Muhammad Yunus is the man who saved the lives of millions of people around the world by introducing micro loans to poor people, giving them a chance to build businesses and give them a chance to thrive.
This feat won him the Nobel Prize.
It all started when he was teaching economy at a university in Bangladesh. ‘
Looking out the window though he felt it was superfluous to teach the young students about economy when outside their brothers and sisters where living on the verge of death.
One day he ventured out into a neighboring village and started talking to the people who lived there. He spoke to a woman who made the most beautiful furniture out of bamboo sticks.
He asked her where she sold them;
She told him that to get the first bamboo sticks to start her business she had been forced to take a loan from a loan shark, the banks had refused her a loan.
The terms were both a high interest but also that she could only sell her chairs to him, at the price he requested.
In other words, her loan had made her into slave labor.
He asked her how much she had borrowed; it turned out to be about 7 U.S. cents!
He went around the village and found 42 people who were in similar situations, he counted how much money they owed, it turned out that they were all turned to slave labor for a total of 27 dollars.
He gave them the money himself!
A start of a new kind of bank
After a lot of trouble he started the bank Grameen Bank in Bangladesh which loans money to poor people at a reasonable interest and gives them the chance to build themselves a future.
The start of a new kind of company
With the start of Grameen bank men and women over all of Bangladesh got the chance to start companies and get themselves out of poverty.
What Mohammad did afterward was to found a completely new type of company, a cross between the traditional profit based companies and the non-profit institutions.
The companies are called social companies.
A Social Company
A social company is the same as a traditional profit based company with the only difference that they don’t create a profit and that they work for a cause.
The point of a social company is to solve a problem, for example poverty in an area.
The company is to be completely self-sustaining. Meaning it has to make enough profit to cover its expenses, it doesn’t live off of charity, the money the company makes isn’t given to stock owners, instead the money goes to expansion or to the poor.
The power to change the world
This new type of company has the potential to change the world.
All of us want to make a difference, but often we don’t know how. We end up giving money to a charitable institution; the problem is that the institution needs us to keep giving them money if they are to survive.
The money you give to an institution gets used up and then they need more. It follows the same principle as the analogy about giving a man a fish, which would feed him for a day, or teaching him to fish which will feed him for life.
Charitable institutions work a lot on “teaching people to fish” the problem is that they themselves need others to “give them fish” to survive.
A Social company is a charitable institution that “knows how to fish”.
Social companies can accept your money to start the company, but after that they don’t need more, they are self sustaining meaning you can put your money into a new social company spreading even more good to the world.
How to make a social company sustainable
The question many have about social companies is how do you get them profitable?
How do you make money while serving the poor?
You have to charge for your services.
This is a notion that scares many, if you offer healthcare to the poor they can’t afford to pay much which is why you would need to get donations to run the institution.
A social company will instead create a system that charges different amounts to different people.
One example is the cooperation between Care2Children and Grameen healthcare for curing Thalassemia .
Thalassemia is a horrible disease that kills children all over the world but is curable.
Read more about it on Wikipedia
The company will open centers that can take care of three children at a time. 2 of the beds will go to richer families that can afford to pay for the expensive costs of the operations; the profit from those operations will go to making the third bed available for less fortunate families.
This way they can offer the service to poor families whilst giving the richer families a reason to pay more.
There are many ways to make a company profitable
Another example is Grameen Veolia Water which provides quality drinking water for people both in cities and in villages in Bangladesh. By charging more in towns they can charge lower rates in the poorer villages.
By using this technique everyone in Bangladesh will have the chance to get good water at an affordable price.
A glimse of the future
I see this as a potential for the future, I haven’t done it justice in this article but Muhammad Yunus has explained it incredibly in his book. I suggest you read it.
This is the future of our world, a chance for everyone to live acceptable lives, a chance for everyone to use their skills to create a better world for us all.
In the future I am sure that I will start multiple social companies and hopefully make a difference in people’s lives all over the world.
Read Muhammad Yunus book Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs