Dr. Muhammad YUNUS

Dr. Yunus was born in Chittagong, Bangladesh, in 1940. He received his Ph.D in economics from Vanderbilt University, in the United States, in 1970, and returned to Bangladesh in 1972 to become head of the Department of Economics at Chittagong University.

After witnessing the poor suffering from the Bangladesh famine of 1974, Dr. Yunus started working on activities to eradicate poverty. In 1983, he established Grameen Bank, which provides unsecured microloans (microcredit) to the poor. Under his core philosophy that "a credit system for the poor requires neither mortgages nor collateral", Grameen Bank supported the independence of the poor in rural areas and provided small loans to the self-employed, particularly poor women, making a significant contribution to alleviate poverty in Bangladesh.

In recognition of his achievements, Dr. Yunus received the Nobel Peace Prize (Norway) in 2006 (with Grameen Bank). In addition, he has received more than 100 awards from around the world, including the Grand Prize of the Fukuoka Asian Culture Prize 2001 (12th) (Japan), the Ramon Magsaysay Award (Philippines) known as the "Nobel Prize of Asia", the Presidential Medal of Freedom (U.S.A.), the U.S. Congressional Gold Medal (U.S.A.), the World Food Prize (U.S.A.), and the Nikkei Asia Prize (Japan); and more than 40 honorable titles, including honorary doctorates, from universities around the world.

Dr. Yunus aims to eradicate poverty using business methods. To this end, he runs more than 50 Grameen Family companies to solve various social issues in areas such as education, medical care, energy, and information communication. He develops and promotes social businesses in Bangladesh by stimulating local industries, spreading communications technologies, and using renewable energy. He also engages in social business on a daily basis in partnership with the United Nations, multinational corporations, and universities around the world.

A small-loan program, known today as “microcredit,” was developed by Dr. Yunus through the establishment of Grameen Bank and has spread around the world. Microcredit loans are granted to impoverished people in more than 130 countries, including not only developing countries but Europe, the United States, and other advanced nations as well. In New York City, Grameen America has launched microcredit programs to provide financial services for local women aiming to start a business or expand their existing business (most are single mothers struggling to lead an independent life with dignity).

Microfinance is a concept developed from microcredit to offer a wide variety of financial services, ranging from small loans to savings, insurance, and fund transfers. Grameen Bank also provides various financial services in addition to loans, including deposits, savings, life insurance, and pensions.

In the early 1970s, shortly after Bangladesh gained its independence, political turmoil and natural disasters threw the country into total chaos, with poor farm villagers in particular suffering from extreme hunger. Dr. Yunus, having witnessed starvation and poverty, founded Grameen Bank (“Village Bank” in Bengali) exclusively for the poor with the aim of alleviating poverty.

Grameen Bank provides collateral-free small loans to the poor who cannot borrow money from conventional banks. The distinctive features of Grameen Bank’s microcredit are as follows:

Microcredit is based on trust, not on collateral or legally enforceable contracts.
It is offered to create self-employment for income-generating activities and housing for the poor, as opposed to consumption.
Rather than people coming to the bank, the bank should go to the people who are planning to apply for loans.
A borrower must join a group of five. Only when the first two eligible borrowers have made their payments within six weeks are the others eligible for loans.
Microcredit provides such support as guidance and consultation for borrowers’ livelihoods and businesses along with their loans.

Grameen Bank developed a methodology and system tailored to the economic needs of the poor and accordingly established loan requirements for them. The bank’s loan process has enabled poor people to acquire the skills necessary to make a living and earn a steady income. For this accomplishment, Dr. Yunus and Grameen Bank were awarded the Nobel Peace Prize in 2006.

At present, Grameen Bank has grown into a nationwide financial institution offering services to all poor people in rural villages of Bangladesh. Of the bank’s eight million borrowers, 97 percent are women, with a repayment rate of about 98 percent.

Since Grameen Bank’s founding, Dr. Yunus has established companies in a wide range of fields, including agriculture, fisheries, renewable energy, information technology, education, maternal and child health, and handweaving, and implemented multifaceted approaches to provide sustainable solutions to poverty. The term “social business” was first used by Dr. Yunus during the Nobel Peace Prize award ceremony in 2006 as a new concept developed from various microcredit initiatives that can fundamentally change the structure of capitalism. With human beings seen as both selfish and altruistic, social business focuses on the interests of others, and unlike conventional business that pursues personal interests to maximize profits, social business is conducted in a sustainable way with the aim of solving social problems. The key features of social business are as follows:

Aim: Businesses aimed at solving social problems
Means: Financially self-sustaining through the use of business methods
Profit: Using profits for employee welfare and reinvestment in the company, not for dividend payments

The following Seven Principles of Social Business are defined by Dr. Yunus as the essence of accumulated experiences of managing a “non-loss, non-dividend company” dedicated solely to achieving social goals based on selflessness.

. The business objective is to overcome poverty, or one or more problems (such as education, health, technology access, and the environment) which threaten people and society, and not to maximize profit.

. Financial and economic sustainability

. Investors are returned their investment amount only; no dividend is given beyond the investment money.

. When the investment amount is paid back, company profit stays with the company for expansion and improvement.

. Gender sensitive and environmentally conscious

. The workforce is paid a market wage with better working conditions.

. ... Do it with joy.

Yunus Social Business, introduced and established by Dr. Yunus in Bangladesh, is attracting worldwide attention as a new type of business that can change the world, and continues to expand its role in launching joint ventures with major corporations, cooperating with United Nations agencies and educational and research organizations, developing projects and businesses in other countries, creating individual entrepreneurship, and forming student networks.