Muhammad Yunus Designs an Ideal Regulatory Body | Big Think

Muhammad Yunus Designs an Ideal Regulatory Body

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Muhammad Yunus warns against the negative forces of globalization.

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Muhammad Yunus:

In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.Realizing that there must be something terribly wrong with the economics he was teaching, Yunus took matters into his own hands, and from his own pocket lent the equivalent of $27 to 42 basket-weavers. He found that it was possible with this tiny amount not only to help them survive, but also to create the spark of personal initiative and enterprise necessary to pull themselves out of poverty.Against the advice of banks and government, Yunus carried on giving out 'micro-loans', and in 1983 formed the Grameen Bank, meaning 'village bank' founded on principles of trust and solidarity. In Bangladesh today, Grameen has 1,084 branches, with 12,500 staff serving 2.1 million borrowers in 37,000 villages. On any working day Grameen collects an average of $1.5 million in weekly installments. Of the borrowers, 94% are women and over 98% of the loans are paid back, a recovery rate higher than any other banking system. Grameen methods are applied in projects in 58 countries, including the US, Canada, France, The Netherlands and Norway.In 2006, Yunus and the bank were jointly awarded the Nobel Peace Prize, "for their efforts to create economic and social development from below.

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TRANSCRIPT:

Muhammad Yunus: Regulatory body will be important because you are creating a new institution, new framework. For all types of regulatory body, one of the fundamental things you do – the right institution versus the wrong institutions. You claim to be a social business, but the way you designed it is not really a social business. So somebody, a regulatory body, will give you certification that yes you are properly done, and then continue to monitor you. That way you do it in the right way or the wrong way. Like in regulatory body for anybody who sells food items – whether they are selling the right food. Is it healthier? Is it contaminated? That’s a regulatory body’s job. And if you are running a restaurant, if you’re running a hotel, there’s a regulatory body who comes and checks you and certifies that you are performing all the functions properly. Similarly if you are running a social business, somebody will have to certify you. Yes you are running on the right track. Your calculations are right. Your estimates, your accounting is right. So that you know people are . . . Your business is transparent. After all people are investing in your thing. So there will be ____________. There will be auditing firm. There will be regulating authority. There will be business standards, international standards, and so on and so forth. So these are the things which will have to emerge as you go into business like this. There will be local regulatory body. There will be international regulatory body, because there are lots of social businesses which will be multinational social business. Now we are . . . The moment we talk about globalization, everybody talks about the fear of multinationals coming and taking over our business and destroying our economy, destroying our livelihood. Yes, because they are powerful. Nobody is there to combat them. Nobody is there to kind of stand in front of them. “Look, you can do no such thing.” So they go wherever they want. And their governments and everybody is supportive of them because they bring so much money for them. So if you accept the social business concept, gradually you will have multinational social business who will be standing next to the profit maximizing, harmful social businesses. “Look you can’t do that.” We will take it over, and then they go and start the business on their own, try and protect the interest of poor business, poor . . .

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