Interview With Nobel Laureate MUHAMMAD YUNUS On Rural Micro-credit

February 1, 2007

Compete with Bangladesh in disbursing micro-credit: Yunus http://www.financialexpress.com/fe_full_story.php?content_id=153214 ASHOK B SHARMA Posted online: Wednesday, January 31, 2007 at 0000 hours IST NEW DELHI, JAN 30: Nobel Laureate Muhammad Yunus has suggested disbursement of micro-credit would help if institutions do it more as a “social business”, rather than with an intention of maximising profits. He said Grameen Bank model in Bangladesh proved to be a success and could work well in other parts of the globe as well. “We have achieved the target of lifting 100 million people out of poverty in 1997-2005. Out of this, 85 million are from Asia. About 34 million poor in India and 16 million in

Bangladesh have come out of poverty with the assistance of micro-credit,” Yunus told FE. He said in Bangladesh 80% of the poor household were covered by micro-credit and the remaining 20% would be covered by 2010. He urged India to compete with Bangladesh in disbursing micro-credit. “India, with a larger population size, needs to give micro-credit assistance to at least 160 million poor to come up to the level of 80% coverage,” said Yunus. According to Yunus, mere disbursement of credit by micro-finance institutions would not solve the problem, and such institutions should be motivated for social business. “Social business enterprises are those where investments are made for public good. The enterprises should not be loss-making ones. The profits should be ploughed back only to the enterprise and not to the investor. After the organisation becomes self-sustaining, the investor can only get back his invested

amount,” he explained. Yunus stressed the world must wake up to the concept of social business. “There must be a separate law for regulating social business. There should be separate management course for social business, a stock market exclusively for social business firms and a social business fund,” he said. He, however, is not in favour of interest-free loan concept of Islamic banking system, though the Grameen Bank had tried the concept with success in assisting beggars. He said the enterprise had to exist by mobilising deposits, paying interests to depositors and earn interest on loans. Grameen Bank, in collaboration with French company Danone, launched a social business enterprise, Grameen Danone Foods, for production of nutritionally fortified yoghurt for the poor. It may be noted that Grameen Bank and Telenor had jointly floated Grameen Phone for providing mobile phone

sets and services to the rural poor. It has covered 63% of the country's growing mobile phone market. But recently dispute has risen with Telenor attempting to violate the norms of social business. Grameen Bank project was conceived in 1976 in Jobra village in Bangladesh and in 1983 it was transformed into a formal banking system under a special law of the government. Grameen Bank has 23,000 branches in Bangladesh, owned and operated by depositors. The bank has 7 million borrowers, 97% of which are women.--------- Yunus seeks common passport for South Asia http://www.financialexpress/fe_full_story.php?content_id=153299 ASHOK B SHARMA Posted online: Thursday, February

01, 2007 at 0000 hours IST NEW DELHI, JAN 31: With a view strengthen cooperation in the South Asian region, Nobel Laureate Muhammad Yunus has urged Prime Minister Manmohan Singh to initiate the proposal of a common passport for the people of the region. Speaking to FE Yunus said : ‘‘Fighting poverty in South Asia is biggest challenge. This region has great potential to emerge as the world’s strongest economy, particularly in human resources. If the there is a common passport for the region, it would help greatly in fostering people to people cooperation.’’ Yunus also suggested to the PM to initiate reforms in the South Asian Association for Regional Cooperation (SAARC). He criticized the bureaucratic structure of SAARC and said that in every of this South Asian body, the civil society organizations should be called upon to participate. He also suggested that

the countries in the region should make enactments to recognize the existence of social business. “Social business is that where an investor invests money for public good, without expecting monetary dividend. The investor would, however, be allowed to take back his invested capital after successful operation of the enterprise,” he said and added that such development-oriented enterprises like micro-credit institutions should be ultimately owned by the local people. He suggested separate stock market for trading of share of social business enterprises, separate course for social business management and a Social Business Fund.

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