The thing called social business

Based on the banking rules it was impossible to give loans to the poor for the basic reason that they are “not credit worthy “.

Social business

Recently, I reviewed an interesting book titled “building social business “ by Muhammad Yunus.

He is a social entrepreneur, banker and economist that became a recipient of the Nobel Peace Award for pioneering the concepts of microfinance and microcredit.

He was able to establish a “ bank for the poor “. The Grameen (which means “village” in Bengali ) bank was created due to a frustrating experience he had as a banker . Based on the banking rules it was impossible to give loans to the poor for the basic reason that they are “not credit worthy “.

The poor were left with the option of borrowing from the “rich” within the poor community with very high interests and ridiculous demands . Most of them had to become slaves to their creditors because they were not able to pay back.

This is how it works; some people , whose sole aim is to assist in the eradication of poverty , invest their money in a social business project ( a bank for the poor , for instance). The poor are given loans with reasonable interests (usually just enough to start a business and terms and times of payment are agreed on ). As they become more committed, they are encouraged to also buy shares of the company . Remember that the whole idea is to eradicate poverty , so they must be encouraged to make changes that will ensure that they are not poor again . Now this does not mean that they will count millions of naira , but they will have enough to sustain them and their families .

The business will make profit HOWEVER the investors will not. So the profit is turned back into the business.

Now the investors will agree on when and how they can collect their investments back. This means if I invest N500,000 in 2017 and want to collect my investment in 2027, I will be collecting 500000.

The Grameen bank is now worth over 4 billion dollars. And the poor own it!  This is so brilliant!

In 2006 , he created the “Grameen Danone “ which produces yoghurt enriched with nutrients for the poor children of Bangladesh , at an affordable price”.

This company has also employed the poor to sell the products door to door and in kiosks. Danone is a French multi national food-products company , that entered into partnership with the Grameen Company.

By the way , the grameen companies have been known to create businesses for beggars , who soon left that way of life .

The difference between the rich and the poor in our society is frightening. Here is to hoping that some people will take the time to study the theory and practice of social business, “ the new form of capitalism “ as Yunus calls it, and come up with ideas on how to run social businesses that can be adapted to our communities., gud to talk.


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