EDITOR'S note:

What began with a loan of US$27 to 42 women in a small village 33 years ago has grown into a global microcredit movement that has changed the lives of millions of poor people around the world.

Muhammad Yunus, founder and managing director of Bangladesh's Grameen Bank, was the guest speaker at Wharton's MBA commencement on May 17. The following is the last of three articles based on his interview with Knowledge@Wharton.

Q: You referred earlier to the idea of a social business. One example is Grameen Danone Foods. It's remarkable that you are able to produce a power yogurt called Shakti Doi for 5 US cents for an 80 gram cup. Please explain the economics and whether that model is scalable?

Yunus: The idea of social business is that investors have invested the money not for their own benefit, but to achieve a social objective.

What we have done is put all the micronutrients, which are missing in the children, in the yogurt and make it tasty. Children love it. They pay that 50 US cents to buy a cup.

If a child eats two cups a week and continues to do so for eight to nine months, he or she gets all the micronutrients back and becomes a healthy, playful child. That's the company objective.

Once you are in social business, lots of costs go down because you don't need to incur them. For example, you don't do any elaborate or fancy marketing because people know what you are doing and they are interested in it. So you don't have to go on television and be in the newspaper. We are here.

"Life is meaningless without eating Shakti Doi?" We don't say that. We explain what it is as the people come, and gradually this spreads. And that's it.

In our design, we made sure that extra costs are cut off. For example, we made it a very small plant so that you don't produce too much.

Around our own plant, there are enough consumers to buy (the product so that we don't have) to move it long distances.

Our idea is to have many, many, many small plants all around the country so that you reach out to everybody. We want to have about 50 plants to cover all the children in Bangladesh. Each one is self-contained. Each one makes money.

Sometimes we get through difficulties - like suddenly during the food crisis last year, milk prices jumped. We couldn't maintain the price that we had. We were wondering what we should do.

We came up with many kinds of alternatives to keep the prices down - without losing the micronutrients. We quickly came out with the Shakti Drink (which uses) less milk but (increases) other (ingredients) - all without losing the good taste. We kept the price as low as before. We were lucky; milk prices went down again.



Q: In addition to Grameen Danone and Intel, you have a relationship with BASF for anti-malarial nets. Do you have ther joint ventures or partnerships with companies in the works?

Yunus: Yes. Many companies are coming up with ideas to work with us for social businesses, and we are giving them ideas. One, already in operation, is a very important social business - Grameen-Veolia. Veolia is a French water company, one of the largest water companies in the world.

We persuaded this giant company to create a tiny little water treatment plant in the villages of Bangladesh to serve 50,000 people, because our big problem in Bangladesh is arsenic in our water.

About 75 million people - half the population of Bangladesh - drink water with a high level of arsenic.

So we are putting up this company to supply clean Veolia-quality water to every household in the village.

The people will be paying for it - a very small amount. Nobody will mind paying that, and it will cover all the company's costs. It will become a social business.

Once you can do that successfully for 50,000 people in the village, you have developed a seed. Then all you need to do is plant the seed in other places.

So development of the seed is the most important thing in social business.

We have already been approached by India. We have been approached by China. They would like to have Grameen Danone in (these countries) because they have the same problem.



Q: You have been dedicated to microcredit long enough to be able to observe the children of that first generation of women that you helped, going back to 1976 and the US$27 that you loaned to 42 women in a small village. How are these children, who are now adults, doing?

Yunus: We have encouraged the borrowers of Grameen Bank to send the children to school because they themselves are illiterate. Their husbands are illiterate. Their parents are illiterate. So we said, let's break that circle here.

We succeeded at having all the children in school. Then we saw that lots of these children are getting excellent results in the schools. We started introducing scholarships for all the top performing students.

Then we saw many of these children coming close to higher education. They have difficulty getting into higher education because they don't have the money to pursue it. But they are as good as anybody else.

So immediately we introduced education loans so that they don't have to worry about money. The money is our problem. You can simply get an education.

Right now, there are more than 35,000 students under education loans. We include medical schools, engineering schools and universities. So in almost every single public university, public medical school and engineering school, there are Grameen children who are studying there.

When I meet them, they will always discuss (one) issue, which is that they worry about getting a job. They say: "After we finish our (education), can you help us find jobs?"

How am I going to find jobs for them? So I started thinking about it. I had the idea that maybe they shouldn't be thinking about jobs.

We tell them: Look, you are children from Grameen families. Your thinking should be different than other children's.

You should take a pledge and repeat this pledge every morning you wake up. And your pledge is: I shall never seek a job from anybody. I'll create jobs.

If you cannot come up with an idea, think about your mother. She didn't wait for anybody. She took the money and went into business herself.

(Reproduced with permission from Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. Trustees of the University of Pennsylvania. All rights reserved. Shanghai Daily condensed the article.)