08/02/15 LSE – Notes

These notes were taken by Lilly Evans:

Creating a world without poverty: how social business can transform our lives

Mary Kaldor – 160 people watching on video link

  • One of Nelson Mandela’s global elders

Mohammad Yunus

  • Got into banking by circumstances not knowing anything about banking: now introduced as a banker

  • If he knew about banking, he would not have done it => not knowing things is a real advantage as you do not inherit a mindset

    • Biggest problem is changing inherited mindsets

    • Knowledge appears to give you vision to see the world but in reality you lose vision

    • In the process of education we become mini professor – following the line


      • Challenge for academic system: retain freshness of mind and at the same time bring knowledge

  • Grameen bank: design origins

    • Whenever they need a procedure or rule in a specific case in early days, look what banks do, figure it out and then do the opposite!

    • Microcredit is not just giving tiny loans –

    • Basic principle of banking is: the more you have the more you get

    • Reverse: if you have nothing you get most of Grameen attention

    • Convention wisdom dismissed re security, no collateral, no guarantee and no lawyers

    • Trust based banking and it works – amazing now when he sees the subprime crisis

    • Globally operating system with very high repayment rate – 97-98%

    • People they loan to are women who normally do not deal with money and say they do not know anything – repeatedly he advised his students that when they say that it is not their voice but the voice of history when they were made to believe they are no god at anything other than bringing up kids => need to overcome their fear

    • Have to work 6 year to get 50/50 in borrowers to be women, conventional banks still have only 1% borrowers women

    • Raised question of getting to concentrate on women: today have 7,500.000 borrowers and 97% are women – they own the bank

    • Encourage kids to go to school, now that is 100% at school; they have scholarships for best scholars and ceremonies to locally honour them: last year gave 51,000 scholarships

    • Introduced education loans: 21,000 loaned fro higher education, offer scholarships from major US universities incl. Harvard

    • New phenomenon emerging: daughter coming from city to visit mother in the village, one is totally illiterate and sent daughter to school who is now a doctor – society never gave a chance to the mother to achieve the same

NB Peter Lampl re education link re Grameen

  • Grandmother is still the same old woman, not even been through Grameen experience

  • Seeds of poverty are built in the system

  • We messed it up and then we blame them: lazy etc

  • Bonsai tree metaphor: small flowerpot means little tree so nothing wrong with the seed

  • Society does not provide space for poor people to grow – change the base so people can grow

  • Encourage children to go to school

  • Environment is harsh, floods are regular

  • Second generation focus: even if disaster comes they would not be pushed back in poverty

  • Grameen branches: evaluated in Star system

  • Colour of the star tells what is the accomplishment

  • Repayment rate: green star

  • Each branch has to find its own money: branch starts with just address and they start mobilising deposits, must then create cushion of excess deposits (extra star)

  • Must come to break even point in 12 months: another star when you make profit

  • Fourth star is when all the children of all Grameen borrowers are in schools: violet star – typical branch has 4,500 borrowers which means ensuring at least 10,000 children at school

  • When all 4,500 families are out of poverty, you get 5th star – that is a major achievement and done without external help or taxes

  • No financial benefit for getting 5 stars but build their pride, in the meetings they sit up front

  • Doing something that you take pride in energises the system

  • All human beings are entrepreneurs: some may have discovered it and some may not have discovered it – you got the gift but you may not have been lucky to unwrap it, were not allowed the opportunity

  • 4 years ago started to focus exclusively on beggars to see how much they can be entrepreneurial

  • Started talking to them: finding out at what point someone became a beggar was a lead question – understanding that break point is crucial

  • gave the beggars option to take something to the places where they normally beg

  • each member of staff can take one beggar at one time in addition to their regular work and it is optional

    • of the staff all have adopted a beggar

    • each wanted to take on more beggars: now they are at the 4 level and have 100,000 beggars

    • in a year more than 10,000 beggars came out of begging – some became personal shoppers

    • 90% are part time beggars – they are in the process of closing down begging division and that is their core business, it takes lot of time; now they have to build sales division so they are restructuring business

      • they know market segmentation: they know which house is good for begging which one is good for selling

      • typical loan is $12-$15: why can’t we do more of it at this rate, no interest on it, you can pay it when you can and there is no time limit. If you pay back, you can get a bigger loan

    • If beggar can figure out how to change their life and improve it, then why don’t we change the system that does not work cf banking system or institutions

    • Prime crisis proves that these people are more creditworthy than traditional ones

  • Concept of business: in the books it assumes that the purpose of business is to make profit

    • Humans are robots = make money

    • Why not bring whole human being into business?

      • 2 kinds of business: make money (all about me) + social business (do good to the planet)

      • today we can not exercise the second one: you have to step out of business and become philanthropist

      • if we can create such social businesses they can be much more powerful than charities: it is sustainable, circulates

  • Example: GrameenDanone company created as social business for a social purpose:

    • Put missing micronutrients into yogurt

    • Both partners agree they do not take dividend

    • Bottom line is how much impact you have made to lives of people

  • Once social business exists, then we need to have another department in business schools to create and train people to work in social business where the whole thing is done totally differently

    • GrameenDanone: biodegradable cups – found them in China made of corn starch – he asked them to find something that is edible

    • The moment you design something as a social business lot of issues that otherwise do not come up will appear as the drive is different

Lets fix the date to create the poverty museum in London


  1. Research in impact of microfinance to women

  2. Monetarising poor and changing their way of life

  3. Microfinance initiatives are limited in their impact and Governments have to invest in infrastructure which they shirk from


Control of money – 61% women in Grameen bank have no control or partial over their money – sees it as a positive since 39% women have total control while in the past it was 1%. It takes a long time to change society, and they are looking to increase that

Research recommendation is not to lend to men.

There is no world without money to live in

You cannot live the same old way once you have moved forward – as long as the new lifestyle is not harmful to others => fundamental question re global warming and climate change

They would do it before government does it, government is a slow machinery and by nature slow in action and response – people are much faster so problems can resolve and government can focus on issues that citizen can not do like rule of law or governance

Money is the best medicine – poor people have poor health

  1. Need to transform institutions people operate in, reflection on Bangladeshi politics

  2. Reflections on health insurance

  3. How can this type of social business be replicated elsewhere

  4. Second economy barriers and solutions for next 20+ years


Political crisis: very confrontational politics and extreme corruption – world champion for 5y, now going through cleansing process

Hoping this will lead to better political situation

However, despite this corruption, Bangladesh has been moving forward with declining poverty per year of 2% – if this continues with just this trend they will reach Millennium Development goal no.1 by 2015. It is a serious business and of 8 millennium goals, they are right in the middle on 6 of them, 2 slightly behind => most likely Bangladesh will accomplish all 8 goals by 2015

In health indicators they are ahead of India.

Growth rate in economy has been 5%, now 6,5%

Today girls outnumber boys in secondary education

Though something good is happening, they feel that if they did not have corruption it would be even better

Health insurance pays for having local doctors and clinic – can expand it nationwide

Problem: cannot retain doctors: so now they will train doctors locally, train nurses locally (cf. EFE Foundation programs)

35 centers that Grameen run is difficult because of attrition rate

Social business – obviously it can be created in Uk, cf Guardian newspaper

Instances may be already but we never recognised them already

We can list them after and invest in them

Barriers: mindset – can we accept the new idea and can we make it work

Need brilliant ideas for social business – design plans for social business in areas where there are problems

Waiting to create this – creating websites to share ideas

  1. How he got the acceptance for his ideas from the beginning?


Changing mindset

  • does the idea make sense when you hear it

  • are people crazy to give money without getting profit => he sees this saner thing than giving away money (cf to cats and dogs)

  • if it makes sense to you it will make sense to me, so talk to your friend

Making money becomes a wild process

  • this is an end once you have made money

  • means is make money but end is use it to make good

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