Nobel Peace Prize laureate and father of microfinance, Muhammad Yunus, talks to RESET about social business, radical system change, and how the spirit of entrepreneurship that lies within all of us should be harnessed to tackle the planet’s most pressing challenges.
Muhammad Yunus is known throughout the world, and has been recognised with a Nobel Peace Prize, for his pioneering work tackling poverty in his homeland of Bangladesh and beyond. His microcredit movement, offering small sums of start capital to people who are excluded from the traditional banking system, has been opening up financial services and entrepreneurial opportunities to underserved people across the globe for over 40 years, encouraging social and economic development from below.
Recently he’s also been actively championing the concept of “social business”, firm in the belief that the world needs more companies that set out to solve social and environmental problems, focused on maximizing impact, not profits. The idea has attracted significant attention in recent years, with the field of social entrepreneurship and ecopreneurship growing steadily, as more and more founders prioritise purpose alongside a sustainable business model.
Professor Yunus was in Berlin as part of the 2019 Global Social Business Summit, a series of events that brings together academia, youth and social business activists to discuss the role of social and economic innovation in setting a path towards a better world. He came into the RESET office at the Holzmarkt to tell us more about the event, his dream of a world of “three zeros” and the key to achieving it before it’s too late.
Welcome to Berlin! What do you aim to achieve while you’re here?
We have a very simple idea: we’d like to create a whole new civilization. Our current civilization is not going to work, it’s headed towards disaster, and the deadline is not too far from here. Just 30-40 years from now it will all be over. So, before that happens, we thought we should make a new path and move in a new direction. If we continue along the old path, we’ll continue repeating what we’ve been doing in a much worse way. The same road will always take us to the same destination. If you want to go somewhere else, you need to build new roads. We don’t know what they’ll look like, but we have to try. That’s what we’re in the process of doing here in Berlin
We define that new civilization by saying it will be “a world of three zeros”: zero poverty, zero unemployment and zero net carbon emissions. Establish those three things, and the rest will come. It will be a world where wealth will not be accumulated in a few hands. It will be a civilization of sharing, of caring and of human values.
And what are the key challenges to establishing that sharing, caring civilization?
One is wealth concentration. All of the wealth goes in one direction, into the hands of a few people. If today 100 people have most of the wealth, tomorrow it will be 50 people, then 30, then 20. It’s a ticking time-bomb. It’s about to explode. People won’t tolerate it. There are already a few signs of that: Brexit, the yellow vests, the demonstrations in Chile… They’re all about the same issue.
Another thing is the environment. 20 years from now, only if we have managed to keep global warming to around 1.5 or 2 celsius, will we survive. If we can’t do that, we won’t make it. It’s over. There’s not much scope and there’s not much time.
Another thing is artificial intelligence, which is set to take over people’s jobs. It has no boss. It becomes smarter by itself, and is set to develop much faster than the human brain. Technology can be a blessing or a curse and we have to learn to draw a line. We should follow the model of medicine. You can’t just develop any medicine you want. There’s government control, public control, to see if it’s good or whether there are side effects. After 10-20 years they let you sell that medicine. But we’re not doing that for AI. There’s no testing or control.
So you said that the tipping point is coming and that our civilization isn’t sustainable, but right now, we do still have time. Where do you see the potentials? Where can and should we start making changes?
Oh, I didn’t put it that nicely – I said “disaster”! And we don’t have that much time. Greed is the central force and that’s what we need to address. How can we create business that is not based on greed? That’s what we do, and we call it “social business”. It’s not based not on greed, but human need. Social businesses are “problem-solving businesses”, made without any intention of anybody making any personal profit. When the company makes profits, those profits are ploughed back into the business – to address the problems of poverty, unemployment, education, healthcare, environment. Today, that’s not what is done. Today people usually still do business to make money, regardless of the consequences.
Nowadays, social enterprises and green startups are often reliant on funding from large-scale investors to develop their ideas. This is a very different kind of financing to the one you yourself developed in Bangladesh: microfinancing, small loans, for small-scale entrepreneurs. How do you see those two different types of “financing for good” developing in the future?
They’re two different worlds. With microfinancing we’re talking about small amounts, anywhere between 10 and 500 dollars. Financial services are like economic oxygen to people. If you don’t have that oxygen, you cannot work and cannot function. As soon as you connect people to financial services, they become active and alive and can create their own businesses. It’s a continuous process, taking money and paying it back step by step. Almost half the population of the entire world is not connected with that financial oxygen. That’s who we wanted to reach, people who are excluded.
Even today, after 40 plus years, microfinancing and microcredits are a well-known, well-respected concept. But still the financial sector is immune from it. It’s remained a footnote in the financial world. Why is it not mainstream? Is it because it doesn’t work? Everyone says it works. Is it because it has potential problems? We’ve been running it for 40 years and didn’t see any. It’s simple reluctance, or the machine that we call the financial sector is not capable of doing that. So, if it’s incapable, let’s build another financial sector, one for the poor. This one now is designed the wrong way. It’s for the rich. So design one for the poor people.
I’m not interested in conventional venture capital investments that are only done to make money, but we have created a Social Business venture capital fund. We go to young people, unemployed people, and tell them, “Forget about jobs.” People are not born to work for anybody else. Human beings are independent beings. They’re entrepreneurs. When they were in the caves, they were not sending job applications. They became hunters, gatherers, problem-solvers. How did we forget that? Entrepreneurship is in our blood, it’s in our DNA. But our system is designed to help you learn how to get a job, not to help you become an entrepreneur. We forgot our natural tendency and assumed an artificial responsibility to take a job and to serve people. And as we serve people, because we’re not competing with them, we’re only helping them to become rich.
So we say, “Each one of you can become an entrepreneur. Bring the fund a business idea and we’ll invest in it. We’ll become partners. If you’re successful, return the money we gave you. We’re a social business, we’re not interested in your profit. Your profit stays with you and can be spread out among many other people. Give me back the money that I gave you and I’ll give it to somebody else.”
So, what happens next? What is the key to achieving real system change, to create the “new civilization” that you mentioned?
Young people. Like Greta. She’s saying that we’re destroying nature and stealing her future. All young people should be feeling like that. If they take on the responsibility, they can create that new world. We can build those roads together. Maybe they will discover social business, entrepreneurship. Instead of taking a job they will say, “No. I’m an entrepreneur. Why should I work for you? I can be much bigger and much better than what you offer me. I control my life, not you.” If young people rebel! That’s the only chance we’ve got.