A history of microfinance | Muhammad Yunus | TEDxVienna

Summary

The transcript details the inspiring journey of a visionary who started with minuscule loans to poor women, challenging traditional banking norms. By forgoing collateral and focusing on the future rather than the past of borrowers, he established the Grameen Bank, which is now owned and operated by its borrowers, predominantly women. The narrative underscores the entrepreneurial potential in every individual, including beggars, and the transformative power of social businesses designed to solve societal issues without profit motives, harnessing human creativity and technology for social good.

Takeaways

• 🌟 The speaker started with a small loan initiative, lending as little as $27 to 42 people, which grew into a significant movement.
• 🏦 They faced resistance from banks but overcame it by offering to be a guarantor, demonstrating commitment and risk-taking.
• 🌱 The Grameen Bank was created as a response to the rigid rules and procedures of conventional banks, aiming to serve the poor and women.
• 🚫 The bank operates without collateral, lawyers, and detailed past inquiries, focusing on the potential and future of borrowers.
• 👩‍💼 The bank is owned and run by the borrowers, primarily poor women, which is a unique model in the banking industry.
• 🔄 The speaker challenges the conventional banking model by inverting its practices, targeting the poor, women, and rural areas instead of the rich and urban centers.
• 💡 The concept of 'social business' is introduced, where businesses are created not for profit but to solve social problems.
• 🌐 International collaborations are highlighted as a way to scale social businesses and address issues like malnutrition and disease.
• 🛍️ The speaker shares examples of social businesses, such as producing affordable shoes, clean water, and fortified yogurt for children.
• 🌐 The speaker emphasizes the potential of human creativity and technology to solve global problems if directed towards social good.

Q & A

What was the initial amount of money used to start lending in the Grameen Bank model?

The initial amount of money used to start lending was very small, a total loan of $27 to 42 people, which is less than a dollar per person.

Why did the banks initially refuse to lend money to poor people?

Banks refused to lend money to poor people because they were stuck with their rules and procedures, which did not accommodate the needs of the poor.

How did the founder of Grameen Bank overcome the banks' refusal to lend to the poor?

The founder offered himself as a guarantor, signing all the papers and taking all the risk, which eventually led to the creation of Grameen Bank.

What is unique about the ownership structure of Grameen Bank?

Grameen Bank is unique in that it is owned by the borrowers themselves, with 97% of them being women.

Why did the founder decide to lend to women instead of men?

The founder chose to lend to women because conventional banks tended to lend to men, and he wanted to reverse that trend to empower women.

How does Grameen Bank differ from conventional banks in terms of collateral?

Grameen Bank does not require collateral, which is a departure from conventional banks' practices, making it accessible to the poor who typically lack collateral.

What is the significance of the 'Beggars Bank' initiative mentioned in the script?

The 'Beggars Bank' initiative demonstrates that even the poorest individuals, such as beggars, can become entrepreneurs. It provides them with small loans to start door-to-door sales, helping many to stop begging and improve their lives.

How successful has the 'Beggars Bank' initiative been in terms of reducing begging?

The initiative has been quite successful, with over 22,000 beggars out of 100,000 stopping begging completely within the last 5 years, as they became successful in their new sales roles.

What is the concept of 'social business' as introduced by the founder?

Social business is a concept where companies are created to solve social problems rather than make profits. Any profits made are reinvested into the business to expand its social impact.

Can you provide an example of a social business venture mentioned in the script?

One example is the joint venture with Danone to produce fortified yogurt for malnourished children in Bangladesh, which helps improve their health without the intention of making a profit.

How does the founder view the role of technology in addressing social issues?

The founder believes that technology is a powerful tool that can be harnessed to solve social problems if human creativity is channeled towards this end, potentially leading to a new civilization focused on problem-solving.

Outlines

00:00

🌟 Founding Grameen Bank: A Revolutionary Approach to Banking

The speaker recounts the humble beginnings of Grameen Bank, which started with a small loan of $27 to 42 people. Initially, banks were reluctant to lend to the poor, so the speaker offered to be a guarantor to overcome their rules and procedures. The bank's unconventional approach included lending to poor women without collateral, focusing on their future rather than past, and being lawyer-free. The bank's unique structure allows borrowers, primarily women, to own and operate it, setting it apart from traditional banking systems.

05:01

🚀 Challenging Norms: Empowering Women and Entrepreneurship

The speaker discusses the challenges faced in changing societal norms regarding women and entrepreneurship. Despite initial resistance, the speaker insisted that all humans are entrepreneurs and sought to empower the poor by lending to them. A bold initiative was taken to lend to beggars, demonstrating that even the most marginalized can become successful entrepreneurs. This program expanded significantly, with over 100,000 beggars participating and many successfully transitioning from begging to sales.

10:02

🛍️ Transforming Beggars into Salespeople: A Unique Social Experiment

The speaker elaborates on the beggars-turned-salespeople initiative, highlighting its success in transforming the lives of over 22,000 individuals who have stopped begging. These individuals have become door-to-door salespeople and personal shoppers, demonstrating adaptability and entrepreneurial spirit. The speaker emphasizes that poverty is not a personal failure but a systemic issue, and by providing opportunities, even the most impoverished can rise above their circumstances.

15:04

🌱 Social Business: Addressing Social Issues with Entrepreneurial Solutions

The speaker introduces the concept of social business, which aims to solve social problems without the motive of personal profit. By creating businesses that focus on social impact rather than financial gain, the speaker has addressed issues like malnutrition, lack of electricity, and water pollution. Partnerships with international companies have led to the creation of affordable products like fortified yogurt, clean water, and shoes, all aimed at improving the lives of the poor.

20:05

🌐 Global Collaboration for Social Impact: The Future of Social Business

The speaker discusses the global potential of social business, emphasizing the importance of using technology and human creativity to solve societal problems. By creating businesses that measure their success by social impact rather than profit, a new paradigm of business can emerge. The speaker envisions a world where human capacity is channeled towards addressing global challenges, leading to the creation of a new civilization that prioritizes social well-being over monetary gain.

Keywords

💡Microcredit

Microcredit refers to the extension of small loans to individuals who lack collateral, which is a traditional requirement for bank loans. In the video, the speaker initiated microcredit by lending a minimal amount of money to poor individuals, particularly women, which was instrumental in empowering them economically. The concept is central to the video's theme of financial inclusion and poverty alleviation.

💡Grameen Bank

Grameen Bank, meaning 'Village Bank,' is a community development bank that provides microloans to the impoverished without requiring collateral. Founded by the speaker, it is owned by the borrowers themselves, primarily women. This concept is pivotal in the video as it exemplifies an innovative banking model that serves the rural poor and challenges traditional banking norms.

💡Entrepreneurship

Entrepreneurship in the video is presented as an inherent quality in all human beings, not just a select few. The speaker argues that everyone has the potential to be an entrepreneur and that societal structures often suppress this ability, particularly among the poor. The video showcases how even beggars can become entrepreneurs, highlighting the transformative power of recognizing and nurturing entrepreneurial spirit.

💡Social Business

Social business, as discussed in the video, is a non-loss, non-dividend company dedicated to solving social problems. It is a concept where the primary goal is to create a positive impact on society rather than maximizing profits. The speaker collaborates with international companies to create social businesses that address issues like malnutrition, lack of clean water, and disease prevention, demonstrating a novel approach to corporate responsibility.

💡Poverty Alleviation

Poverty alleviation is a central theme in the video, where the speaker shares his experiences and strategies in combating poverty through financial inclusion and social business models. The video emphasizes that poverty is not a personal failure but a systemic issue, and by providing opportunities and resources, even the poorest can improve their circumstances.

💡Financial Inclusion

Financial inclusion is the process of ensuring access to financial services and affordable credit for all people, especially the underserved segments of society. The video illustrates how the speaker's initiatives, such as Grameen Bank, have been instrumental in bringing financial inclusion to the rural poor, thereby empowering them to participate in economic activities.

💡Selflessness

Selflessness in the video is portrayed as a driving force behind the creation of social businesses. The speaker believes in channeling human creativity and capacity towards addressing societal problems without the primary motive of personal financial gain. This concept is integral to the video's message of using business as a tool for social change.

💡Banking System

The banking system, as critiqued in the video, traditionally caters to the wealthy and requires collateral, which excludes the poor. The speaker颠覆了这一系统 by creating Grameen Bank, which operates without collateral and is owned by its borrowers, thus making banking accessible to those previously marginalized.

💡Collateral

Collateral, in the context of the video, refers to the assets or property that borrowers must pledge to secure a loan. The speaker rejects the need for collateral in lending to the poor, arguing that it is an unnecessary barrier to financial inclusion. This decision is a key aspect of the microcredit model and underscores the video's theme of innovative financial solutions for poverty alleviation.

💡Bonsai People

The term 'Bonsai People' is used metaphorically in the video to describe individuals who, like bonsai trees confined in pots, have had their potential for growth stunted by societal constraints. The speaker uses this concept to argue that poverty is not due to a lack of ability in the poor but rather due to systemic limitations that prevent them from reaching their full potential.

💡Malnutrition

Malnutrition is a significant issue addressed in the video, particularly in the context of children in Bangladesh. The speaker discusses the creation of a social business to produce fortified yogurt to combat malnutrition, highlighting the video's focus on using business as a means to improve health and well-being among the most vulnerable populations.

Highlights

Started with a small amount of money, loaning as little as $27 to 42 people.

Attempted to persuade banks to lend to the poor, offering himself as a guarantor.

Created Grameen Bank or Village Bank to serve the poor, especially women.

Designed bank procedures to work in adverse conditions, focusing on the future rather than the past of borrowers.

Eliminated the need for collateral, lawyers, and detailed past histories of borrowers.

Reversed conventional banking by focusing on poor women and rural areas.

Grameen Bank is owned and operated by its borrowers, primarily women.

Challenged the banking system by inverting traditional practices.

Believes all human beings are entrepreneurs, including the poorest of the poor.

Started a program to lend money to beggars to demonstrate their entrepreneurial potential.

Over 22,000 beggars have stopped begging after being part of the lending program.

Poverty is not created by the poor but by the system and concepts we have built.

Described the concept of 'Bonsai people' to illustrate the stifling of potential due to societal constraints.

Discussed the instinct to create businesses to solve social problems.

Founded a solar energy company to address the lack of electricity in Bangladesh.

Introduced the concept of 'social business' with the aim of solving social issues rather than making profit.

Collaborated with international companies to create social businesses that address malnutrition and disease.

Emphasized the importance of measuring the social impact of businesses, not just financial profit.

Called for a new civilization focused on using human creativity and technology to solve global problems.

Transcripts

all I can say that whatever I did uh

probably if I can look back I can say I

was uh trying to do very little things

and I was not trying to persuade anybody

to do anything just what I thought I can

do I tried to do do

that uh and it started with a little

amount of money so little that um you

can laugh at it uh looking

back it's a total loan of

$27 to 42

people so it's not even a dollar a piece

so that's what excited me and wanted to

do more of it uh trying to persuade the

banks to do it they wouldn't do it so I

offered myself as a guarantor I said

okay I'll sign all your papers and take

all the risk and you give the money they

were stuck with their rules and

procedures so I was trying to kind of

get over those things and that was the

beginning luckily it worked and

continued to grow lending money to poor

women tiny little money everybody said

it's going to collapse very soon he said

until it collapses I'll keep on doing it

so why should I stop it just because

someday it is going going to collapse

which we don't know whether it will uh

that's it and then we created a bank out

of it called it gramine bank or Village

Bank and people ask me how did you

figure this out all these rules and

procedures that you put into it so that

it can work even in very adverse

circumstances still it

works I said oh I don't do very hard

work I easygoing man uh I just look at

the conventional Banks how they do

it and once I learn how they do it each

piece and I just do Theos

it and it

works they go to the rich people so I

decided to go to the poor people they go

to men so I decided to go to woman they

go to the city center do business I

wanted to go to the Village remote

Village they want collateral I said

forget about collateral who wants Catal

if you want col you never get to the

poor people so dismissed

collateral they have big lawyers in

their Bank we said we don't need lawyers

so we are the only lawyer free Bank in

the whole world probably it works we

don't need

them and lawyers and the banks

conventional Banks want to know your all

antients what you have been doing

whether you know everything what kind of

business you have been running

everything your past as much details as

they can

get so we said forget about it we are

not interested in the past of our

borrowers we are interested in the

future of our borrowers so if you're

looking for the poor people I'm sure

there's something they have done which

know may not be very pleasant why you

dig into it so because he or she is not

responsible for society is responsible

for what he or she has been doing so why

don't you just give it a break and start

fresh uh see what he or she wants and

this is how we wanted to do conventional

Banks uh

concentrated uh on

owning or conventional banks are owned

by the B uh Bri people so we reverse

that too we made this bank owned by the

poor people and not only conventional

banks are owned by rich people mostly

it's owned by rich men so we reverse

that we not only make it owned by the

poor people we made it owned by poor

women so this is a bank which is owned

by the borrowers themselves right now we

have 8.3 million borrowers 97% of them

are women and they own the bank and they

run the bank they are the board they

decide the rules and procedures and so

on so forth so this is one way to

describe how the operationally and

structurally the whole bank is done and

then you can understand where we come

from it's not just tiny size of loan

makes it ging bank is a kind of making

everything other way in one meeting in

the early years 10th year or 11th year

of

Bankers the one Banker was saying

Professor you you're not going to get

get away with this you made the whole

banking system upside down

I said yes I that's what exactly I did

because banking system was a standing on

its head so I'm trying to put it on his

feet and they challenged me on account

they said you should change the name of

your

bank make the name gamine women's

Bank several Bankers suggested that I

should change the name of the bank

because explanation was at that time we

are only 64% women the rest of is men at

early

years so when I was replying to this

question I said yes I'm very happy to

change the name of the bank I'll make

the bank gramine women's bank but but

before I do that you would like you

would have to do

something change the name of your

bank because 99% of your borrowers are

men so you should say X men's Bank y

men's Bank Z men's Bank after you have

done this then I will come and do mine I

mean women's man so it's very easy when

you do it with women everybody says it's

wrong you shouldn't if you do it with

men that's perfect there's no problem

with that so this is continuously we

have been facing and another issue comes

up in our work because I've been

insisting that all human beings are

entrepreneurs it Burns of many people oh

why does he say that there are only few

people who are entrepreneurs rest of us

we are not entrepreneurs we have to work

under the entrepreneurs I said no all

human beings are entrepreneurs that's

how we survived on this planet otherwise

we would be in the caves still living

the kind of life we lived there because

we all work together to change our life

that's how we came here and still

function here they didn't take it very

seriously then they said yes you can

lend money to the poor people but you

should be looking for entrepreneurial

poor I said not in my case because

everybody's entrepreneur so I go ahead

with that even she tells me again and

again no sorry please don't give me

money I don't know what to do with my

your money I never used money in my life

I can't use your money we don't give up

we keep chasing we came and explaining

to her no you can do that so that

confidence builds up in her just because

she doesn't have confidence doesn't mean

that she have she doesn't have

entrepreneurial ability it's a question

of building confidence in her so we Tred

to build the confidence because Society

has totally demolished her confidence in

herself that's what the poor people are

you're saying you are wrong you're no

good you're good for nothing and

generation after generation that they

have heard it they that's what they

believe in so we wanted to change that

build confidence in them so in order to

demonstrate that even the poorest person

can be entrepreneur one idea came to me

why don't I do something so that I can

demonstrate this this idea was to lend

money to

Beggars you cannot be poorer than

Beggars that's the last stage of human

survival you have no other source you go

and beg for your daily food go to houses

neighbors find something to eat or get

some money to eat and that's how you

surv you not only do it once or twice

that becomes your livelihood for rest of

your life I said let's try that so we

started talking to the

Beggars we started talking that as you

go from house to house

begging would you like to carry some

merchandise with you some cookies some

candies some toys for the kids and we

make it sound easy for them by saying

you are going there anyway this is not

extra work for

you so and you are giving people more

options so that if they don't give want

to give anything free you may try to

sell something so they may like to buy

something or they may like to do both

give you some food free and also buy

something from you so you have two

businesses going instead of one

business people like that Beggars like

that they said where do we get the money

I said we'll give you the money so we

started giving them the loan our idea

was if they succeeded in getting the

loan and paying us back by the business

they would do that will show that yes

even a beggar can be an entrepreneur on

his own on her

own we thought there'll be 1,000 or

2,000 beggars in that

program it became such a popular program

we ended up with more than th 100,000

beggars in that program and we have been

watching them what is there what are

they doing it's became very popular

what they do as we

explain and now in The Last 5 Years this

is about the time that we are doing it

in Last 5 Years out of this 100,000

Beggars more than 22,000 Beggars have

stopped begging

completely because they became

successful door to-door

salesperson and not only they became

door-to-door salesperson some of them

became your personal

shoppers you come and the housewife say

says when you come tomorrow you bring me

this she brings you this because she

cannot go to the market all the time but

this lady is going around doing things

so she brings you whatever you need it

little things but you have a good

business going people ask us to buy them

and she she feels comfortable and the

family feels comfortable with it my

colleagues who are getting so

enthusiastic about this program because

they see that even a beggar can change

her life by selling something doing

something they keep saying why don't the

other begar get out of begging why are

they taking so much

time I try to I try to advise them to be

patient I said please be patient it

takes time after all begging is their

Core Business you don't shut down your

core business just like

that you have to totally confident how

the new business your sales division is

working so

so once they figure out what a sales

division is doing well then they may say

well this division core Core Business we

can now shift so it takes a lot of

courage to come to that stage that you

close down completely so this is

gradually they will

come when you talk to them they tell you

something very

interesting they said they know which

house is good for buying selling which

house is good for begging so they go

accordingly so by by this time they have

experience uh between and who are the

one who doing both so I tell my

colleagues not only they do the business

we have not trained them anything they

they already know how to uh do the

market

segmentation which

one and their loan size is such a small

amount they start with something like

$12 $15 that's about the size and paying

back that loan they en itic to take the

second loan and the third loan each one

becomes bigger and bigger and bigger so

you look at this phenomenon and you ask

yourself what creates

poverty what created this situation that

human being has to be brought into this

kind of situation where they have to beg

for

existence is this the fault of the

person repeatedly I come to the same

conclusion there is nothing nothing

wrong with the

people poverty is not created by the

poor

people poverty is created by the system

that we have built the concepts that we

have

created that's what created poverty

nothing absolutely nothing wrong in

human beings it is poverty is externally

imposed phenomenon it is not internally

developed phenomenon so if it is

externally de imposed

phenomenon we can if we remove that that

external imposition people will come up

as human being as anybody else and

that's how the question of that Bonsai

came it started describing poor people

as Bonsai people there's nothing wrong

with their seed they their seed as good

as anybody else's seed simply Society

didn't never gave them the space to grow

so they are just like

the tree on a flower pot

so thinking what's going wrong with the

concept I F I started looking at what is

happening in the world I said in the

meantime in order to solve problems I

started creating businesses it almost

became instinctive in me whenever I see

a

problem I go right ahead and design a

business start a business to solve that

problem I didn't notice it before but

when you have done it once when you've

done it twice and you have done it 100

times then you realize it like you have

an instinctive feature that you design a

business to solve a problem you look

back you created so many pro so many

such companies we have problem of

electricity so we created a solar energy

company everybody said oh solar business

is not going to work in Bangladesh I

said who knows it may work let me give

it a try nothing wrong if I fail it's

okay but I have to try so I tried to

bring solar home system it is expensive

for the plural people we made it easy

for them to pay back it was extremely

difficult even to sell five solar home

system per month it was such a struggle

now we came to a stage after 15 years we

sell more than thousand solar home

system per day and it's growing

improving and it's done in a business

way so we did the solar energy in a

business way and it's expanding people

love it because they need electricity

because kerosene L is no good for them

so this is what we do then I realized

maybe this is a category of business

which is missing in the in the whole

conceptual framework because conceptual

framework gives you one type of business

business to make

money I said that's a wrong

interpretation of human beings human

beings are not just money-making

machines human beings are not

robots human beings are much bigger than

just onedimensional

being they're multi-dimensional being

what happened to other dimensions so

that's when the question of selfish

aspect of human being selfless aspect of

human

being came into discussion I said why

don't we create business on the basis of

the selflessness where I don't want to

make money for myself by decision nobody

has imposed it because I'm so excited to

create business to solve a problem it is

such an ex such an exciting experience

to be able to solve a

problem then I said that maybe is the

one which you should be doing it's a

non-loss non-dividend company to solve a

social problem so we started creating

more and more of these companies then we

had one connection with the Danon of

France we talked to Frank ribo he was

trying to understand what Gamin back is

I started asking him what uh donon

is then he said uh he has explained to

me what done on is suddenly I didn't

think about it before because I I I

didn't go with a plan for him just

stopped on the way to talk to him I said

what why don't she have a company in

Bangladesh we can do it

jointly whatever he thought he just

stood up shook hands with me he said yes

let's do

that I said but I have not finished here

I said it will be a social business he

said what is a social business then I

gave my spill this is the social

business you'll never get any money out

of it you can take your money back to

what you invested but nothing more than

that he stood up again shook hands he

said I'm I

agree then I thought he didn't

understand my Bangladeshi

English and I didn't understand his

French

English so on the way out I sent him a

very detailed

email and he immediately sent back I

understood everything you said I stand

by what I committed let's go ahead and

do it and this is 2005 that company was

created in 2007 and continued to

function now we produce

yogurt fortified with

micronutrients for the children who were

malnourished in Bangladesh and that

yogurt does wonderful thing to the

children because half the children of

Bangladesh are malnourished so this

produced a yogurt

which has all these micronutrients and

once this children eat this they regain

their health because you see if you are

malnourished your physical growth

becomes very stunted similarly your

mental growth becomes stunted so it's a

very strange situation for a nation to

have a half the children malnourished so

we thought at least in our way we can

see if we can do that now it works since

it works as a social business so we can

go and replicate Ed as

many factories as possible we have just

the first factory which is fully uh in

full production so we are starting the

second Factory and we calculate we'll

have 50 such factories around the

country so that every child has access

to this yoga it's a delicious yoga

children love it so that's an example of

social business so we created many such

social business with International

collaborations not because we wanted it

but International multinational

companies wanted it so we have

collaboration with bolia to produce

water our water has a serious problem

arenic and pollution so we are creating

we have created a small company to bring

clean water in the village in a very

affordable way we created a company to

produce shoes with Adidas we challenged

them that they should take a position

that nobody in the world should go

without shoes and as a shoe company it

is their responsibility to produce shoes

affordable to the poorest people they

ask me how much the price should be to

make it affordable I said maybe under

one Euro they were shocked that Adidas

shoes had to be sold under one Euro so I

said well it's a if you want to do it

that's the price range you can go they

took the challenge after long debate and

discussion within the company they did

that now after two years of research and

test marketing uh next month we'll have

the full Mass marketing will begin

actually next month so this is another

example of social business because bear

wearing Adidas shoes or rebok shoes

doesn't mean you are going for fashion

this is an essential thing if you go

barefit particularly in country in

tropical countries like Bangladesh you

contact lots of diseases particularly

parasitic diseases and many many people

are affected particularly women and

children are affected by this because

they are always in an area where it very

easy to contact uh parasitic diseases so

you protect them from the parasitic

diseases we have created gamine BSF to

bring mosqueton Nets so that you are not

attacked by the malaria and all these

companies are done for the sake of

protecting yourself from diseases or

escape from uh malnutrition and so on so

forth companies don't want to make money

out of

it they want to make sure the impact of

this companies are on the people you

measure the impact so in a moneymaking

companies at the end of the year you ask

your CEO how much money we made this

year the more money you make more

excited you get in a social business you

ex you ask your CEO how much impact we

have made this year you're not asking

how much money we made because you're

not making money for yourself if money

is made it stays with the company but

the whole company is dedicated to create

the impact and that's how measurement of

impact becomes very important thing so

that way if you open it up this idea can

create a new kind of phenomenon if you

I believe that every human being has

that selflessness but our Theory our

concept doesn't allow that to come out

so I'm creating a window I'm creating a

door so that it come out if it comes out

then all the problems we have created

over years and years of our way of singl

minded Pursuit Of Money uh may be

addressed by creating all this uh social

business to address that technology is

our at our command we have enormous

technology but this technology is at the

control of the businesses what do they

use of it make use of it make money I

said if we can

now create a door or create a road to

use this technology to solve problems

all this problem will be resolved human

creativity and human capacity is

Limitless in the presence of this

Limitless human capacity and human

creativity all the problems of the world

cannot just stand for few seconds it it

has to disappear and this is the age

where we all have this capacity of

Technology all the question is do we

have the methodology of using this

capacity to address this problems if you

do we can do it through social business

you may have better idea of doing it but

whole question is creativity of human

being has to be channeled to address the

problems that we have made for ourselves

if we do that we can create a whole new

world we can create a whole new

civilization and that's what we should

be looking for thank you very

much