| Small loans, big results

Nobel Prize Winner Muhammad Yunus uses microcredit for Bangladeshi welfare

There is no doubt that microfinance has become one of the biggest buzzwords of this decade. Microfinance, or the practice of giving small loans to poor individuals in order to start a small, often informal, business, has been incredibly successful. Practiced most widely in Bangladesh, it has funded start-up businesses from basket-weaving to bread-baking, often serving niche markets overlooked by large corporations.

Muhammad Yunus, the 2006 Nobel Peace Prize winning economist widely believed to be the father of microcredit, started the Grameen Bank in 1983 in order to facilitate the lending process among the people of Bangladesh. The Grameen Bank now has assets of over $855 million U.S., and has diversified its business to include an energy company, a cell phone company, a fishery, and a clinic network. Yunus calls these ventures “social businesses.”

Asked to comment recently about the world economic crisis, Yunus said, “I am not blaming [American bankers]; I am blaming the theory which produced them. … We can create money in the business; also we can change the world in business. That changing the world…is what I am calling social business.”

In his recent book, Creating a World without Poverty, Yunus describes “social business” as enterprises with social objectives like building a clinic or the sale of mosquito nets that must be profitable and able to pay back investors their initial contribution. Social business differs from other development initiatives because it isn’t a handout, nor is it a loan with an unreasonable rate of return (see: the World Bank’s Structural Adjustment programs), but rather a for-profit business which has an incentive to make its programs work.

The issue of seemingly worldwide doctor shortages has affected the rural population of Bangladesh immensely. In an effort to train more doctors, last October, Grameen Health along with representatives from Emory, Duke, and McGill Universities signed a Memorandum of Intent to create a learning centre in Dhaka. While still in its nascent stages, the centre will create degree programs for training doctors and nurses. It will act as a hub of planning and research in Bangladesh’s health sector. Yunus said during the World Health Care Congress that “while initial evaluations of the Grameen Clinic network and its health impact are positive, continuous improvements in coverage, disease prevention, quality of care, and sustainability remain as top priorities.”

In Bangladesh, rates of moderate-to-severe youth malnourishment hover around an extraordinary 55 per cent. In response to this, the Grameen Bank partnered with the French dairy comapny Danone to create Grameen-Danone in 2006. They produce nutrient-rich, full-cream yogurt, which the company sells for around ten cents a cup. The yogurt is sold door-to-door by women who would otherwise be unemployed, giving income to one of the country’s most vulnerable populations. The business, which employs around 1,600 people, has been incredibly successful, and Danone’s community trust reports holdings of nearly €35 million. Danone plans on reinvesting those profits into new social business models in Bangladesh and around the world.

Another important social business headed by Yunus is Grameen Kalyan (meaning well-being in Bengali), a network encompassing 50 clinics across the country. Each clinic serves up to 50,000 people in the immediate vicinity, many of whom are users of Grameen’s health insurance program that offers full insurance for around $2 USD a year per family. The network of clinics includes a pathology library, pharmacy, and emergency services.

As part of a new partnership with General Electric (GE) and the Mayo Clinic, Grameen Kalyan plans on expanding its care network throughout Bangladesh. Yunus has appealed to GE to create more portable, accessible, and less expensive ultrasound devices that women from around the country can be trained to use. According to Yunus, “Young women…will be encouraged to become entrepreneurs who go house to house and operate and sell the use of this equipment.” Using a partnership with GrameenPhone (another Grameen Bank social business), the images from these ultrasounds in rural areas can be sent to doctors in the cities for consultation.

Canadians, who have a perennial fear of the words “business” and “health” in the same paragraph, may wonder whether it is justified for a business like Grameen Health to act as a health care provider in lieu of the government. Highlighting the social business aspect of Grameen, Keat Yang of the McGill Student Network for Economic Development commented, “It is one thing to look at privatization of public goods in askance, but there is a distinction between social enterprises and firms that seek to maximize only profit.”

Indeed, while Grameen may profit from its Grameen Kalyan network, its mandate would force the reinvestment of that excess money into the community. According to Shelley Clark, a McGill Sociology professor specializing in global health, “When the government has failed to provide adequate care for decades, I personally see no reason why businesses couldn’t lend a hand.”