Sunday, February 15, 2009

read and reviewed: creating a world without poverty by muhammad yunus
submitted by: anita

I thought that I was a dreamer and an optimist, but compared to Muhammad Yunus I would almost be considered a cynic. In Creating a World Without Poverty, not only does he envision eliminating poverty in his native country of Bangladesh, he envisions "putting poverty into museums" throughout the world so that future generations of children could go and marvel at the way large parts of the world used to live.

He acknowledges that he is a dreamer. Yet he has in fact reduced Bangladesh's poverty level from 73% in 1973 to 40% in 2005. The poverty level continues to decrease by 1 percent each year and so in the not too distant future, his dream of eliminating poverty in his country could become a reality.

How is he doing it? It's pretty simple. He has dared to think outside of the box. He has refused to buy into the capitalistic, maximizing profit model that the developed countries have lived by. Instead, he introduces the concept of social businesses. These are businesses that are created not to be PMBs (profit maximizing businesses) but businesses that have as their goal a social benefit to the world's poor. People who invest in the businesses get their investment back, eventually, but they do not receive any profit. Instead any profit that the business makes is re-invested into the business or else it goes to the shareholders who are the poor. As an added benefit, the investors in these businesses can then invest in another social business and keep perpetuating the benefits. It is much better than a hand-out, for both the investors and the recipients.

How can a model like this work? Yunus has shown that it works well. He started out by offering loans to poor people who had no collateral and who would be poor risks by most bank's standards. He found that these poor borrowers had a far better rate of loan repayment than more well-off borrowers. He also found that the poor were extremely resourceful and hard-working when it came to using their loaned money. As a result many of them were able to create viable businesses, pay back their loans and better the standard of living for themselves and their families.

For example, some poor women would take out a loan and become telephone ladies. They would purchase a cell phone and then sell minutes to people in their village. This provided benefit to them and also to others around them. And connecting a poor village with the world helps to remove them from isolation which further increases the likelihood that they will escape poverty.

It is a hopeful book. Yet it also is pleading with the world to adopt this same model of social businesses in order to save our planet as well as eliminate poverty. As has become obvious to many, the world can no longer afford to maximize profit and ignore the effect that this idea has had on the world's resources and on the use of the these resources by the privileged few.

I found it an inspiring book, with lots of practical insight. Putting its ideas into practice should be given serious thought by the developed nations. Success will only be hindered by a stubborn clinging to the current model of business that has benefited only a small portion of the world's population. Yunus believes that investors and people in general, are capable of and even attracted to making a choice that does not result in financial gain, but instead contributes to a world where those at the bottom of the socioeconomic structure are benefited and given a way of escape.

1 comment:

g13 said...

hey anita,

thank you for contributing to the conversation by adding this review.

i think yunus' concept of socially responsible business is interesting. however, i wonder how many investors will participate in this schema since it does not increase their capital in any way.

insofar as his schema sounds a lot like kiva and other microloan systems, i think that he could inspire a number of affluent westerners to invest in these socially responsible businesses. but in order for this kind of system to transform the massive systems of poverty in the global south, the scale of such investments would have to be enormous.

of course, if you could just get a majority of american evangelicals to invest their income into a system such as yunus', remarkable things could happen.