Social business created to alleviate poverty
The Jakarta Post
Jakarta, posted: Sat, June 13, 2015 | 12:44 pm
Nobel Peace Prize laureate and Grameen Bank founder Muhammad Yunus was in Jakarta on June 10 for the New Cities Summit 2015, delivering a keynote speech, 'Redesign Economics to Redesign the World.' Yunus has been promoting his ideas on 'social businesses,' businesses that are created to address social problems. He shared his views about social business with The Jakarta Post's Evi Mariani and Corry Elyda.
Question: Could you tell us more about social businesses?
Answer: The conventional businesses that we are familiar with focus on how to make personal profit. The more profit you make, the more successful you are. That's what the whole world knows about business.
What I try to do is use the same business methodology to solve the problems of the poor people, or people in general, not just poor people's but any global problem. Usually these things are done by charity. You bring education for people, health for people, housing, nutrition; you donate money and run a charity school, a charity hospital.
The objectives are still the same, but you don't give the money as charity where money goes out and does the good work but money doesn't come back. So you need fresh money all the time. In our country we do the same thing in a business way. For example, we have a nursing college in Bangladesh; we created a nursing college as a social business. We bring girls from poor families to come to the nursing college and we give them loans from the Grameen Bank so they don't have to bring any money from their families. Everything is taken care of: their housing, tuition, clothes, everything.
Once you have your degree done, you get a job. Then you spare one fourth of your salary to repay the loan, so in three years the money comes back. The interest rate is very small: 5 percent a year.
How do you encourage the private sector to take part in social businesses?
Many businesses have their CSR (corporate social responsibility). Why don't you use CSR money to start social businesses? You can take care of unemployed young people, creating entrepreneurship by investing in their businesses so they become businesspeople, making them job creators.
I'm telling the young people: We are not job seekers, we are job creators. But somebody has to give them money so they can start the business. CSR money can become a fund for social business and this fund invests in a business of a poor person, a young person, an unemployed person.
He has a business idea and sets up a little shop. He knows everything about running a shop because he used to work for somebody in the beginning and then he makes money. He returns your money and he doesn't have to pay for interest or profit because it's a social business. Now you get your investment back and you invest it in somebody else.
Many rich people have their own excess money. They have zakat (alms). Why don't they use the zakat to give scholarships as a charity? But make a commitment with the young person: when you get a job, would you create a fund for a scholarship for another person? So that becomes a sustainable system.
Sometimes money is not a problem, but people do not have the time and energy to empower or train these young people to make good businesses and make more profit.
That's why we create social businesses. Hire a CEO just like any company. I hire people to train these young people to make sure the company grows. The money I give to the social business, I get the money back. In charity, you never get your money back.
How do you make sure that the social business really runs as a social business? Is there any method to sustain social businesses?
That's why we have certification. Every year auditors come, look at the company to see if you have done everything in a social business way. You use the money to benefit the people. They are special auditors who don't look at your accounts for tax purposes. They're looking at your characteristics as social businesses.
Can it work for Indonesia?
Somebody has to start. It's not a big thing to do. You start in a small way. You get very excited: oh, it works and then you want to do more. Like you start with 50 young people, transforming them into entrepreneurs. It doesn't take billions of rupiah.
If you're successful, you tell these 50 people: why don't you run it for 100 people? In the beginning you don't have to start with a million young people, like the governments do.
If you want to start and say, I don't know anything: one thing, you can visit Bangladesh and see what we do and say, 'Aha, this is good,' or read my book.
How much do you believe that social businesses can alleviate poverty?
How can I take five poor people out of poverty? That's this business. If you are not successful in taking five people out of poverty, then you are not a successful business. You have failed in your objective. If you're successful, you have the money still and you take another five poor people. And you tell people: If you have more money I can take 20 people out of poverty.