Review of Building Social Business by Mohammad Yunus

Abstract

Nobel Laureate Mohammad Yunus, professor emeritus of Economics at Dhaka University in Bangladesh is the founder and managing director of Grameen Bank. Before this, he was the chairman of the economic department at Chittagong University. The dire poverty situation in Bangladesh coupled with the 1974 famine compelled him to become a social activist (Yunus & Weber, 2010). Due to frustration with local banks that refused to give loans to the poor, he decided to boldly act as a “guarantor” for several poor people so that banks would give them loans. Despite this, there still existed a lot of red tape in the banking sector that slowed down his noble intentions. To overcome them, rather than turn his bank on the poor, he decided to give up his academic work and started a bank. “Grameen Bank” which means “village bank” was founded in 1976 and through its various businesses aimed at poverty alleviation became the first micro finance bank. To simplify the repayment process his “clients” would receive loans using no collateral and pay back interest free in weekly increments in line with set rules. The bank taught the borrowers how to effectively manage and use their loans so as to create small successful businesses (Yunus, 1940). In its initial stages, it loaned money to both men and women but soon realized that due to cultural practices, children of borrowers benefited much more when the borrower was the mother and not father. This is due to the fact that, whereas men would in most cases spend the borrowed money on themselves, the women on the other hand would spend this money on children for food and education. Empowerment of the “Grameen ladies” has had a positive impact on their social status within their families and communities (Yunus, 2010).