A history of microfinance | Muhammad Yunus | TEDxVienna

All I can say that whatever I did,

probably if I can look back

I can say I was trying to do very little

thing.

And I was not trying to persuade anybody

to do anything. Just what I thought I

can do.

I tried to do that.

Uh

and it started with a little amount of

money.

So little that um

you can laugh at it looking back.

As a total loan of $27

to 42 people.

So it's not even a dollar a piece.

So that's what

excited me and wanted to do more of it.

Uh

trying to persuade the banks to do it.

They wouldn't do it. So I offered myself

as a guarantor. I said, "Okay, I'll sign

all your papers

and take all the risk and you give the

money."

They were stuck with their rules and

procedures. So I was trying to kind of

get over those things. And that was the

beginning. Luckily, it worked

and continued to grow lending money to

poor women tiny little money.

Everybody said it's going to collapse

very soon. I said, "Until it collapses,

I'll keep on doing it. So why should I

stop it just because someday it's going

to collapse, which I don't know whether

it will?"

Uh that's it and then we created a bank

out of it, called it Grameen Bank or

Village Bank.

And people ask me,

"How did you figure this out?

All these rules and procedures that you

put into it so that it can work even in

very adverse circumstances, still it

works."

I said, "Oh, I don't do very hard work.

I'm easy going man.

Uh I just look at the conventional

banks, how they do it.

And once I learn how they do it, each

piece,

and I just do the opposite.

And it works.

They go to the rich people. So I decided

to go to the poor people.

They go to men.

So I decided to go to women.

They go to the city center to business.

I wanted to go to the village, remote

village.

They want collateral. I said, "Forget

about collateral. Who wants collateral?

If you want collateral, you never get to

the poor people. So dismiss collateral."

They have big lawyers in their bank. We

said, "We don't need lawyers." So we are

the only lawyer-free bank in the whole

world, probably. It works. We don't need

them.

And lawyers and the banks, conventional

banks, want to know

your all antecedents, what you have been

doing, whether you know everything, what

kind of business you have been running,

everything, your past.

Uh as much details as they can get.

So we said, "Forget about it.

We are not interested in the past of our

borrowers.

We're interested in the future of our

borrowers.

So if you're looking for the poor

people, I'm sure there's something they

have done which not may not be very

pleasant. Why do you

dig into it?

So because he or she is not responsible

for his society is responsible for what

he or she has been doing.

So why don't you just give it a break

and start fresh?

Uh

see what he or she wants.

And this is how we wanted to do.

Conventional banks

concentrated

uh on owning

uh all conventional banks are owned by

the

rich people. So we reversed that too.

We made this bank owned by the poor

people.

And not only conventional banks are

owned by rich people, mostly it's owned

by rich men.

So we reversed that. We not only make it

owned by the poor people, we made it

owned by poor women. So this is a bank

which is owned by the borrowers

themselves. Right now we have 8.3

million borrowers.

97% of them are women.

And they own the bank. They run the

bank. They are the board. They decide

the rules and procedures and so on and

so forth.

So this is one way to describe how the

operationally and structurally the whole

bank is done. And then you can

understand where we come from. It's not

just tiny size of loan makes it Grameen

Bank.

It's a kind of making everything other

way.

In one

meeting in the early years, 10th year or

11th year, of bankers,

the one banker was saying, "Professor,

you you're not going to get it get away

with this. You made the whole banking

system upside down."

I said, "Yes, I that's what exactly I

did because banking system was standing

on its head. So I'm trying to put it on

its feet."

AND THEY CHALLENGED ME ON ANY

ACCOUNT. They said, "You should change

the name of your bank.

Make the name Grameen Women's Bank."

Several bankers suggested that I should

change the name of the bank because

explanation was that at that time we had

only 64% women.

The rest of us men in the early years.

So when I was replying to this question,

I said, "Yes, I'm very happy to change

the name of the bank.

I'll make the bank Grameen Women's Bank.

But but before I do that, you would like

you'd have to do something.

Change the name of your bank.

Because 99% of your borrowers are men.

So you should say X Men's Bank, Y Men's

Bank, Z Men's Bank. After you have done

this, then I will come and do mine.

Grameen Women's Bank. So it's very easy.

When you do it with women, everybody

says it's wrong. You shouldn't If you do

it with men, that's perfect. There's no

problem with that. So this is

continuously we have been facing.

And another issue comes up in our work

because I've been insisting that all

human beings are entrepreneurs.

It burns up many people. "Oh, why does

he say that? There are only few people

who are entrepreneurs. Rest of us, we

are not entrepreneurs. We have to work

under the entrepreneurs." I said, "No,

all human beings are entrepreneurs.

That's how we survived on this planet.

Otherwise, we would be in the

caves still living the kind of life we

lived there. Because we all worked

together to change our life. That's how

we came here and still function here."

They didn't take it very seriously. Then

they said, "Yes, you can lend money to

the poor people, but you should be

looking for entrepreneurial poor."

I said, "Not in my case because

everybody's entrepreneur. So I go ahead

with that." Even she tells me again and

again, "No, sorry. Please don't give me

money. I don't know what to do with my

your money. I never used money in my

life. I can't use your money."

We don't give up. We keep on changing.

We keep on explaining to her, "No, you

can do that." So that

confidence builds up in her. Just

because she doesn't have confidence

doesn't mean that she doesn't have she

doesn't have entrepreneurial ability.

It's a question of building confidence

in her. So we tried to build the

confidence because society has

totally demolished her confidence in

herself. That's what the poor people

are. You're saying you're wrong, you're

no good, you're good for nothing. And

generation after generation they they

have heard it. They have That's what

they believe in. So we wanted to change

that, build confidence in them.

So in order to demonstrate that even the

poorest person can be an entrepreneur,

one idea came to me is, "Why don't they

do something

so that I can demonstrate this?"

This idea was to lend

to beggars.

You cannot be poorer than beggars.

That's the last stage of human survival.

You have no other source. You go and beg

for your daily food.

Go to houses, your neighbors,

find something to eat or get some money

to eat. And that's how you survive. You

not only do it once or twice, that

becomes your livelihood for the rest of

your life.

I said, "Let's try that."

So we started talking to the beggars.

We started talking that as you go from

house to house begging,

"Would you like to carry some

merchandise with you?

Some cookies, some candies,

some toys for the kids?"

And we make it sound easy for them

by saying, "You are going there anyway.

This is not extra work for you.

So and you are giving people more

options.

So that if they don't give want to give

anything free, you may try to sell

something.

So they may like to buy something.

Or they may like to do both. Give you

some food free and also buy something

from you. So you have two businesses

going instead of one business."

People like that. Beggars like that.

They said, "Where do we get the money?"

I said, "We'll give you the money."

So we started giving them the loan.

Our idea was if they succeeded in

getting the loan and paying us back

by the business they would do,

that would show that yes, even a beggar

can be an entrepreneur on his own on her

own.

We thought there'll be 1,000 or 2,000

beggars in that program.

It became such a popular program.

We ended up with more than 100,000

beggars in that program.

And we have been watching them, what is

there? What are they doing? It's become

very popular. What they do, as we

explained.

And now, in the last 5 years, this is

about the time that we are doing it. In

last 5 years, out of this 100,000

beggars, more than 22,000 beggars have

stopped begging completely.

Because they became successful

door-to-door salespersons.

And not only they became door-to-door

salespersons,

some of them became

your personal shoppers.

You come, and the housewife says, "When

you come tomorrow, you bring me this."

She brings you this, because she cannot

go to the market all the time. But this

this lady is going around doing things,

so she brings you whatever you needed

little things. But you have a good

business going. People ask us to buy

them, and she she feels comfortable, and

the whole family feels comfortable with

it.

My colleagues who are getting so

enthusiastic about this program, because

they have see that even a beggar can

change her life by selling something,

doing something.

They keep saying, "Why don't the other

beggars get out of begging?

Why are they taking so much time?"

I try to I try to advise them to be

patient. I said, "Please be patient. It

takes time. After all, begging is their

core business.

You don't shut down your core business

just like that."

You have to totally confident how the

new business, your sales division, is

working.

So

So once they figure out what the sales

division is doing well, then they may

say, "Well, this division, core core

business, we can now shift." So it takes

a lot of courage to come to that stage

that you close down completely. So this

is gradually they will come.

When you talk to them, they tell you

something very interesting.

They say they know which house is good

for buying uh selling,

which house is good for

begging.

So they

go accordingly. So by by this time they

have experience

uh between who are the one who are doing

both.

So I tell my colleagues not only they do

the business, we have not trained them

anything.

They they already know how to uh do the

market segmentation.

Which one?

Hey.

And their loan size is such a small

amount. They start with something like

$12.

Uh $15. That's about the size.

And paying back that loan, they are

enthusiastic to take the second loan,

and the third loan. Each one becomes

bigger and bigger and bigger.

So you look at this phenomenon, and you

ask yourself,

what creates poverty?

What created this situation that human

being has to be brought into this kind

of

situation where they have to beg for

existence?

Is this the fault of the person?

Repeatedly I come to the same

conclusion.

There is nothing wrong with the people.

Poverty is not created by the poor

people.

Poverty is created by the system that we

have built.

The concepts that we have created.

That's what created poverty.

Nothing absolutely nothing wrong in

human beings. It is poverty is

externally imposed phenomenon.

It is not internally developed

phenomenon.

So if it is externally

imposed phenomenon,

we can if we remove that external

imposition,

people will come up as

human being as anybody else.

And that's how the question of the

bonsai came. I started describing poor

people as bonsai people. There's nothing

wrong with their seed. Their Their seed

as good as anybody else's seed. Simply

society never gave them the space

to grow.

So they are just like the

tree

tree on a flower pot.

So thinking, "What's going wrong with

the concept?"

I

I started looking at what is happening

in the world.

I said, "In the meantime, in order to

solve problems,

I started creating businesses."

It almost became instinctive in me.

Whenever I see a problem,

I go right ahead and design a business.

I start a business to solve that

problem. I didn't notice it before, but

when you have done it once, when you've

done it twice, and you have done it 100

times, then you realize it that you have

an instinctive feature that you design a

business to solve a problem.

You look back, you created so many

so many such companies. We have problem

of electricity, so we created a solar

energy company.

Everybody said, "Oh, solar business is

not going to work in Bangladesh."

I said, "Who knows? It may work. Let me

give it a try. Nothing wrong. If I fail,

it's okay. But I have to try."

So I tried to bring solar home system.

It is expensive for the rural people. We

made it easy for them to pay back.

It was extremely difficult even to sell

five solar home system

per month.

It was such a struggle.

Now we came to a stage after 15 years,

we sell more than 1,000 solar home

system per day.

And it's growing,

improving.

And it's uh done in a business way. So

we did the solar energy in a business

way, and it's expanding. People love it,

because they need electricity, because

kerosene lamp is no good for them. So

this is what we did.

Then I realized maybe this is a category

of business which is missing in the

in the whole conceptual framework.

Because conceptual framework gives you

one type of business, business to make

money.

I said, "That's a wrong interpretation

of human beings.

Human beings are not just money-making

machines.

Human beings are not robots.

Human beings are much bigger than just

one-dimensional

being.

They are multi-dimensional beings. What

happened to other dimensions?

So that's when the question of selfish

aspect of human being, selfless aspect

of human being

came into discussion. I said, "Why don't

we create business on the basis of the

selflessness?

Where I don't want to make money for

myself by decision. Nobody has imposed

it, because I'm so excited to create a

business to solve a problem. It is such

an ex-

ex- such an exciting experience to

be able to solve a problem."

Then I said, "That maybe is the one

which you should should be doing. It's a

non-loss, non-dividend company to solve

the

social problem." So we started creating

more and more of these companies. Then

we had one

connection with the Danone of France.

We talked to Franck Riboud. He was

trying to understand what Grameen Bank

is. I started asking him what uh Danone

is.

Then he said

uh he explained to me what Danone is.

Suddenly,

I didn't think about it before, because

I I I didn't go with a plan for him.

Just stopped on the way to talk to him.

I said, "What Why don't you have a uh

company in Bangladesh? We can do it

jointly."

Whatever he thought, he just stood up,

shook hands with me. He said, "Yes,

let's do that."

I said, "But I have not finished yet."

I said, "It will be a social business."

He said, "What is a social business?"

Then I gave my spiel. This is the social

business. You'll never get any money out

of it. You can take your money back to

what you invested, but nothing more than

that.

He stood up again, shook hands. He said,

"I

I agree."

Then I thought he didn't understand my

Bangladeshi English.

And probably I didn't understand his

French English.

So on the way out, I sent him a very

detailed email.

And he immediately sent back, "I

understood everything you said. I stand

by what I committed. Let's go ahead and

do it."

And this is 2005.

That company was created in 2007, and

continued to function. Now we produce

yogurt

fortified with micronutrients

for the children who are malnourished in

Bangladesh.

And that yogurt

does wonderful thing to the children.

Because half the children of Bangladesh

are malnourished. So this produced a

yogurt which has all these

micronutrients, and once these children

eat this,

they regain their health. Because the

You see, if you are malnourished, your

physical growth becomes very stunted.

Similarly, your mental growth becomes

stunted. So it's a very strange

situation for a nation to have a half

the children malnourished. So we

thought, at least in our way we can see

if we can do that. Now it works.

Since it works as a social business, so

we can go and replicate as many uh uh uh

uh factories as possible. We have just

the first factory, which is fully uh

in full production. So we are starting

the second factory, and we calculate

we'll have 50 such

factories around the country, so that

every child has access to this yogurt.

It's a delicious yogurt. Children love

it. So that's an example of social

business. So we created many such social

business with international

collaborations. Not because we wanted

it, but international multinational

companies wanted it. So we have

collaboration with Veolia to produce

water.

Well, our water has a serious problem,

arsenic and pollution. So we are

creating We have created a small company

to bring clean water in the village in a

very affordable way.

We created a company to produce shoes

with Adidas. We challenged them

that if they should take a position that

nobody in the world should go without

shoes.

And as a shoe company, it is their

responsibility to produce shoes

affordable to the poorest people.

They asked me

how much the price should be to make it

affordable.

I said maybe under 1 euro.

They were shocked. That Adidas shoes

have to be sold under 1 euro.

So, I said, "Well, it's a If you want to

do it,

that's the price range you can go."

They took the challenge after long

debate and discussion within the

company. They did that. Now, after 2

years of research and test marketing,

next month we'll have the full

mass marketing will begin actually next

month. So, this is another example of

social business because

bear wearing Adidas shoes or Reebok

shoes doesn't mean you are going for

fashion.

This is an essential thing. If you go

barefoot, particularly in country in

tropical countries like Bangladesh, you

contact lots of diseases, particularly

parasitic diseases. And many, many

people are affected, particularly women

and children are affected by this

because they are always in the area

where it is very easy to contact uh

parasitic diseases. So, you protect them

from the parasitic diseases. We have

created Grameen BSF to bring mosquito

nets so that you are not attacked by the

malaria. And all these companies are

done for the sake of protecting yourself

from diseases or escape from

malnutrition and so on and so forth.

Companies don't want to make money out

of it.

They want to

make sure the impact of these companies

are on the people. You measure the

impact.

So, in a money-making companies, at the

end of the year, you ask your CEO, "How

much money we made this year?"

The more money you make, more excited

you get.

In a social business, you you ask your

CEO, "How much impact we have made this

year?"

You're not asking how much money we made

because you're not making money for

yourself. If money is made, it stays

with the company. But, the whole company

is dedicated to create the impact. And

that's how measurement of impact becomes

very important.

So, that way, if you open it up, this

idea can create a new kind of phenomenon

if you I believe that every human being

has that selflessness, but our theory,

our concept doesn't allow that to come

out. So, I'm creating a window. I'm

creating a door so that it come out. If

it comes out, then all the problems we

have created over years and years of our

way of single minded pursuit of

money uh

maybe addressed by uh creating all these

uh social businesses to address that.

Technology is our at our command.

We have enormous technology. But, this

technology is at the control of the

businesses. What do they use of it? Make

use of it? Make money.

I said, "If we can now

create a door or create a road to use

this technology to solve problems,

all these problems will be resolved.

Human creativity and human capacity is

limitless.

In the presence of this limitless human

capacity and human creativity, all the

problems of of the world cannot just

stand for

few seconds. It would has to disappear.

And this is the age where we all have

this capacity of technology. All the

question is, do we have the methodology

of using this capacity to address this

problems? If we do, we can do it through

social business. You may have better

idea of doing it, but whole question is

creativity of human being has to be

channeled to address the problems that

we have made we made for ourselves. If

we do that, we can create a whole new

world. We can create a whole new

civilization. And that's what we should

be looking for. Thank you very much.