“Well hello!” exclaims Professor Muhammad Yunus happily as he re-positions his headphones and peers into the Skype screen.
“It’s good to see you!” he continues, waving as if we were old friends.
Perhaps effusive greetings are standard practice for Nobel Peace Prize winners—I figure it would take a lot to dim the light of someone whose humanitarian efforts have taken them all the way to Oslo. Still, I’m relieved he’s in a jovial mood, despite the tech issues in Bangladesh that have delayed our scheduled start time.
Muhammad Yunus’ efforts as a pioneer of microfinance and social business have been recognised globally. At last count, that includes 112 awards from 26 countries and 55 honorary degrees. His Nobel Peace Prize (2006) was followed by the Presidential Medal of Freedom awarded by President Obama in 2009 and the Congressional Gold Medal (2010).
In 2012 Fortune magazine named him “one of the greatest entrepreneurs of our time.”
Promoting social entrepreneurship is the key reason for Professor Yunus’ upcoming visit to Australia, culminating in the Australasian Social Business Forum in Melbourne on April 6.
As you’ll glean from the conversation that follows, the vision of Muhammad Yunus remains vast. His wish list is as ambitious as ever and his commitment to imagining and achieving social change is steadfast.
NR: You’ve said many times that making money is a happiness but making others happy is a ‘super happiness’. I wonder when did you discover this super happiness? Was it something you realised from a young age?
MY: Well, when I started doing this work, that’s when I realised what this is all about. At that time, I had no expression for it and people kept asking me the question: Why should anybody do social business if they’re not making money? They’re insistent that money is the incentive in the world, so if you take away the incentive from people then you don’t have anything left.
So, I said ‘Yes, I agree that money is an incentive. It’s one incentive but it’s not THE incentive. There are other incentives in life and I said making people happy is an incentive too. Then I start saying ‘Making money is a happiness, making other people happy is a super happiness.’ And, it’s not only an incentive it’s a super incentive. You don’t know it because you never did this. I said why don’t you try it, find out, compare. When you compare I’m sure you’ll enjoy the super happiness that I enjoy doing the things I do.
I have all the options for making money but I don’t go there because I see so much fun, so much enjoyment in doing these things. So that’s how I explain it.
You describe social businesses as ‘non-loss making, non-dividend paying businesses that exist to solve problems rather than make money’. Do you think one day social businesses may replace NGOs or will there always be a role for traditional charities?
I would say there’ll be a role for everybody. I’m providing an option—I’m not saying ‘push everything away, this is the only thing you can do, it’s a replacement for everything else.’ That’s not how I position it. Instead, it’s that this option is missing. Some of the things that you want to do can be done much better this way than the traditional way of either making money or giving to charity.
Charity is a wonderful idea because it’s the only thing which has helped many people all these years but it has limitations.
The limitation is that charity money goes out, does wonderful work, but the money doesn’t come back. You have only a one time use of your money. If you transform this into a social business, with exactly the same objective but do it in a business way then your money goes out, does the work and comes back again. You can use that money again and again—there’s no limit to the use of that money. It’s extremely powerful.
So, that’s the point I’m making. It never ends, it never depletes, it grows in the system. So I’m giving these options.
You’ve drawn a fairly sharp distinction between social businesses and other social enterprises that make some level of profit. Do you think there’s room on the social change agenda for social enterprises that do generate some kind of profit? Does profit have to be a dirty word?
No, it’s not a dirty word, I’m only saying this is an option. If you want to make money you can make money. It gives you happiness, I’m not denying that. Making money is a happiness, making other people happy is a super happiness. I’m not saying ‘this is dirty, this is clean.’ That’s not it, it’s not discrediting the other one.
The social enterprise terminology is used in a very broad sense—it includes almost everything under the sun. You can run a business, make money and call it social enterprise. It’s possible. I’m not saying that’s a bad idea, it’s a good idea too instead of just making money and not having that social aspect. When you’re mixing social and profit this is an improvement.
But the question always comes: What is the ratio of mixing? Is it 1 per cent social, 99 per cent profit? Is it 50 per cent social, 50 per cent profit? Is it 99 per cent social, 1 per cent profit? That is not clear. It’s a little hazy.
In our case, we take the extreme form. It’s 100 per cent social, 0 per cent profit. It’s very clear. By definition we made it very clear: it’s a non-dividend company to solve human problems. So there are two conditions: it is non-dividend, you can take back your investment money, but it is designed for no profits. It’s not making personal money.
So it’s very clean, neat and very powerful.
When you mix social and profit this is still a good idea because you have both sides in the business, but my positon probably would be that if you’re mixing, you’ll do less of each. You cannot do the maximum of both. If you do only one, then you can maximise it. I chose to maximise the social because I had no intention of making any personal money out of it.
Social enterprise is on the rise—there are more than 20,000 social enterprises in Australia alone—but very few have managed to scale. Why do you think that is?
I think social enterprise is growing pretty fast. It’s being adopted in many countries and many young people are doing it. I’d say the expansion speed is good.
Many universities are adopting it to set up what they call the Yunus Social Business Centre so that students can learn from them and have courses—business people can have short courses to understand what social business is, and NGO leaders can have social business courses and so on. So this is to communicate with each other, just to let them know that they have options.
Right now we have 25 universities around the world with Yunus Social Business Centres and there are many more coming and launching every month so that makes me feel that yes, young people are interested, universities are interested and we see large companies coming forward with social businesses of their own.
There are initiatives in France where big companies gather together and call themselves Action Tank and through that Action Tank they come up with social business ideas with each other and take them back to their respective companies. So the companies themselves are coming up with the social business ideas.
Now India has just launched an Action Tank, bringing several of the top businesses in India together to create social businesses. Brazil has started too. So, seeing this adoption, seeing this interest from the big companies—when the only thing the big companies usually understand is the money—but when you bring them closer to it, when you explain things, they see an opportunity to play another role. A role to solve problems through social business.
Philanthropy is uniquely placed to operate as risk capital in many regards. What role do you think philanthropy can play in nurturing social business and the wider social enterprise sector?
I would say philanthropy has had its own role as a charity but now it can look beyond that role. It can go beyond philanthropy to become a philanthropic investor.
If you have a social business that’s trying to achieve the same thing you’re trying to achieve through philanthropy then you can make people self-reliant, independent. For instance, somebody comes up with a beautiful idea—this is how I will help make 100 people self-reliant, they won’t come back for charity, I will make sure they have an income of their own, they can grow by themselves, this is my social business idea provided you give me x amount of money as an investment, then I can do this.
So philanthropy can take the challenge and give the money. For these 100 people, there’s a one-time investment and that’s it—you don’t have to go back to them anymore because they can take care of themselves. That’s the promise of the social business to you.
There’s a lot of philanthropic investors who are looking into this as an opportunity to do the work in a more sustainable way.
The social sector is a space where sharing failure can be a dangerous business. There’s reluctance to admit to missteps or to initiatives that went awry. From your life’s work fighting to end poverty, could you share an instance of failure—something that didn’t go to plan and the lesson you learned from that?
Everything I’ve done, all my life, is done as a matter of trial and error. I didn’t have any finished blueprint at any time, it’s always a work in progress. So I do it step by step and sometimes I see it doesn’t work at all the way I would’ve thought and I abandon it, just walk away from it.
That doesn’t mean that it will never be done again. I’ll concentrate on other things and then two years, three years down the line, I’ll see suddenly, ‘Ah, this is what I should’ve done. If I connect this with that, it would be a beautiful idea.’ So I come back and start all over again. This half done thing, I can figure it out.
So this is how it works, it’s not like one thing works and then another thing fails. Nothing is permanent. The one thing that’s working today, maybe the day after tomorrow it will not work. The one that you abandoned because it didn’t work, the day after tomorrow it will be the most beautiful project you ever did.
We now know that 8 men own the same amount of wealth as the 3.6 billion people in the poorest half of the world. Given that inequality is accelerating around the globe and is manifesting in the anger and fear that drove Brexit and the election of Trump, what do you think it will take, in real terms, to break this cycle? For instance, you’ve called for a mobilisation of citizen power to transform the ‘wealth pyramid’ into a ‘wealth diamond’—how does that happen?
I would give two things as examples.
Today as Oxfam has said, 1 per cent of the world owns 99 per cent of the wealth and it’s getting worse every year. Next year will be worse than this year, so wealth is going in the one direction and becoming speedier and speedier along the way.
Because we were told in the capitalist system that all of us have to work for somebody else, because we’re all looking for jobs as soon as we come out of school or college, we are told that you have to go out and find a job. Life is finding a job and working for somebody else. As long as this continues, wealth concentration will continue because we have been converted into machinery, working for people who are amassing the wealth. If we don’t work for them, they cannot amass because we have the tools that helps them get their wealth.
By directing people to become job seekers, this has been a gross mistake by misinterpreting human beings. Human beings are not born to work for anybody. Human beings are born to be entrepreneurs.
Much of our time on this planet we have been entrepreneurs—we were hunters, we were gatherers, we were farmers, we were problem solvers, we were go getters. That’s what we were—we didn’t work for anybody. Only a couple of centuries back the idea came that if you work for somebody then you can have an income for yourself so this is a very easy, cosy thing. The idea of entrepreneurship was completely gone because of the industrial revolution so we became workers in factories and offices and so on.
But if we go back, if we all become entrepreneurs, there’s no question of wealth concentration because we, ourselves, become gatherers of wealth because we are in business. We are not passive and the wealth concentration will disappear.
Second, if you compare money making business with social business—if we have more social business there’s no chance of wealth concentration because social business doesn’t pass on any wealth to individuals because by definition it is a non-dividend company—any surplus stays with the company. The wealth always remains with the company to do more good for more people.
So these two factors work against wealth concentration. As the flow of this becomes bigger and bigger, the flow of wealth to the top will become thinner and thinner because now the wealth is going in the other direction.
What is the most important policy an enlightened government might put in place to lessen inequality?
Promote social business, promote entrepreneurship—these are the two things.
Microfinance has made tremendous gains in reducing poverty in places like your home country of Bangladesh, but it’s attracted its fair share of critics who argue that it places too much emphasis on individual effort. Do you think there’s any merit in those claims?
From our side, what we have been trying to do is draw attention to why we do the microcredit.
Microcredit is a big question mark to the financial system. The entire financial system is wrong. Absolutely wrong, because people need financial services, but they don’t get them.
You can consider it kind of a financial oxygen for people. If you can’t find enough oxygen you start gasping, you start finding it very hard to breathe and survive. You grow weak, you fall dead. Economically you are dead, these are the poor people in the financial sense.
It’s not the fault of the person, it’s the absence of the financial oxygen. And who’s at fault? It’s the fault of the financial system which is providing financial oxygen to the rich. All the oxygen is sucked up by them, there’s nothing left for poor people.
With microfinance, we’re challenging the whole financial system. It’s not just about giving a few dollars and walking away, we’re challenging the whole system. Until it’s designed in the right way, the financial system cannot function for the poor people and so the poor people remain deprived and create political problems, social problems, income inequality problems which brings us back to the wealth inequality and how to address that.
Grameen has been operational in the US since 2008. Based on your experience, what role do you think microfinance can play in developed countries?
We’ve been doing it for the last eight years in the United States. We have eight branches of Grameen America in New York City and 11 branches in 11 other cities. So, we have 19 branches, nearly 100,000 borrowers, 100 per cent of whom are women, and we have a 99.6 per cent repayment rate.
These are absolutely bottom people—their start up loan will be somewhere under $1,000 and gradually they improve their income situation by taking larger loans. We’ve given nearly three-quarters of a billion dollars through loans and the money comes back.
If we had more money, we could reach out to more people, but because we are an NGO in the US somebody has to give us the money, lend the money, which means we have to go out to banks and philanthropists.
Coming to break-even point is no problem, it is financially self-sustaining. So we have no problem on the performance side, it’s simply that the system doesn’t work to give us the ability to take deposits from the people since the banking law does not allow us to take deposits from anybody since we are not a bank in the US. So we are stuck as an NGO.
Empowerment seems to be a central message that underpins much of your work and you’ve spoken at length about the out-sized impact that can be achieved by investing in women and girls. Why do you think the world is so slow to embrace this knowledge? Do you think we’ll see substantial change in the way money is used to create social impact now that we’re on the cusp of the greatest wealth transfer in history?
Until we have the legislative part done, until we deconceptualise the banking system, it cannot be done. Because today, all said and done, microcredit is just a footnote in the financial world—it’s not even on the main page. So you have to read the fine print in the foot note to understand that there’s something called microcredit that serves these poor people.
The financial system should prioritise this area. These are the people who are deprived of the financial oxygen. If you give this oxygen, people become active, strong, they build up the economy from the grass roots—they are economically active citizens.
That part is completely missing. It’s left to the NGOs to do a little bit here and a little bit there.
We need a separate banking law to create a bank for the poor. Today that banking law doesn’t exist, we only create banks for the rich. There’s no space where the bank for the poor can be created because the bank for the poor is completely different—it is totally based on trust and the use of a small amount of money.
As a result, NGOs are doing many of the microcredit programs but some have gone in the wrong direction, have become sort of the loan sharks and instead of helping, they’re exploiting people, charging high interest rates and putting lots of pressure on the borrowers to pay back. There is right microcredit and there is wrong microcredit and we need independent authorities to see who is exploiting the situation for their own benefit.
You’ve called millennials the most powerful generation in history and urged them to be job creators rather than job seekers so as not to sacrifice their creative power. Given the ‘ticking time bomb’ as you call it of inequality, are you optimistic that this next generation will be able to move fast enough to reshape economic frameworks and government accountability?
Once we put the system in place and the policies and institutions in place, the time will not really be a big factor because when it’s done, the technology and the enterprise and the creative power of the young people will overtake everything. They can transform things in the fastest way possible.
Today is the age of speed. If you go back 15 years and tried to imagine what work would be like in 2017, you could not imagine the life that we have. You would have to have had the imagination of science fiction to imagine the world that we have.
Imagine what kind of world it will be 15 years from today, you write it down, imagine 15 years from now and I bet you it will be wrong. That’s the speed in which the world is moving.
So once we fix up our minds, fix the destination, it will go very fast. The problem is we don’t have a destination. We haven’t figured out what we want to be. I tell the young people, ‘Fix your destination. What is the purpose of your life? Fix it up, go for it and it will happen. Your energy will push you there.’
But if you don’t have the imagination of the world that you want to build, it will never happen. Imagination is the power.
In my way, imagine three zeros: zero poverty, zero unemployment, zero net carbon emissions. So I chase these three zeros. This is what I want to achieve.
You’re such an advocate for creativity and the importance of imagination in finding new solutions and building new realities—what do you do to nourish your own creativity?
Well, I keep doing things as I proceed, everyday I’m doing something, following up something. Some things look very unrealistic but I enjoy trying to make unrealistic things realistic.
Because in the past everybody says ‘It’s wrong’, everybody says ‘It cannot work’, everybody says ‘It cannot fly’ but I saw everything fly. I saw it fly very well.
So just because people say a thing cannot fly, it’s not the truth. The truth is they’re on the wrong side of history. They don’t know what this is. So take a jump, make it happen.
One of the world’s most pressing problems is the refugee crisis. Given that you’ve devoted your life to building businesses that solve problems, what are your thoughts on this situation?
Refugees are a big chunk of society moving from one place to another place because of the circumstances they’re in. These are not hungry people looking for food, they are doctors, professionals, professors, all kinds of people, representing the whole spectrum of society.
They’re all moving together, so it’s not ‘Okay, we can give them the food’, that’s not enough. We have to give them the space.
The whole question is are you willing to integrate them into society? If you don’t want to integrate them, then they will be in the camps and you put the fence around them and they will remain outsiders all the time.
The question we have to resolve is ‘Are we allowing them to participate in our society and in our economy?’
If they participate in our economy, they bring their talent, their creativity and they will be an asset to us. Their children will go to school and our children will get to know each other and so on, so that they are not treated as outsiders and they will do business with us. They are artisans and craftsmen, they are business owners and they are factory builders — let them do whatever they are doing. We are together.
So that’s the attitude we have to break—it’s not the refugees which are the problem, it’s our ideas that are the problem.
Australia’s 2016 Philanthropist of the Year, Audette Exel, will interview Professor Muhammad Yunus on stage at the 2017 Australasian Social Business Forum. Full program details and tickets available here.
The author wishes to thank the hastily assembled yet extraordinarily talented ‘brains trust’ of social entrepreneurs, philanthropists and advisors who gave freely of their experience and expertise to provide thoughts and feedback on the research for this interview. My gratitude and respect to you all.