Microfinance · Social Business

Grameen update

On Tuesday, I participated in a dinner event sponsored by the Seattle International Foundation featuring Nobel Laureate Muhammad Yunus, founder of Grameen Bank and author of Banker to the Poor.

Professor Yunus shared a number of updates and answered questions. Here are some of my notes…

On Grameen Bank in Bangladesh:

  • Now serving 7.5 million clients (avg. family size of 5 => 35M+ people)
  • 27,000 staff
  • Now 80% of poor in Bangladesh are offered microfinance (all MFIs) and targeting 100% coverage by 2012
    • Most poor countries have 5-10% with the best being 15% coverage of microfinance for poor, so lots of work still to do
  • Bank is owned by borrowers
  • All capital loaned out comes from savings of the poor (and bank staff)
  • Each branch must drive their own savings for capital to loan out … require that each branch become profitable and capital self-sustaining within 1 year
  • Microfinance is very empowering for women … often first time in their lives that they have anything of their own. Borrowers (women only) decide who will inherit their savings if they die. Interestingly, most women choose their youngest daughter as she has the least opportunity.

On other Grameen-spawned businesses:

  • Grameen Phone is largest mobile operator in Bangladesh with 16M subscribers
  • Grameen Energy is focused on bringing solar energy solutions to the poor … reached 100,000 households so far and now aiming for 1M. Cost of solar panels continues to slow down growth of this business. There is great hope that some technology breakthroughs will substantially lower the cost and enable them to accelerate deployment.

On social businesses:

  • Yunus continues to be a strong proponent for social businesses … that is, businesses which exist as commercial entities AND have a mission to have a strong positive social impact
  • I think he is right and this is a great new opportunity for entrepreneurs

On microfinance in China:

  • China has very little supply for microfinance and, next to India, has the largest unmet demand for microfinance
  • Yunus recently met with senior people in China’s central bank on their request to hear about his ideas on microfinance
  • Central bankers were initially quite defensive … holding up their cooperative model as being quite effective in channeling financial services to the poor
  • Yunus said that that was quite interesting and that China must be doing something quite differently as in Bangladesh there was also a long-term cooperative system which was widely promoted by the government, but is completely ineffective due to corruption, bureaucracy and lack of relevance.
  • This caught the central banker leader off guard and she surprisingly agreed with his assessment and said that they would no longer rely on cooperative model as the cornerstone of China’s financial services provision for the poor.

Additionally, Grameen America was formally announced. See my earlier posting.

2 thoughts on “Grameen update

  1. The Social Business concept is interesting, though many public and private commercial businesses say they want to make a positive social impact.Did he give any vision or practical guidance as to what these really look like or how they work best in practice?

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