better conditions that could facilitate greater energy efficiency. After all, by keeping a large part of human society away from technological innovation, it becomes impossible to truly mold our energy consumption needs and patterns into sustainable practices that will yield the final zero, i.e. ‘zero carbon emissions’.

He concluded by saying that ultimately, the attainment of all three zeroes relies on a shift towards social entrepreneurship, such that it helps human beings come together to maximize their collective gain and minimize the degradation of the environment they live in. Therefore, he said, cooperation, and not just competition, is required if humanity wishes to tackle the biggest problems that have implications for every single one of us.