Creating a world without poverty

The book -  Creating a world without poverty by Muhammad Yunus is part historical anecdote and part suggestions to the actual theme. So, if you are expecting a complete treatise on how social business can provide a viable alternative to capitalism, you might not be very pleased.

The book is divided into three major parts

  1. The promise of social business
  2. The Grameen experiment
  3. A world without poverty

Each of the parts have multiple chapters delving more on the major section. The second part – The Grameen Experiment talks in detail about the genesis of Grameen bank and the growth of the Grameen group. It also details the growth of their first major social business – Grameen-Danone. If you are looking for specifics of the growth of Grameen-Danone, then this section is very interesting. Dr.Yunus goes on to describe the struggles the group went through to get the venture starting. And they are no different from anything an entrepreneur in the profit making business (PMBs) world would face.

Before that though, the first part is where Dr.Yunus differentiates the for-profit model of businesses, which he calls profit making business and the for-social-profit model of businesses which he calls social businesses. In his own words

..we need a new type of business that pursues goals other than making personal profit – a business that is totally dedicated to solving social and environmental problems.

….A social business is not a charity. It has to recover its full costs while achieving its social objective. .. And this makes all the difference in defining social business and its impact on society.

The foundation for social businesses is that humans are multi-dimensional and profit making is not the only drive for people. This is the most appealing part for me in the idea of social business. And the social business is not something that lives off hand-outs. It creates value for its customers by not only creating products and services but also by benefiting the society at large. Dr.Yunus then goes on to elaborate on the various facets of social businesses and how they differentiate themselves in their mission. The chapter 2 in Part I majorly deals with what defines a social business.

Like I mentioned, part II is dealt with the Grameen experiment and concentrates on Grameen alone. Of course, while reading about the Grameen story, one also picks up various titbits of interesting information. For example, Dr.Yunus talks about the story of trying to design a production plant for Grameen-Danone yogurt. It is about how Guy Gavelle, director of industrial operations, APAC tried to design a very small plant for the production of yogurt, instead of the usually large production plants that Danone created.

Part III of the book expands on the idea of social business. How the social business market place would look, how one could create a stock market where social business could be invested in. How the profit sharing mechanism of social business could be. He also talks about how IT can help in to further the cause of social businesses.

So, should you read this book ? If you are someone interested in social businesses and want to know how one can create a business whose primary motive is not profit, then yes, there are few refreshing ideas in the book. If you are a die-hard capitalist who sincerely believes that a free market is impartial and helps in making society better, you might learn a thing or two about how social business can operate. I would rate the book a 6 out of 10. There are some part of the book, specifically the ones related to Grameen which I thought didn’t belong in the book. What I would have loved to see in the book is more description of the pitfalls of social business or how the social marketplace can compete with profit making businesses. All said and done, there might not be a level playing field between social businesses and profit making businesses in terms of operational costs and hence the cost of the final product. Social businesses though have the ability to appeal to a different sense of people – but can that sense overtake the more pressing economic impact ? How can one work out a strategy where a social business could derive maximum value (both in terms of profit and social impact) from every unit of money invested. These were some topics I thought would have been more relevant to the book and could add more interest in the idea of social businesses.

Even if you don’t read the book, I suggest that you read the 2006 Nobel Peace Prize lecturePoverty is a threat to peace. It is so fitting that a man and the organization which provided credit to poor people were awarded the Nobel Peace prize. May be in that is where the value of social business is ! 

Micro loans for education

Rangde education is different from the traditional micro-credit option that Rangde offers. The difference – there isn’t any ROI for the investment. It is not to say that the principal amount is not returned, but that is the only amount that is returned. Unlike the income-generating micro-credit, for which the investor gets a return of 2% (3.5% APR), when the investor invests for micro-loan for education there is no ROI.

I am ok with the no ROI option for the micro-loan for education as the money is used for something that is important at the time it is most needed – when children go to school. It is sort of a scholarship program, but wherein the money is borrowed not given as a scholarship. So, if you are interested in making a difference at the right time, please invest in the children who could do with your help in their education. The Rangde site and Roshan Vikas have more details about how to go about investing.

As an aside, I made a gift purchase and gifted it to someone I know. Let’s see where they decide to invest the money in – whether a return generating micro-credit or more timely micro-loan for needy children.