Microfinance and social business in Bangladesh

Mon Dec 09 15:44:00 UTC 2013

A visit to Dhaka shows how the work of Muhammad Yunus and the Grameen Bank can be highlighted in classroom activities in social business and microfinance.

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My brief visit to Bangladesh was to talk to business studies teachers about our new International Advanced Level in Business Studies. It prompted me to reacquaint myself with the work of Nobel Peace Prize winner Muhammad Yunus, re-read his book and think about how his work could be linked to our specifications.

Some possible activities include:

As the plane touched down at the airport I switched my phone back on and found that I was now connected to the Grameen Phone network. The name was familiar, but it was some time since I had read Dr Muhammad Yunus's book, ‘Creating a World Without Poverty.' I could remember the Grameen Bank but had forgotten about the other Grameen businesses, until the Grameen name appeared on my phone.

The Grameen Bank ('Grameen' means village) dates from the 1980s and aims to tackle one of the constraints to growth and development in poor countries, namely that there is no mechanism for those with surplus capital to lend to people who want to start their own business but have no capital (the poor). Moreover, as these poor people have no property, they have no collateral to use to borrow money from a bank.

Dr Yunus, a Professor at the University of Chittagong (Bangladesh) felt that the skills of the rural poor were being wasted and that these people needed only small quantities of credit to start a small business, which could generate enough revenue to repay the loan and provide them with an income.

The Grameen Bank started to provide basic banking facilities and loans on trust, with no collateral required. The depositors were ordinary small savers and the borrowers primarily women.

The success of the village bank led to other businesses being established – like the phone network, Grameen Phone, which started me thinking about this in the first place. This business was founded in the 1990s after the success of the village phone programme. The idea was similar to the bank – that the rural poor should not be excluded from the benefits of the mobile phone. The Grameen project has been responsible for the establishment of many other social businesses that have touched the lives of many Bangladeshis.

In 2006, The Norwegian Nobel Committee awarded the Nobel Peace Prize to Muhammad Yunus and the Grameen Bank for their work in trying to stimulate economic development using micro-credit.

Kind regards,

Colin

Colin Leith, Business and Economics subject advisor
Colin LeithBusiness and Economics
UK: 020 7010 2182
Intl: + 44 (0)20 7010 2182
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