JUNE 7, 2008

JOHN SHATTUCK:  Good afternoon, and welcome to the John F. Kennedy Library.  Congratulations on your good taste in coming to this event this afternoon in lieu of being outside in a very alluring and beautiful day. We’re very honored to have all of you, and above all, to have our guest of honor who I will introduce. I’m John Shattuck, CEO of the Kennedy Library Foundation, and on behalf of our Board of Directors and our Library Director, Tom Putnam, it’s a very special privilege to have this extraordinary program with our extraordinary guest.  

Let me first express our thanks to the organizations that make these forums possible, starting with our lead sponsor, Bank of America, and our other generous supporters, Boston Capital, the Lowell Institute, the Corcoran-Jennison Companies, the Boston Foundation, and our media sponsors, the Boston Globe, NECN, and WBUR, which broadcasts these Kennedy Library Forums on Sunday evenings at 8.

Although it was delivered almost half a century ago, there are many passages in President Kennedy’s famous Inaugural Address that sound as if they might have been spoken yesterday.  One of them is this: “To those people in the huts and villages of half the globe struggling to break the bonds of mass misery, we pledge our best efforts to help them help themselves . . .  For if a free society cannot help the many who are poor, it cannot save the few who are rich.”  President Kennedy then goes on to issue one of his famous challenges:  “Now the trumpet summons us again . . . as a call to bear the burden of a long twilight struggle . . . against the common enemies of man: tyranny, poverty, disease, and war itself.  Can we forge against these enemies a grand and global alliance, North and South, East and West, that can assure a more fruitful life for all mankind?  Will you join in that historic effort?”

Our speaker today has spent his life forging a global alliance to combat poverty. Muhammad Yunus is an economist who has redefined what it means to be an economist. 

In 1974, when he was teaching economics at Chittagong University in southern Bangladesh, his country went through a terrible famine in which hundreds of thousands died.  He wrote at the time that “nothing in the economic theories I taught reflected the life around me.  How could I go on telling my students make-believe stories in the name of economics?”  And so he began studying the economic realities of the poor, and soon he hit upon a new theory that offering the poorest of the poor very small interest-free loans might be able to stimulate massive employment and economic development.  

The question Muhammad Yunus was asking was whether it’s possible to harness the power of the market to address the problems of hunger, poverty and inequality.  His answer was the concept of microcredit, a revolutionary banking program that provides poor people – many of them women – with small loans they can use to launch businesses and lift their families out of poverty.  Based on this concept, he founded Grameen Bank and initiated an extraordinary economic revolution that has done more than any previous effort in history to combat global poverty.  Over the past thirty years this revolutionary concept has spread to every continent and has benefited over a hundred million people.  And for this extraordinary vision and achievement Muhammad Yunus was awarded the 2006 Nobel Peace Prize.

This year he has brought Grameen Bank to the United States.  Earlier this spring, in the midst of the subprime mortgage crisis, the Wall Street Journal referred to Grameen as the champion of “sub sub subprime” and said that it has the potential for changing the way we should think about credit.  Muhammad Yunus has challenged the banking world to remember that “credit” means “trust,” and that someone who has credit is someone who can be trusted.  “But bankers have taken the word ‘credit’ and built a whole edifice of institutions entirely based on distrust.”  Grameen Bank is based on the original meaning of credit, and 98% of its millions of small interest-free microcredits are repaid.

This year Muhammad Yunus has gone beyond the concept of microcredit to pioneer another revolutionary idea – the idea of “social business,” a new way to use the creative discipline of the market to tackle global problems from poverty to pollution to disease to ignorance.  And in his new book, Creating A World Without Poverty, which is on sale in our bookstore (and I know he will be pleased to sign after the Forum), he defines a social business as a business that is “cause-driven” rather than profit-oriented, but a business whose original capital investment can still be recovered in full.  He argues that running a social business is a far more efficient way to bring about change than philanthropy.  In philanthropy, he says, “the dollar has only one life -- you can use it only once -- but the social business dollar has an endless life because it can be recyled.”

These are some of the extraordinary ideas that have made Muhammad Yunus the world’s leading social thinker and activist.  Over the years, he has been showered with international awards for his work, and he has served many international institutions dedicated to eradicating global poverty and promoting sustainable development.  We are deeply grateful for your visit, Dr. Yunus, and we welcome you to the stage of the Kennedy Library.  [applause]

I would also like to introduce someone who will be coming to the stage of the Kennedy Library following Dr. Yunus’ remarks, who will provide the expertise of moderator, and that’s Dr. Lincoln Chen.  Dr. Chen is an expert on global health and poverty, and spent nearly a decade in Bangladesh in the 1970s as a representative of the Ford Foundation when Muhammad Yunus was starting the Grameen Bank. He recently chaired the board of the world’s largest private relief agency, CARE USA. And he’s currently president of the China Medical Board of New York, an independent foundation dedicated to advancing public health in China. Earlier he founded and directed the Global Health Equity Initiative at Harvard’s Asia Center, served as Executive Vice President of the Rockefeller Foundation, and held the Takemi Professorship of International Health at the Harvard School of Public Health.  Three years ago Lincoln moderated an outstanding Kennedy Library forum on global poverty, and this afternoon he joins us for this extraordinary conversation on the same subject with Muhammad Yunus.

Please join me in welcoming to the stage of the Kennedy Library Muhammad Yunus and Lincoln Chen.  [applause]

PROFESSOR MUHAMMAD YUNUS:  Thank you. What a great occasion. It’s a beautiful day, and I should be grateful to you because you have sacrificed a beautiful afternoon to come here, indoors. I’m honored and I’m privileged to share our experiences and the questions that that prompted in our minds and the solutions that we want to find of those questions. 

And as you just mentioned -- that about subprime crisis and referred to our work as a sub sub subprime -- and that kind of puts us in the context of a big crisis. Because here we are -- while we have had the satisfaction almost that we have developed the banking system in the world in a way, it’s almost looked at as is a perfect system -- nothing can go wrong, very sophisticated, very efficient -- but suddenly shows up with the subprime crisis. And in order to tackle this crisis, we have to go to a write-off process for a trillion dollars. 

And we don’t seem to get very upset about it. We never raise the questions, why it happened, who are responsible for this, how to avoid it in future. And a trillion dollars? 

Something that we can’t even fathom what that money is, with the food crisis at the same time, and suddenly prices of all food items jumping up everywhere around the world, almost to hundred percent rising food prices.

So when we have to run our bank with the poor people -- and these are the people who spend the bulk of their income in food -- so today with all this income they make, they can’t get the food plate that they used to get. They get half the plate for the same money.

And we’re talking about international efforts of several billion dollars, $15 billion to $20 billion dollars to address this food crisis. And such a big discussion where this money will come from. So it puts, again, side by side by with the trillion dollar write-off. Didn’t have to go through any congressional decision making on that one, very quietly done, not much publicized. But the other one becomes a big issue, where this money is  coming from. 

So it shows the kind of two different ways that we handle things in our lives. And this is also significant.  This is 2008:  just the midpoint of the millennium development goal period from 2000 to 2015 when those goals were adopted in 2000 in the Millennium Summit, the whole world was very excited.  Finally, we’re doing something which was never done before in human history, made a very clear decision that we want to reduce poverty by half by 2015. How much you want to reduce, that was very well defined. By when we were to do it, is a very specific date, and so were the other seven millennium development goals, very clearly enunciated. 

But soon we were derailed.  The world, instead of fighting poverty and fighting diseases, we went in the other direction, fighting terrorism. So while we are getting back to the issue of millennium development goals and checking back how far we are and feeling excited that some of us, some of those countries around the world are actually coming to the level that they are going to make it, reach those millennium development goals -- Bangladesh is one of those countries which is set right there to achieve all the eight millennium development goals. It is a fantastic experience for a country like Bangladesh and similar other countries who are going to make it, and a feeling of success coming in. 

Now with the food price going up, with the oil price going up, we don’t know where we’ll end up. So this is the context in which we’ll be looking at the issue of poverty and how it appears to us, how we got involved in this issue in the first place. I’m not a banker or I’m not someone who had any experience in lending money to anybody. But I was pushed into the situation because the circumstances in Bangladesh at the time where I was teaching in one of the universities in Bangladesh, famine situation.  And I was trying to see if there is anything I can do as a person -- not as an economist, because I felt that as an economist I don’t have anything extra which could be of any assistance to anybody; but I thought maybe as a person, as a human being, I can go out to the people and stand next to another human being and see if I can be of any help, even for a day. 

So that’s what I was trying to do. I was not trying to make any big plans or big projects, anything of that sort. But while I was trying to do that every day, I learned something, learned lots of little things, but one kind of came to my face again and again and hit me  —  the loan sharking in the village. So I wanted to understand that loan sharking, how much money they borrowed, what kind of loans they took, what is the impact on the person, just curiosity, not in those academic terms, just to understand. 

When I made the list, there were 42 names on the list and the total money they needed was $27 dollars. That’s what they borrowed from the loan sharks. And for that $27 dollars, the lives of 42 families were totally ruined. And I looked at it and I was trying to understand how people have to suffer so much for so little. And I was trying to kind of grasp the situation and trying to see what needs to be done in a situation like that. 

Suddenly it occurred to me the problem is really an intricate problem, but the solution is so simple. All I have to do is to give this $27 dollars to all these 42 people and they can return the money to the loan sharks, and they will be free. I was thrilled by the idea that it can be resolved so simply. And I was trying to figure out, am I making some mistake? I said, eh, there’s no mistake. They will be free. 

So I did that and that’s what led me to all these things. At that point, I thought this was done and I’ll move on to something else. But I couldn’t. People were so happy to have that $27 dollars. They thought I have done some kind of a miracle for them. Then the next thought that came to my mind, that if you can make so many people so happy, why shouldn’t you do more of it? And I had no idea what I will do next. But I wanted to do more. 

So among several ideas that I toyed around in my mind, one idea kind of looked good. Again, I thought it is a very simple, sensible solution. I thought of the bank which is located on the campus. All I have to do is to go and explain to the bank manager that he can lend the money to these people in the village, and the loan sharks will not get a chance. And money’s so small, he will never miss it. And in exchange, everybody will admire him, what a great job he has done.  See how innocent I was about banking? [laughter] And he reacted very strongly. He said, “No way.” And that kind of disappointed me. I said, “Why?” Such a simple idea. I thought he would be jumping on this. 

Anyway, it became a big kind of debate between me and him. I couldn’t persuade him; he couldn’t persuade me. So the whole thing went to the higher officials in the banking sector. I tried to convince them. I couldn’t. After months of running around, finally I came up with another idea. I said, “Why don’t you accept me as a guarantor? I sign all your papers, and you’ll save your rules because you are worried about your rules. That way, you save your rules and give the money.”  It took another two months to persuade on that one. But finally, they accepted it -- not because they were satisfied with the whole arrangement, but probably they wanted to just get rid of me. Their idea was, if they gave you some money, this money will never come back. So I’m not going to come back to them, because the money didn’t come back. But I was very happy. I was happy that I could take the money and bring it to the people. 

And that was the beginning in 1976. And I wanted to find the ways, how to do these things so that people are encouraged to pay back the money. Because I want to make sure money comes back. And it worked. And that was the happiest moment that everybody said, “It won’t work.”  This time I found out it worked. And I kept on expanding. And there’s a long story in between. 

And the more it became successful, the more reluctant the bank manager became. Because he was hoping the whole thing would disappear. It didn’t disappear. It was growing. So I -- seeing the reluctance, seeing the kind of complications he was introducing into it -- I thought instead of trying to go to him every time, why don’t I create a separate bank?  So the idea of creating a separate bank came to my mind. And then another struggle began, to have a separate bank for the poor people. Everybody said, “Are you crazy? Having a bank for the poor people?” Nobody heard of it. But I didn’t give up. Finally made it happen in 1983. We became a formal bank of our own. And we are very happy, wanted to expand it as far as we can go. And we continued to do that, and still our repayment stayed on a very high level, near 100%. 

And people asked me, “Why you concentrate on women?” Now if they ask me after 31 years the same question, “Why do you have so many women?,” particularly when the press asks me, I come back and ask the counter-question, “Have you asked any bank why so many men?” [laughter] [applause] Because that’s how it all began. I was asking the question, “Why so many men? You refuse to lend money to the poor people, which is unjust. And you refuse to lend money to women.” Not even one percent of their borrowers in Bangladesh happened to be women. Ninety-nine percent plus are men. 

So that is a separate story of battle between me and the banks. When I began finally with me as a guarantor, starting it, I made a first decision. Half the borrowers in my program must be women, because this is what I’ve been debating about. So I must show that it can be done. So with all my enthusiasm, I went out to the women to persuade them to take money from Grameen program. And women said, “Don’t give it to me. I don't know anything about money. Give it to my husband.” 

Here we go again, I said. “I’m trying to give the money to you and you’re telling me to give it to your husband.”  They said, “We don’t handle money.” My students were with me. They were very upset because I was insisting on women and women are not coming into the program. They tried to persuade me, “Why don’t you abandon this, because they are saying very clearly, they don’t know what to do with money.” 

So I tried to explain to them what I had in my mind. I said when a woman says, “I cannot take money because I don’t know what to do with money,” this is not her voice. It is the voice of history, the history of neglect and the history of fear that has generated in them. She is always told she is nobody; she doesn’t know anything; she cannot handle anything; and that’s how she grew up, but that doesn’t mean that in reality she doesn’t know anything.  So our job is to be patient and peel off the layers and layers of fear that the history has built around her. And we don’t have to be successful in every single case. All we need to be successful is one case.  If one woman finally can come out of it and say, “Let me try,” and if she tries and if she’s successful, every one of her friends in the neighborhood will look at her and say, “Oh my god, I can do better than that.” [laughter] The new kind of awakening will come. All you need to show, a demonstration, and they will change their mind, because somebody has done it. 

An almost similar thing happened -- that first desperate woman got into it. She was very nervous, but she did it and others became curious. And some more came out to dare such a thing and did it, and it gradually snowballed. But what really happened, it took six years to bring it to the 50/50 level. Then we saw money going to the family through women, brought so much more benefit to the family than compared to the same amount of money going to the family through men. So again, that’s a whole range of differences that we saw. 

At the end we ask ourselves, what is so good about 50/50? Why must we stick to this 50/50 policy? If it is better served, if the family’s better served by entering the family through woman, why don’t we do it? So we started focusing on women. And we started encouraging everybody to focus on women.  As a result, we moved from 50% to 60, 70, 90 percent. Today, we have seven and a half million borrowers in Bangladesh in Grameen Bank, 97% women. [applause]  It’s an amazing kind of situation where you take the poorest women into the bank and give her little loans, and she starts earning money by selling eggs or selling milk from milk shop, or making baskets and selling basket, or whatever she knows. And suddenly she looks different. She looks at you in a very confident way. She’s no longer the shy woman, scary woman that you used to see in the village running away from you. Now, she’s all smiles. She wants to show you what she has done. She’s a very confident woman. She took a $40 dollar loan. She took a $50 dollar loan. She’s now negotiating next time, “You have to give me $60 dollars.” She’s ahead of the time. She’s preparing you so that you’re not shocked. 

So we go into kind of a battle with her: “No, no, no, $60 is too much for you,” until she explains why she needs the $60 dollars.  It’s an amazing experience. You feel the confidence she feels. Only a few years back, she’s the one saying, “No, no. We never handle money. I can’t touch money. I never touched money in my life.” So a transformation takes place. So the microcredit, as the work that we do became known as, it’s not about lending money. It’s about transforming human beings in the way she looks at it, in the way she can transform herself, and gradually touches every member of the family. 

We started doing something so that they can bring all of their problems together, discuss among themselves and look for the solutions to those problems. And out of those intensive discussions among themselves was created something that became known as Sixteen Decisions. One of the Sixteen Decision is, we shall send our children to school and make sure they remain in school. 

We encourage their decisions to be implemented. And in the beginning, we’re not sure whether this would be possible, but we didn’t give up. We say, “Let’s try at least.” These are all illiterate families, absolutely illiterate. So we thought, this will be a kind of a break if we can bring the children to school.  And we were successful. Children came to school. They send their children to school. Then we see many of the children who come for the first time coming to school. Some of them came out of the top of the class in performance. So it’s an amazing experience to see for the first time in the whole history of their family a child, a little girl, a little boy coming to school, and soon she’s at the top of the class, the school where all the children of the village are attending. 

So we were thrilled things like this can happen. So we wanted to recognize it, celebrate it. So we immediately introduced the scholarships for those kids who are at the top of the class. And since then we have been giving these scholarships. Last year we gave about 64,000 student scholarships from Grameen Bank. Each year the number increases. Then many of these children went to the higher education because they graduate, continue.

They didn’t abandon it. Our idea is we will consider ourself absolutely successful if we can make them complete primary education, because for the first time a generation will complete their primary education out of these poor families. 

We came out wrong. Not only did they complete their primary education, they continued. As a result, thousands and thousands of students came at the level of higher education. So we introduced an education loan. Right now there are more than 23,000 students in medical schools, engineering schools, universities -- all with student loans. So entire financing is done by the Grameen loans. Some of them completed their Ph.Ds. So we have a completely new generation coming from those illiterate families. 

Then you go to the village and you see this Grameen borrower with a very happy face. You are visiting her. She’s happy that you came to meet her. She’s showing off all the things she has done over the last 15 years, 12 years, the house that she has built, the cows that she have bought, and all the other successes along the way, bank account that she has. And she has a young girl with her. She’s also very happy looking. And she introduces her with pride.  She says, “My daughter.” And she has just finished her medical school. She’s a doctor now. And you look at the mother and you look at the daughter. You feel happy that out of this illiterate family you now have medical doctor.

Then you come, your mind, you’re faced with a question. Her mother could have been a doctor, too. But she never had a chance. She never went to school. But the daughter got a little chance so she went to school. And she got the scholarship. She got those education loans. She became a doctor. So seeing these examples again and again, you cannot escape the conclusion: there’s nothing wrong with the poor people. They have the same quality as any human being. Simply, society never gave them the space, never gave them the opportunity to unleash their capacity. So that’s why mother could never go to school. She could have been an engineer. She could have been a professor. She could have been anything. 

In one generation, what a difference can be made, just a tiny little chance. Then the question is, who made the poverty then if it is not inside the person? Where does it come from? Obvious answer is it comes from outside. It’s imposed on the person. It is not natural to the person. It is imposed on the person. How is it imposed?  Imposed by the system.

And I gave the example of a bonsai tree. I said, if you take the seed of a tall tree and put it in flower pot, it grows only this big. The fault is not on the seed, because the seed was a perfect seed. The problem was it was planted in a flower pot, so it’s not given enough space to grow. So the poor people are the bonsai people. There’s nothing wrong with their seeds, simply society never gave them an opportunity. 

So poverty’s created by the system that we have developed for ourselves, made of the institutions that we have built like different financial institutions that we just began talking about, and also by the concepts. And I particularly focus on the concept of business. I said, this was something played a very critical role in deciding what kind of society we’ll have. 

And the economic theory that we have built, we made it very clear that business means business to make money. Profit maximization is the mission of business. So since theory says so, we try to fit into that role, in the profit maximizer’s role. The moment we sit in the business chair, we become profit maximizers. We cannot see right. We cannot see left. All we do is maximize profit. 

It’s a very uncomfortable kind of concept because it creates a human being in this theory which is one-dimensionally human being. All it does is make money. Human being is portrayed as a money making machine. And what I try to draw attention to, real human being that we are, we are multidimensional beings. We are not single dimensional beings. We want to make money. We want to make a difference. We want to help others. We get touched by other people's problems. We want to go out and help people out. We have all kinds of dimensions in us. But that is not reflected in the business world. 

So I’m suggesting that, why don’t we create a different kind of structure of the theory? We take account of the multidimensionality of human beings and to justify that multidimensionality, we create two different kinds of business:  one business that we already know, make money, other business is kind of opposite to that. This is a business to do good rather than benefiting personally. The first type of business is all about me: “I want to have everything for myself and I don’t pay attention to who gets hurt by that.”

But the second business is all about others, nothing for me. So I deny everything for myself. All I’m doing is dedicating everything for others. And that second category, I’m calling it social business, business to do good to others, non-loss, non-dividend company. We can create that space, create that concept, then people have a choice how much of their investment should go into the social business, how much of their investment will go into profit maximizing business. I’m not saying that you have to close down, do other. No. You do anything you want. You have options. And that’s what human beings are all about. 

So if nobody takes the door to social business, then we say that doesn’t have much of esteem in it, so forget about it. But if people choose that one, why not?  Let them do it. And we created some of these social businesses to demonstrate how it is done. And one company that we created is a Grameen, the loan company, which is in collaboration with Dannon France. It produces yogurt. 

The objective of this company is to address the malnourished children of Bangladesh. There are millions of malnourished children in Bangladesh. So what we have done, we put all the micronutrients which are missing in the children into this yogurt  —  vitamin, iron, zinc, iodine, whatever  —  and then sell this yogurt at a very cheap price without losing money. We made sure we can bring down the cost absolutely minimal, no fancy packaging, no fancy marketing. Once you put your mind into it, you are amazed by how many ways you drastically reduce the cost. 

In a profit-maximizing business, you don’t do that. You spend a lot of money to attract more customers, clients. So you spend a lot of money in marketing -- maybe a dollar worth of product -- but you spend five dollars in marketing and make people pay for it so that you can sell more. So we reduced the price and sell it to the poor children, malnourished children. An expert tells us that if a child eats two cups of this yogurt per week and continues to do so for 15 to 18 months, they regain their health. 

So the purpose of this company is to see how many children they can bring out from malnutrition, not how much money you made during the year. So that’s a different kind of bottom line. We can create many, many such social businesses. Then when you have lots of social businesses, anybody can invest in social business. I may not create a social business, but I can invest in a social business. Where do I find them? Because the stock market that we have today is about making money. I cannot find a social business where you don’t get any money. Nobody reports it. I open The Wall Street Journal; it will not be reported because there is no profit in it. 

I said, well, there’s a simple solution. Why don’t we create a new stock market, social stock market. All the social businesses will be listed there and will tell us which company is reducing malnutrition, which company’s helping poor people out of poverty, which company’s helping the health of the pregnant mothers so that she doesn’t die at childbirth and the child doesn’t die at its own birth, or such other things:  drink pure drinking water, safe drinking water, sanitation, housing, whatever, all the things that we always talk about so that this can be addressed as social business. And those will be listed and we’ll go and say, “Oh, I like this. This is what I wanted. Here is my money. Go ahead. Do it. I did it not to make money out of that. When I wanted to make money, I go to the other stock market. When I wanted to do good, I come here. I’ve invested.”  That’s how we are. We want to do both. 

And I said, this is a very strange situation. In profit maximizing business, making money is the means. What is the end?  aking money is the end. Doesn’t make sense. I said, this one makes much sense, at least to me. I make money in the profit maximizing business. That’s my means. And I use this money in the social business. That’s my end. That’s what I wanted to do. So I want to change the world. I want to have a kind of world that I feel proud of.  I don’t have those problems that I leave behind and say, “Oh, let government do it. I don’t have anything to do with it.” No, I’m a citizen here. I can do it. I’m a human being. I can run the social business myself. I can create a beautiful design of a social business to address very specific problem. I can design a social business to get 200 people out of welfare. That’s my social business. I can do that. If I can take 200 people out of social business, I repeat this. I take 400 people out of welfare, sorry, as a social business. 

So I have designed something which works. They say, “Ah, this is a very good idea. I would like to do some more.” So somebody else picks it up, does it. So there will be nobody on welfare, nobody unemployed. I can create a social business to create employment for them so that nobody will be unemployed. You go on investing those things. And where will we be finding this description of the beautiful new company coming up? Because Wall Street Journal doesn’t report it because this is not money making company. So we’ll have a social Wall Street Journal which will be reporting all those things that we will get excited: “Aha! This is a great company. I would like to support such a company.”

Because it is in our heart. We want to do that. So we create that social business and do it. Well, once we can do that, then nobody will be a poor person because the system has created poverty. If I pick out the seeds of poverty from the system, nobody will be languishing in poverty because it is not imposed by the system. All human beings are packed with unlimited capacity, unlimited potential. Simply, they don’t get the chance to unleash that. 

One of the things that we did out of our own curiosity and to see how it was done, four years back we introduced within Grameen Bank a new loan product. This time we said, we concentrate on the beggars. Because you cannot be poorer than beggars. That’s the last stage. And we want to lend money to the beggars, see what they do. 

So we came up with this idea and we designed it in a way. We said, there is no interest. So the loan that you take, it will never grow because there’s no interest in it. And there is no time limit, so that you cannot be at default at any time. If there’s no time limit, how can you be defaulting? So they’re free from the fact that this is not growing money and they are free, there is no chance of ever getting defaulted. 

And we said, if you can return the money to us, because it’s a loan, then you can take another loan, bigger than what you took the last time.  You can go on like this until you are capable enough to take the full cost loan. Until then, you’ll be free to do that.  

And we went to the beggars trying to find out how they became beggars in the first place, how they were pushed and pushed and pushed by the society, finally stretched hands for their survival. There’s no other means left for them. We wanted to understand how cruel the society can become to push a person to that tipping point. And once you have done that, you couldn’t come back again ever since you remain a beggar. And that’s your life. You want to feed your children, you had no other means. There’s a sad story behind each one of them. 

And then tell them, as you go from house to house begging, would you carry something with you, some merchandise with you, some cookies, some candies, some toys for the kids, or whatever is interesting the children will find, and give people option? You can give something free, some food, something as you do in the past, or buy something from me. I have some merchandise to sell. Or do both, it’s up to you. 

And there’s nothing to lose. And we make it very plain. We tell them, “Look  —  you are going there anyway. So this is not extra work for you.” And they liked it. And in the beginning, we thought maybe we’ll have 3,000, 4,000 beggars, and we’ll find out how they behave, how they can really make it happen. Can they pay back one loan, two loans at least?  See how it happens. It became a very popular program, popular among the beggars and popular among our staff. Our staff loved it, to serve a beggar. They thought this is a wonderful opportunity for them. 

Today, we have more than 100,000 beggars in the program. [applause]  In these four years, we have now more than 11,000 beggars who have completely stopped begging. They became door-to-door salesperson. [laughter] [applause] Some of them are pretty smart. They became personal shoppers. You gave the money, you gave the list, she brings it for you. Because women in Bangladesh cannot go to the market, so she found somebody who can do intermediation between the market and her. 

And sometimes when my colleagues become impatient why other 90,000 are not coming out of begging, I said, “Don’t rush them. They’re now part-time beggars.” I said, “They’re in the process of restructuring their business, and begging was their core business. And closing down core business is always painful. It’s not easy.” Some of the beggars explained to me (and I’m sure they explained to others also) they know which house is good for begging and which house is good for selling. I said, the beautiful market segmentation, they figured out. 

So people are smart. When you give the opportunity, they took it. Many of them have taken the second loan, third loan. So it’s not the question of whether you are a defaulter or not. The fact that they are paying back and taking the second loan, they understand that this is the way to move up. 

And all the money that we have loaned to them -- a typical loan is about $12 dollars -- with a $12 dollar loan, how can you go wrong?  People ask me, “Do you think all these beggars will come out of begging?” I said, “I have no idea. I never did it before.” But I’m taking a chance. I said, out of these 100,000 if ten beggars come out of begging, I’ll be so delighted. They have done it on their own. Now today there are 11,000 who came out of begging. I’m so happy. And others are moving in that direction.

And the total money that we lent out for all these 100,000 plus beggars, more than half the money has already been paid back. So that’s not an easy thing. I could have given this money to all these 100,000 beggars, $12 dollars as a grant, as a charity, “Take it. We can afford it. Grameen Bank is a big bank, lots of money. It will not cause any harm on the bank at all.” But would we have received this result?  No. They’ll be using this $12 dollars, enjoy themselves, few days, and after a week, after two weeks, five weeks, they’ll come back: “Can you give us some more money?” Because that’s not how we designed it.  They have not organized themselves to fight. So we give them as a loan. This $12 dollar is a loan and explained what are the terms. Now they know the rules of the game. And they took a chance, and this is what they’re doing:  paying back, taking more, and moving on. They know, “If I pay back, you have to give me more. If paid back $12 dollars, I’m asking for $20 dollars. You give me $20 dollars. I want to do more.”

So this is how things can be redesigned, be organized. So once we do that, people can come out of the situation they are in. In Bangladesh, as I said, we’ll be reaching that millennium development goal. Hopefully, we can overcome this food crisis and oil crisis. And I am asking the question in Bangladesh, after we reach that halfway point of reducing poverty, shouldn’t we get prepared for the next target? When we’ll bring Bangladesh at the zero poverty level?  Let’s set a date.  And I have been suggesting a date. I said, “Let’s put 2030 as the year when Bangladesh will have zero poverty, nobody will be a poor person.” And if we can set it up, we can achieve it. And that day, we will advertise in the newspapers, with a big one-page ad, “If you can find one poor person in Bangladesh, million dollar reward.” And nobody will take it because there isn’t any. 

Then we’ll create our poverty museum. The only place you’ll see poverty in Bangladesh would be the poverty museum. We can all do it, anywhere in the world. The whole world can be free from poverty. It’s all a question of imagining it and taking the right step. Thank you very much.


DR. LINCOLN CHEN:  Good afternoon. My name is Lincoln Chen. It’s quite an honor for me to be a moderator with Dr. Yunus. I am here to facilitate questions from you, which we can open in a few minutes. I’ll begin with a few questions, following up on his presentation. 

Dr. Yunus, you’ve given us a wonderful journey of microfinance based on trusting poor people, women as a center and the glue of this trust, and now movement onto changing the external institutional environment through social business. Now, the term ‘social business’ conjures up two other terms  —  social responsibility, usually of companies to behave well, and social investing, which, in the United States is mostly what one would call passive screens: not to put money into war, tobacco, and other aspects. 

Could you contrast your social business with these other two terms, and also indicate where you think the big opportunities are to break through the institutional environment that’s creating so many bonsai trees? 

DR. MUHAMMAD YUNUS:  Thank you, Lincoln. We go back a long time. Lincoln was in Bangladesh when we were starting Grameen Bank. He lived there ten years, seven years, something like that. So it’s good to see him. Good to see you. 

On social responsibility, it is something coming from the corporate world. It started with good intention, because when I’m in the driver’s seat of the company, I cannot pay attention to any other thing except making money. So I have to do something besides making money. We create corporate social responsibility fund where we put money so that we can do the things which we cannot do through the company work.

It was a good intention. But gradually, as good things go into the distortions and wrong directions, it became -- in most of the cases -- sort of a public relations money. You sponsor a soccer team. You sponsor rock music or something and try to get a good image for yourself. It’s more publicity than the work itself. So to that extent, to the extent that it’s used as public relations work, definitely that’s not what we’re talking about. 

I would say if the intention still remains a genuine thing, this money could be easily used as social business. You create a business which aims at a very specific social objective, that what you want to do -- name some:  malnutrition or getting people out of unemployment or out of welfare or good housing or sanitation, or whatever, whatever things that you can do with your money -- create a company, a social business company. 

So I say corporate social responsibility is not equal to social business, because we are talking about a business, not a handout. Most of the time, corporate social responsibility is handout money, whether it’s for publicity or for a school or for college or a scholarship, whatever it is. But social business is a business. You have to bring it money back. Even you can make profit, profit stays with the company. So that way it can expand. It can grow and so on. So that’s part of the corporate responsibility.

Social investment is still, you want to make profit. As long as you want to make profit, your intentions are still not to the extent of clearly social objective. So I would say this is a form where nothing but achieving the social objective matters to me. I don’t get involved, “Oh, am I going to risk my investment? Am I going to have enough return for me, at least 5% return?” I want to avoid certain things through negative(inaudible)  —  tobacco, war, and discriminations, and so on, so forth. So this is fully devoted to that issue. 

DR. LINCOLN CHEN:  So for you, social responsibility, the normal concept is insufficient. You would like the corporations who exercise social responsibility to go into social [simultaneous conversation] …   

DR. MUHAMMAD YUNUS:  Social business itself, yes.  

DR. LINCOLN CHEN:  … with the funds they have. What about the converse? What about social programs run by charitable government or social organizations …     


DR. LINCOLN CHEN:  … that begin to introduce market or business practices and incentives?

DR. MUHAMMAD YUNUS:  Excellent. 

DR. LINCOLN CHEN:  There’s a program called Progresso in Mexico. And they’re giving financial incentives for families to educate their children. There are programs where government workers or non-governmental organization workers might get performance pay. Would you see that as being linked to social business?

DR. MUHAMMAD YUNUS:  Sure. The term that I used for the first time with a clear definition, probably if we take this definition, they will fit exactly the social business, provided they are a business.  My question would be are they getting their money back?

If they’re getting money back, fine. Are they taking any profit?  If they’re not taking any profit, this is a social business. 

Today, whatever they’re doing, they may come to that level. If they come to this level, then they can go to the market. They can go to the social stock market, raise more money for this, those who are willing to. So this becomes a wider thing, very clearly understood what this is. The moment you use the word ‘social’ in many different contexts, you’re not sure what you’re talking about. So I try to bring specific terms so that it implies a very specific kind of business -- not that others are wrong -- simply to categorize a certain type of thing so that we can go and confidently do investment, do investing in those companies. 

DR. LINCOLN CHEN:  And you’ve come to the social business from your trial and error. 


DR. LINCOLN CHEN:  I was looking at all of the Grameen companies. And in addition to Grameen Dannon, there’s, you know, Grameen Telecom, Grameen Com, Grameen Software, Grameen Cybernet, Grameen Solution, Grameen Phones, Grameen Trust, Grameen Fund, Grameen Knitwear, Grameen Shikkha. Are they all social businesses [simultaneous conversation]?    

DR. MUHAMMAD YUNUS:  No, they’re not. They’re not. Because social business idea became gradually formulated in a later stage. But we created this company, different places. Grameen Bank is a social business but under a different definition. I also make it clear in the book that any company which is owned by the poor people, if it is a profit maximizing company, that’s a social business because it goes directly to the poor people. Grameen Bank is owned by the poor people and it is a profit maximizing company. It’s a social business. 

DR. LINCOLN CHEN:  So the stockholders in Grameen Bank are poor people?  

DR. MUHAMMAD YUNUS:  Are poor people. All of them are the stockholders. They’re borrowers of the stockholders of the company. So that’s one. We created Grameen Phone to make it as a social business. Our idea is the Grameen Phone, which is the largest cell phone company in the country, owned by the poor people of Bangladesh, particularly poor women in Grameen Bank, will have the majority share. That’s why we have the Grameen with Telenor. But Telenor today doesn’t want to sell their shares to make it … We are only 38% shareholders. So that definition still is a profit maximizing company. It’s not a social business. But we keep on pressuring them to sell the shares, because we had an agreement with them at the outset of the company. After six years, they will sell majority shares to Grameen Telecom so that we can sell the shares to Grameen borrowers, and they become the majority owners of the largest company in the country. So that’s where we still couldn’t do that. 

We have Grameen solar energy company, Grameen Shakti. That could very well become a social business, but we created the company as an NGO because NGO is not owned by anybody, so we cannot say it doesn’t give any return to the owners. So to that extent, it’s not a social business, because there’s not owner where the owners can say, “I don’t want to take any dividend out of it.” So that way, most of these companies are non-stock companies. 

DR. LINCOLN CHEN:  Many of your companies capitalize on the transformation of technology in business. Is that one of your strategic [simultaneous conversation] approaches to social business?  

DR. MUHAMMAD YUNUS:  Yes, we wanted to understand how to use technology for transforming the life of the poor people. That’s how we got the cell phone company. We wanted to bring cell phones in the hands of the poor people to transform their lives. Also, Grameen Solutions and other things, that we wanted to understand the power (inaudible) of the information technology, how to bring it down to the poor people. That’s why we create a lot of companies based on information technology. 

DR. LINCOLN CHEN:  I think many people know about Grameen phones, and that the fact that a village woman can borrow, and then … I actually visited some of the Grameen phone ladies. It’s really fantastic thing. You can access a cell phone, pay a little money. And the woman is also generating some profit to return to her.  Some of your companies have done, profitability-wise, quite well. In fact, have there been some struggles related to the ownerships of some of the companies? 

DR. MUHAMMAD YUNUS:  The Grameen Phone, that’s [simultaneous conversation]…   

DR. LINCOLN CHEN:  And the other investors?

DR. MUHAMMAD YUNUS:  Yes, there are two partners, Grameen Telecom and Telenor, Telenor of Norway [simultaneous conversation] … 

DR. LINCOLN CHEN:  ... and they are so valuable that …   

DR. MUHAMMAD YUNUS:  They don’t want to sell their shares. 

DR. LINCOLN CHEN:  They don’t want to?  So the debate is over whether a for-profit firm that had the technology and the partnership retain their share or whether it goes eventually to … you want it to shift to the borrowers. So there are real dynamics of starting a social business. 

DR. MUHAMMAD YUNUS:  Now, we don’t have this struggle. At that time, we don’t have a clear picture of what will emerge. Now, it is very clear. We start with social business. We don’t go to the profit maximizing (inaudible) social business. We started a company, drinking water company, because Bangladesh has a big drinking water problem because of contamination of arsenic in the water. So we have a joint venture with Veolia of France to create a village level water company to treat water in the village and supply this drinking water to all the families at an affordable price. And this is a company as a social business. Veolia will never take any dividend. Grameen will never take any dividend out of it. This whole purpose is to make sure they have -- all the families in the village have -- pure, safe drinking water. So that’s another, right from the beginning that is the understanding, that’s a business agreement between two of us. 

DR. LINCOLN CHEN:  So with a business, there’s obviously to and fro, so to speak. But also with the women in the households with the extra income, there must be a lot of dynamics there. What are some of the things that you’ve witnessed in the families, both positive, but also some of the struggles that people go through as they shift through your microfinancing and social organizing programs? 

DR. MUHAMMAD YUNUS:  One big problem, because we focused on women. And it brought into conflict with men. The very husband in the same family doesn’t like his wife to receive loans. He becomes a kind of leader of the opposition, opposing the loan.  So that was a big struggle for us, to make him understand that this is not something that we are doing against his interests. This is a common interest for both. So we have to go through lots of negotiating and diplomatic moves to make sure that tension doesn’t generate in the family. 

And also it created tension in the religious circles -- that they were saying that this is not according to religion, you’re doing the right thing. So we have to bring the religious certification that, yes, it is very much a religious thing to do. It’s nothing against religion. We give examples in the past that women were very much in business and there was nothing wrong in Islam condemning them or anything. That rather they have been supported. They have been encouraged, and so on. 

So we brought those examples to that. So once you do something so entrenched in the society that women should stay home, they shouldn’t.  And we are saying, “No, she can be equal partner. She can be in business. She can earn her own money. She can have her own bank account. She can run her business.” All these things went counter to the traditional way of assigning roles to the women. So we had to go through that. 

We’re happy that we went through it successfully. We do it all over Bangladesh and things have changed completely. One of the most dramatic things that happened in Bangladesh is about the empowerment of women. It’s a tremendous difference that has made in Bangladesh. 

DR. LINCOLN CHEN:  Certainly, to many people overseas, the role of women in Islamic societies is seen to be much more confined and traditional. And you’re obviously empowering them and changing, not only the family dynamics, but the societal dynamics. And what kind of organized opposition have you faced among more entrenched religious groups in Bangladesh?

DR. MUHAMMAD YUNUS:  Religious groups, as I said in the beginning, they were opposed to it, saying this is not according to religion. And we came back with a very good answer, very good explanations. One explanation was very powerful. This is very common explanation whenever people opposed us. We said, our prophet, he started his career working for women, businesswomen. He took a job with a businesswoman. So he was working for her. And later on he married her. 

So I said, “If you want to follow the path of prophet, you should be looking for a businesswoman to marry.” [applause]  I said, “If you’re looking for one, we have plenty. Come to us.” 

DR. LINCOLN CHEN:  Do you have a Grameen dating site or something?  [laughter][applause] 

DR. MUHAMMAD YUNUS:  That would be a little too much. 

DR. LINCOLN CHEN:  There may be a market there; you can never tell. But, you know, you’ve had such great success in Bangladesh. But then the Grameen concept has been transforming itself around the world. And indeed, you’ve just mentioned Grameen America being established and launched, particularly in social business. How much has there been of the diffusion of the Grameen concept? And then, what have been some of the experiences you’ve had thus far? What has it been on a global basis? I mean, I know you’re a popular personality, but what about the whole:  ideas and the values that the personality is projecting?

DR. MUHAMMAD YUNUS:  Well, the Grameen program became popular. That’s why I’m popular, because they say I’m behind it. I would say almost every country in the world today has a Grameen program, very few that you can identify, they don’t have any program, handful. But every other country has one, at least one. Most of the countries have multiple microcredit programs, Grameen programs. So that way, the idea has spread. But it’s still in maybe some countries, maybe small outreach, not many people. All together in the whole world, probably there are about 130 million families which have been reached with microcredit today. It’s increasing. It’s getting bigger. 

The reason this is moving slowly, it’s not because people don’t want to do it. There are legal barriers. That becomes a big problem. And you mentioned we started a program in Jackson Heights, New York called Grameen America. And it’s about three months, three and a half months-old. Today, there are about 200 borrowers in that program, all women. And we follow the same Grameen methodology:  weekly installment, weekly meetings, and paying back. 

The loan size, about $3,000 dollars, $3,500 dollars, something like that, nothing more. Average loan size would be $2,900 dollars. So people are very happy with the loans that they have taken. They’ve not missed a single installment so far, every week. So this is something right in the middle of New York City, being done by someone who used to do the work in Bangladesh in the village. So he came from the village of Bangladesh to do exactly what he does in there, in the middle of New York City. And people responded very warmly and very supportively. 

But again, the problem is it is dependent on infusion of external money, to lend money to people since we don’t have the banking license. Grameen Bank has the banking license.

So we don’t need money from outside. We just take the deposits and lend the money to the poor people. That’s all. So each branch of Grameen Bank generates its own money to lend money. It doesn’t have to come to another branch or another facility to find the money. We could have done that here, too, if you had the banking license. 

Similarly, banking license doesn’t exist in other countries. So people are dependent, those who are initiating microcredit program, dependent on money coming from donors, foundations, and so on, so forth. Cannot provide that money to mobilization of deposits. 

DR. LINCOLN CHEN:  Some people feel that there are cultural differences in the microfinance in that the groups of women who are organized by Grameen and pay back, whether in Bangladesh or in Jackson Heights, would operate through some kind of group pressure and group learning.  In other societies where individual guilt or individual valor plays a role in repayment, that you may get a different repayment structure in some other cultures. Have you found this in the …   

DR. MUHAMMAD YUNUS:  No, not really. These are only stipulated differences. My way of looking at it:  human beings anywhere are 98% similarity, 2% dissimilarity. But we use one word to describe similarity, but a million words to describe dissimilarity. As a result, we feel like this is all about dissimilarity. No. We just don’t talk about our similarities. That’s why we feel that it probably doesn’t exist. It exists.

So no matter which culture it is, one of the common things that you see globally that happened with the microcredit, the repayment rate is very high in every single country, in every single program. There are varieties of programs in different countries, different leaderships. But the common feature that you see, very high repayment, which is very close to 100%, 95, 96, 99% -- that’s the kind of repayment and with no collateral. With no collateral, no lawyers, and still a high repayment rate. 

DR. LINCOLN CHEN:  We all want to see a world without poverty. And you’ve been inspirational in moving us to imagine that this is feasible. But we also have the places in the world like Darfur. Or we have the Nargis cyclone in Myanmar, Burma. Or we have the recent Sichuan earthquake which is causing a lot of impoverishment. Do you think that the social business concepts can be applied, even in some of these, either more difficult political or difficult natural environments? 

DR. MUHAMMAD YUNUS:  I come from Bangladesh. [applause] So it’s all disasters. Last year we had two major floods in the same year and one major cyclone. Right before Nargis, we had the Sidr. Sidr was as devastating, maybe more devastating than Nargis.

We don’t talk about it. We keep on doing things. Everything that you have done over years is all washed away. Your family members are washed away. You start all over again because you have the financial institutions, other institutions behind you, government programs behind you, international support behind you. And you picked it up. 

The coping capacity of the people is just enormous. You go there. You can’t figure out, is this where all the Sidr took place? They’re busy producing crops and things. So this is how it is. So there social business definitely is a very important item to prepare yourself when the disaster takes place, so that quickly you re-do the whole thing. Like Grameen Bank, the moment disaster takes place, a flood takes place or a cyclone takes place, we convert ourself into a humanitarian organization. Our only job is to save people. And then when it’s over, our only job is to put them on their feet, first thing. And that’s what we do.

DR. LINCOLN CHEN:  So you could have a Grameen emergency unit or social business.


DR. LINCOLN CHEN:  And that really, and when we’re thinking about the Sichuan earthquake, there’s a lot that’s going on there [simultaneous conversation] …   

DR. MUHAMMAD YUNUS:  Yeah, absolutely. That’s one [simultaneous conversation] … One of the first thing the Chinese government did is contact us. And we are sending our people to set up microcredit program right there, just in the earthquake areas -- not outside that -- right in the middle of the earthquake areas. So they understood the meaning and the significance of it. We are responding very quickly so that we can go and set it up, the microcredit programs. 

Because once people lost things, you have to start all over again. Where do you start? So any kind of financial ability to handle things on your own, go back to your income generating capacity and so on, restore your capacity, that’s very important. Put back your house, you need a housing loan or you need a housing grant, whichever. You need the housing. So we come with the loan. Somebody else may be coming with the grant money…   

DR. LINCOLN CHEN:  In fact, I understand that in an emergency, especially in Bangladesh, that giving loans and even some cash to the victims that have been affected has been more effective than all of the relief materials because quite often the relief materials are inappropriate and don’t match the needs of the victims. Whereas if they have some cash, they can go and begin to negotiate what they need. Was that your experience with [simultaneous conversation] …   

DR. MUHAMMAD YUNUS:  Right after Sidr, our first job is to go in there, give cash to people, do whatever needs to be done. And it’s not free money. We just kept the record that this money is disaster money. You create your disaster fund, putting back this money whenever you’re ready to do that. You’re not under Grameen Bank principal installment or anything, just create your own disaster fund, get ready for the next one, that sort of thing. So cash is something which is very convertible. You do whatever is needed to be done. If it is food, used for food. If it is medicine, used for medicine. 

DR. LINCOLN CHEN:  But many of your borrowers may have had their assets damaged or destroyed by a disaster. What do you do then in the repayment and the financial structure of your [simultaneous conversation] …   

DR. MUHAMMAD YUNUS:  The standard practice, because we have to go through it every year.  So we have to come up with our own protocol how you do that. As I said, we have to put them on their feet. So that means that you issue fresh loans, fresh loans for whatever you have lost. You lost your cow or you lost your assets, you lost your operating capital, we give them fresh loans. What happened to the old loans? Old loans, we reschedule as a long-term loan. 

DR. LINCOLN CHEN:  Reschedule?

DR. MUHAMMAD YUNUS:  Reschedule it. It’s in the book, but you pay tiny little money over years. One of the principles of Grameen Bank is, no matter how long it takes for you to pay back a loan, interest money can never exceed the principal amount.

[applause] So there is a limit. 

DR. LINCOLN CHEN:  Maybe this is another lesson for the subprime subprime subprime, is somehow looking at the Grameen experience of how one deals with the foreclosures that are happening because of some catastrophic event that’s not the fault of the borrower, but is due to either nature or other institutional factors. I want to make sure we begin now to open up the floor as I ask the last question. 

You’ve presented a very imaginative, very bold, and very revolutionary way of eradicating poverty. But that’s not what most of the aid industry does. Most of the aid industry is foreign aid by government. It’s foundations. It’s U.N. agencies. What’s your view about those other actors? Are they constructive? Or are they simply not able to make a difference?

DR. MUHAMMAD YUNUS:  Well, I won’t wholesale reject them. But I always said that there’s room for improvements, tremendous improvements. For example, today I would say, why didn’t you start a social business rather than just give the money and walk away? You can come and you run your business, and show that you can do it. You can do healthcare business, social business, not making the healthcare to bring money home. Nothing goes outside that country. It’s there. You build it up, design things as a social business, run all kinds of housing program, all the things that we always talk about. You create social business, bring your experts to run this thing in case you think, “They don’t know anything,” and train the local people. 

The moment a business becomes a social business we don’t suspect you anymore. Because other business, you suspect: “You’re taking away our things. You want to make money out of our poverty.” So it becomes suspicious. By social business, you’re not suspicious. You brought money. You’re doing it to achieve a social goal. At the end of the year, you show what you have done. It’s your money. We have nothing to do with it. And you can do a joint venture with a local partner. That’s a social business. Or you can help this local partner to build it up as a social business. 

So you can give an important role to that. You can run a microcredit program as a social business. So that’s another way. So I would say there are varieties available. Traditional donor mechanism is you go to the government of the country. The moment you go through the same channel of government, gradually the corruption comes and you’re wrongly advised because people want something, people need something, government wants something else, all these problems. The moment you go with a social business, then you are away from any kind of government mechanism.

AUDIENCE QUESTION:  My name is Ray Mack. I’m a realtor, a real estate broker. And I’m obviously very interested in what you’re saying about the subprime situation in this country. I’d like to have you answer, if you can, give more insight about what type of inroads you’re making or have made into this country beside the Jackson Heights thing, and what type of reception you’re getting. I just wanted to finish by saying I come here all the time to lectures. And I’ve never seen so many young people here as today. And I think that is absolutely magnificent. I’m jealous.  [applause]

DR. LINCOLN CHEN:  So one question -- we’re going to go to the second -- but the first question is, what else is going on in the United States.  

AUDIENCE QUESTION:  My name’s Nate Stell(?). My question’s regarding microfinance social business and water sustainability. You know, with growing pressures on fresh water resources throughout the world, particularly through factors like urbanization, climate change and population growth, there’s a growing sense that many countries could be heading toward a crisis of water scarcity, including some countries commonly associated with an overabundance of water, like Bangladesh. In the absence of a coordinated and comprehensive effort to prioritize water sustainability, it’s hard to imagine how this crisis can be averted. And so given that no one suffers more from the effects of water scarcity than the poor, what are microfinance institutions and social businesses undertaking and will undertake to address a water sustainable future? 

DR. LINCOLN CHEN:  We’ll take two more. 

AUDIENCE QUESTION:  Hi, Dr. Yunus. My name is Shashan Negum(?). And if you

realize, this is the fifth time we’re meeting. My question is regarding the social stock market concept that you raised, which I feel is really inspiring. The thing is that in a traditional stock market, the motivation for an investor is profit and money is the common denominator. In a social stock market, how do we analyze whatever the impact being created by putting a child in school is greater than an impact being created by a patient being cured of AIDS? What is the common denominator when the range of impacts is so different? 

AUDIENCE QUESTION:  Dr. Yunus, my name is Tanya Palette. And my question to you is if a world without poverty is one in which there is an increasing number of privately held social businesses, then what is the role for the government? 

DR. LINCOLN CHEN:  So, Dr. Yunus:  United States, sustainability, water, social stock market measures, and then the role of social business in government. 

DR. MUHAMMAD YUNUS:  On the United States, we started in Jackson Height. See, one advantage of doing it in Jackson Height, immediately you come under the focus, floodlight of the media. So they were covering the program that we’re doing. So that generated lot of response from many different cities. The cities coming forward said,

“Can you start a program in our city?” Baltimore wants to start, or New York, New Jersey want to have it there, Washington, D.C. wants to have it there. We had discussed today having it in Boston.  So lots of city became very interested in that. So our own position is we want to wait a little bit to see how the prototype is developed so that we know for sure how we do that. And also one area that we have not touched yet, that we would like to touch, that’s welfare recipients. It’s very difficult to do business with welfare recipients because of the welfare laws. Welfare laws do not encourage you to earn money. They would like to keep you there rather than get you out of there. They’re very afraid, keep running away from us. 

So that’s another one that we would like to do. But definitely it’s a question of if you have enough money. We usually talk about the sum around $6 million dollars so that we can lend money to many people with that money. Then we can proceed. We would like to do that. New Orleans has been approaching us to start a program in New Orleans because of the same problem that we faced through our cyclone and other things. 

So we would like to do that. One of the things that I am discussing while I’m here is we want to go in a big way in the healthcare, similar to what we have done with microcredit, reaching financial services to the poorest people. Now we want to absolutely, parallel-ly, we want to do the same thing with healthcare system as a social business, to bring healthcare to the poorest people as a social business so that nobody is refused from healthcare services in Bangladesh. And once we can develop that prototype, then this would be, again, applicable for any country, because anywhere in the world, poor people don’t get health services. So we want to build state of the art healthcare services. We’re discussing the healthcare in this country, all the top medical institutions in this country to see how they can help us designing and implementing this idea in that. So this would be our relationship with the USA on that particular part of it. 

And on the social business for water resources and so on, I mentioned Veolia.  We have a joint venture with Veolia, the largest water company to bring drinking water in the village. We have problem with our drinking water, the arsenic contamination. So we are having this village-level water company as a social business to bring very high quality drinking water to the villages as a social business, meaning that they will pay. We’ll make it, production costs so cheap that the poorest person can afford to buy their water and stay away from the arsenic contaminated water, all polluted drinking water, the surface water that we have. So that’s another one that the social business can come.

Another was climatic change. We are the frontline of being victimized by the climatic changes because our frequency of floods is increasing, intensity of flood is increasing. Water level near Bangladesh and the ocean level is rising at a rate of seven millimeters per year. And Bangladesh is a very flat country and very close at the level of the sea water. Twenty percent of Bangladesh land mass is under less than one meter above the sea level. So when I say under one meter, it means it’s half a meter, quarter of a meter. Water and land is almost at the same level. So if little wind brings your sea level a little bit, these are all washed off. So that’s where we have to struggle. So we want to make the whole world aware that, “Look  —  something is happening in the world because of the climatic change we are suffering.”

So I try to promote the principle that every child in the world should be taught that my lifestyle -- I will build the lifestyle in such a way -- my lifestyle should not harm the life of another person in this planet. It’s a very simple principle. [applause] With one principle like that, we can address many issues. All you have to do is stick to the principle that I don’t want to live in this planet in a way that my enjoyment is taking away the life of another person. It shouldn’t be like that.  So we can address those issues, where it’s happening, how it is happening, and so that we can reverse the process of climatic change in a positive direction than the negative direction that it’s proceeding. 

On the stock market, how do you measure it? In the conventional stock market, you see the profit, return on your investment. You know where to put it in. In the social stock market, suppose you want to buy the stock of Grameen Dannon company? How would you judge it? You look at their social Wall Street Journal. What is their performance last year? How many children regained their health? How many came very close to regaining their health? They have to make their statements. In their annual report, you don’t see how much money they made. All you see is how many children they got out of malnourishment, and so on.  So that when I give the money -- that means as much money I gave -- how many more children will come out of malnutrition in how many days? So this is the information you want to get. If it is a poverty alleviation company, that they said, “Our specialty that we get people out of poverty,” so give us the result, what you have done, how many people came out of poverty, who certified it. They’ll be authorized Price Waterhouses which will be social Price Waterhouses, which will be investigating and providing report certification. So they’ll be rating agencies, social rating agencies.

They go and check it out and say, “This is a great company. They do excellent work.”  The moment you create those things, ancillary companies will come up, testify, certify, authenticate, and everything. So that’s how it will be done. There’s nothing difficult at all. 

Social business and the government role, of course government has the role. But the government role doesn’t take away citizens’ role. So don’t think, “Okay, this is their business. Welfare is their business, not my business. And unemployment, we go and shout that this government is no good.”  We shout, because, after all, we created them. We voted them. But at the same time, I can go ahead and solve the problem myself and show them, “Look  —  you stupid government, you didn’t do it. I did it.” So you show that.  In any case, the individual person is always smarter than the government, always. Because government always moves slowly. Government always thinks slow. Ideas come at a very slow pace. Individuals can react very quickly. They can show the way. Government can follow. Because moving things, once government creates something, it is so difficult to change it. It may be outdated. If you have the post office, you carry the post office, you know? In Japan, the whole government fell because they wanted to change the post office. So that’s how the governments are. Governments are very slow to adjust. 

And the world is moving very fast. Government can have no such way to catch up with that speed. So the people have to set it up so that the government can come and play the role, whatever the role is. But in the meantime, citizens like you and me can set the mileposts: “This is how we go.”  So we shouldn’t be sitting on our hands, saying “Let the government do it.” Government should do it, but at the same time, we should show how to do it. Thank you.  [applause]

AUDIENCE QUESTION:  My name is John Ricketson(?). Dr. Yunus, I loved one story that you told. You tried to convince your banker friend to become a hero and lend to the poor. So I’d like to know first, what he thinks now after your success. And I’d also like to know if anyone from the banking, commercial banking industry has come to you to ask what they can learn. And if they did, do you think they can learn anything. Or is this inevitably separate worlds between what Grameen Bank does and what commercial lending banks do?

AUDIENCE QUESTION:  Thank you, sir, for being here. My name is Jared Norad(?). My question is do you think the outcome of the presidential election here will at all influence your work on microcredit or on social businesses? And if in your answer you want to include an endorsement of Barack Obama, that’d be great, too. 

AUDIENCE QUESTION:  Dr. Yunus, my name is Vernon Domingo(?). We thank you, all of us here on behalf of the poor people. But I’d like to thank you on behalf of my mother who’s a poor woman growing up in South Africa, making chutney from --  selling it from door to door. And if you’d been around there, I think that would have made a huge difference. And she may have been a doctor today. So all of us thank you on behalf of the poor. My one question, how do you resist those pressures, which I’m sure you have from large corporations like Google and Microsoft who’d like to cut in on what Grameen is doing, but have their own agendas, which may, I would imagine, be totally different from yours? 

AUDIENCE QUESTION:  Dr. Yunus, thank you for coming today. My name is Nick Beim(?). I thought your talk was very inspiring. Of the tens of billions of people who you help through microcredit, there’s a subset that have the opportunity to create very significant companies and create lots of jobs and have a very significant social impact.

Their needs may be slightly greater than the traditional constraints of microcredit. What’s the best way, and in particular what’s the most efficient financial instrument to help those people? In other parts of the world, it’s often venture capital. It’s typically equity rather than debt. And I was wondering whether Grameen Bank itself would invest in companies like this, or what you thought in an ideal world would be the best way financially to help them? 

DR. LINCOLN CHEN:  Yeah, I think he was saying, should the people who want to help invest in equity or debt [simultaneous conversation] financing of microfinance? 

AUDIENCE QUESTION:  For the most successful people that you’ve helped through microcredit who want to raise lots and lots of money and create lots and lots of jobs, can you help them through microcredit? Or do their needs go beyond that, and often beyond what may be available in the country, into more traditional equity investment needs? How do you best help those people? 

DR. LINCOLN CHEN:  So you’re talking about the clients of Grameen Bank outgrowing the size of the loan? Okay. So I think what we’re hearing in these four questions are, is the banking industry able and willing to listen? Are politicians able and willing to listen, especially fairly soon? And, of course, then the cautions of corporations maybe taking advantage of the branding and the value base that Grameen Bank has, and then what happens to people who want to grow beyond what Grameen can do. 

DR. MUHAMMAD YUNUS:  Grameen Bank tries to reach out. First of all, within Bangladesh what we are trying to do, reach out to every single poor family so that no family is outside this system of financial service. So if someone decides, you know, “I’m not going to borrow money,” that’s fine. But systems should be available there: “In case you want, I’m here.” Today, 80% of the poor families in Bangladesh have access to microcredit. They’re already in, 80% of the families. So there are 20% more to go. So our goal is to see how close we could come to 100% so that we’ll be standing by.  In case you need money, it will be available to you, to everybody. 

So this is one:  kind of build it to a saturation point. Then the next level, how to get you out of poverty? So this is our concern. It’s not, how much money we lend out, how much is repayment. We talk about repayment because everybody’s curious about repayment. But that’s not our objective. Our objective is how many families we have succeeded in getting out of the poverty line so that they are not under the poverty line anymore. 

Within Grameen Bank, we kind of placed 2015 because that’s a date fixed by the United Nations. By that date, we would like to have all the borrowers of Grameen Bank -- 100% of them -- out of poverty, so that when the world is trying to reduce it by half, Grameen Bank has succeeded in making 100% out of poverty. So this is our goal to see. And in doing that also building up the second generation of those families. So we build the second generation in a way that they take their family far, far away from the poverty line, so that one cyclone, one flood does not push them back under the poverty line again. So they’re so far away, that those things, those incidents, those disasters will not have any impact.  So this is the structure we are trying to build.

Along with it separately what we are talking about now, building up the healthcare program, so that on the healthcare issue-wise, also you are protected. Your health is protected under the healthcare program by itself.  

Commercial banks are doing their business, but still, they are not involved in microcredit. Some of the big banks have created microfinance departments, microfinance programs.

Most of them, they’re doing it through their foundation window, so the foundation can lend money to microfinancing institutions. Some of them are lending money from their commercial window as a commercial loan to microfinancing institution. But still, they have not opened that front door of the business as microfinance institution.

But we’re happy that they have done all those steps. But we’ll not be totally happy until they get involved with the business itself, through their business door. One suggestion that I give that they should be having exclusive subsidiaries -- microfinance subsidiaries - so that they have people specially trained to do this business, but the company is a separate company, so that they can run it as … Because in the same business premise is very difficult to run both kind of banking.  This becomes a kind of orphan banking in the presence of the massive banking that they do. So we don’t want to have second-class citizens position either, so you have a separate premises for them, separate branches for them, separate organizations for them. So this is on the commercial bank. 

Yes, political awareness is very important. Whoever is in charge of the political decision making, we would like to bring it up, that these are the things needed to be done. And we’ll be very happy to bring it up whenever we can. 

And about the Googles and Microsofts and the big, giant companies, one of the issues that was repeatedly raised when we went into our joint venture with Dannon, Grameen Dannon company, first question is always, Dannon is going to use you. That’s why they are doing it. They want to use you, get the publicity and so on. They’ll get a good image for themselves.  My immediate answer was (and I repeated it every time it was asked) I said, “Well, I’m not so sure who is using whom.” I said, “You think Dannon is using us. I thought, we thought we are using them.” Because at least our advantage is the moment we talk about Grameen Dannon, all those question marks that, “Oh, this is a crazy thing.

Nobody’s interested,” the moment we said, “No, we are doing business with Dannon,” “You sure?” then there must be something in it. So credibility increases.  So I said, even if they get publicity by doing this, why shouldn’t they get publicity doing good things? If they do good things, let them have publicity. Then other companies will also come. We would like to have some publicity ourselves. Like Intel came forward. They created a company, Grameen Intel company in Bangladesh to bring information technology to the poorest people. And we are challenging them, “Give all the research facilities available to us so that we can design things for poor -- not sell your products. Design things for the poor people in exactly the kind of way they need.” This is what we’d be looking for. 

So if we know how to make use of them, I think we can make use of them. Google, we’d be very happy to do business with Google. Why not if it serves our purpose? And we can figure out lots of things which Google can do for the poor people. And we would like to give those ideas. And as long as they do it as a social business.  We know that they cannot make money out of it, so that at least that door is blocked. So they cannot just say, “Aha! We got all the poor people. We are making a lot of money out of the poor people.” Can’t say that, because it’s a social business. They cannot make money out of it. 

And outgrowing, yes, in Grameen Bank, entering Grameen Bank is very difficult. You have to be really, really poor person to join Grameen Bank. Once you join Grameen Bank, you can grow as big as you want, no restriction. We have plenty of money. We can give you as much money as you can use it properly. And we do that. Our average loan in Grameen Bank is $150 dollars right now. But our large loans on the top is $15,000 dollars, $16,000 dollars. So that’s pretty big, and we are very happy. These are our success stories -- who came at $40-dollar loan, now went up to $15,000 dollars, $16,000-dollar loan. So we kind of showcase them to everybody: “Look  —  everybody can be like her.”  What are the businesses they do? We publicize them. We write their life history in our publications and so on, how she did it. 

Money is no restriction. Nobody outgrows Grameen Bank in the sense that we cannot provide the money. We have lots and lots of money. Money is not our problem. Problem is how far you can go with us. That’s all. That’s it. 

AUDIENCE QUESTION:  Dr. Yunus, my name is Jarvid Sultan(?). And I’m working in hazard areas, like in Kashmir and in Bangladesh. I have two questions. One of the things that I’ve realized is that NGOs are not willing to fund individual home construction because that becomes a personal asset. But people need homes. So I wanted to find out if there could be an economic model like maybe insurance policy, home insurance policy that would work. And the other, the construction of storm shelters, whether that can be funded as an economic model. 

AUDIENCE QUESTION:  Dr. Yunus, my name is Eliza Kay. And I’m a student at a university in which I’m trying to incorporate microlending into something that the student body participates in. I was very much inspired by your story of going into your career by observing your situation and by helping as a human and not necessarily as an economist. And I was wondering if there are any recommendations you might have for an apathetic college community, how to move people into action and how it affects them?  

AUDIENCE QUESTION:  My name is Yohi Martio(?). The U.S. and the Israeli governments are impoverishing the population of Gaza in order to get them to vote for a government that the U.S. and the Israeli governments like. Does the Grameen Bank address this type of political problem in dealing with poverty? And are you involved in Gaza? 

AUDIENCE QUESTION:  Thank you very much. My name is Fungisa Goga(?). I’m actually from Zimbabwe. And I’m coming here, and I’m a product of a story of a grandmother who taught her daughter out of ten children, selling peanut butter. And now she’s a businesswoman and now I’m in pharmacy school. And I feel compelled and will start a social enterprise with health and agriculture in Zimbabwe. With that said, I wanted to ask if you have any internships or fellowships through Grameen for people like myself, because as you know, it’s very hard for women to have mentors and networking. Thank you.  [applause]

DR. LINCOLN CHEN:  So home construction, political problems, but then advice and internships, advice for young people and internships. 

DR. MUHAMMAD YUNUS:  Grameen Bank gives housing loan. We started in 1984 and we got (inaudible) for architecture in 1989. We gave housing loans on a long-term basis so that they can build their own homes with sanitary latrine and all the other facilities. So we have been involved in housing loans for a long time. So this is something we also encourage others to do. 

If we didn’t have it before, we had to incorporate it later on anyway, because after every cyclone, after every flood, people lose their homes, lose their habitat. And no matter what you do, the first requirement is the house. So you have to come up with a housing loan. So housing loan is part of us.  We have been talking about the material, which are the best material for it and how to make flood-resistant housing so that you don’t lose everything. You can use the same material again to rebuild the house. And multipurpose housing in the time of the flood, you can use part of your material to protect yourself in a temporary housing by shifting the whole house in a different location, all those kind of ideas. So we do that. We don’t have housing insurance. We have other kinds of insurance, but we didn’t have the housing insurance yet. This is one area one can do that. 

On the action part -- I suggested it in my book also -- we don’t have to think about huge, big projects. If I and my friend together can have a project and create a social action group, what we do, we take one beggar out of begging. That is our project for year 2008. Let’s do it. How to do it? And we tried. We could not finish it in 2008, so in 2009, again we declared that’s our project is, within 2009, we want to complete the rest of it. We progressed a little bit, but in 2009, we’ll complete this. That’s a project. If you can help one beggar out of begging, not out of poverty but out of begging, that is possible if you can think about it. That’s my project. I’ll take one person out of unemployment. Three friends got together, find a way, how to make sure this one person doesn’t remain unemployed. And this is our project. We tried year one. We came very close, but couldn’t finish it. We tried year two, and we made it happen. And we tell the story on our website:

“This is what I did.” And it will inspire other people, so that people can do lots of different things.  A social business plan to help people who cannot function in a day-today way. We provided this service, and this is how it came out. This is our social business idea. We put in the website. We didn’t implement it. We came up with the idea and put it there. Somebody said, “Ah, this is a great idea. I would like to implement it. It’s possible. All you did was thought it out in a very elaborate manner.” And that may click in somebody else’s action. All these things can happen and can happen very easily. You inspire each other. I have done something. You have done something. And suddenly, “Aha, let me do it this way. I can do something else better than that.” So we start solving things and so on. 

Internships, yes, definitely we extend internships to many, many young people. We’d be very happy to have your association with us. That has been very helpful in the past that we have done, yeah. 

DR. LINCOLN CHEN:  Well, the last question’s going to be:  Yunus, you’ve won the Nobel Peace Prize. You have 26 honorary degrees and got one yesterday making 27, at MIT. [applause] What’s next? What’s going to happen next? Tell us. What do you see for Muhammad Yunus. 

DR. MUHAMMAD YUNUS:  That’s not what we keep track about. We keep track about -- can we be successful in our healthcare program? That’s what we concentrate on.    

DR. LINCOLN CHEN:  So the next one is universal health for everyone in Bangladesh.   

DR. MUHAMMAD YUNUS:  In Bangladesh [applause].  Thank you. 

DR. LINCOLN CHEN:  Obviously, Yunus and I would like to thank you all for coming, especially the younger, but also the older standby people. I think that for me, this has been a great honor to be here with Yunus. I took a quote from Yunus’ speech at the Nobel Prize, was a very simple statement where he said, “I became involved in the poverty issue, not as a policymaker or as a researcher. I became involved because poverty was all around me and I could not turn away from it.” And what we heard is a life where Yunus did not turn away, where so many people do turn away and so many people close their eyes. Not only did Yunus not turn away, but he faced it and he struggled with it. And of course that really echoes very much the John Kennedy spirit that John Shattuck gave us at the beginning. So on behalf of all of us, I want to thank John and Yunus for this wonderful session we’ve had this afternoon. [applause]

JOHN SHATTUCK:  I’m going to give you a chance to do what I think all of us want to do, and that’s to give a very, very special standing thanks to our guest. But before I do that, rarely is there someone who sits on our stage who one can genuinely say has changed the world. When I quoted, as Lincoln has just said, that challenge that President Kennedy offered in his inaugural address about creating a grand and global alliance to fight the common enemies of humankind, including most prominently the issue of poverty, this gentleman has taken that challenge and acted on it. And we’re very honored that he’s here. And Lincoln, we’re very pleased to have you here conducting this conversation.

Tomorrow morning I’m told that Muhammad Yunus will be on The Today Show. So if you haven’t had enough this afternoon, which I’m sure you haven’t, you can see him in very brief form on The Today Show. But thank you so much for being with us and please join me in thanking both. [applause]

Dr. Yunus will be outside signing books for any of you who wish. Thank you. 

DR. MUHAMMAD YUNUS:  Thank you very much.