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Turning Human Goals into Business Goals
Yunus warns that rising wealth inequality could give rise to social unrest, political polarisation and increasing tensions between groups
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In the 2017 Deloitte Millennial Survey, respondents in emerging markets expressed the greatest concern for issues like hunger, healthcare, income inequality, crime and corruption; unemployment ranked third, a greater concern than terrorism in many emerging markets. In the survey, 53 per cent of the respondents felt accountable for social equality but only 33 per cent felt that they had the influence to do something about it. At a time when both, concern and helplessness around social challenges are high, Nobel laureate, Muhammad Yunus’s latest book is a timely reminder that focused action is needed to start overcoming these challenges. In A World of Three Zeroes, Yunus lays out his vision of achieving zero poverty, zero unemployment and zero net carbon emission.
The 77-year-old Bangladeshi social entrepreneur begins by discussing the extreme inequality that the current economic system has produced. Wealth is a magnet, he says, and bigger magnets draw smaller magnets towards them. The poor, “people with no magnets”, find it hard to attract any magnets to them at all.
Yunus quotes from an Oxfam report of 2010 that states that the top 388 richest people in the world own more wealth than the entire bottom half of the world’s population. In 2017, this number has shrunk from 388 to just eight. In India, 57 billionaires own the same wealth as the bottom 70 per cent of the population. Yunus warns that rising wealth inequality could give rise to social unrest, political polarisation and increasing tensions between groups.
Yunus searches for an alternative economic system by analysing the current system where a human is seen as a personal gain seeking being. This results in the belief that humans are indifferent towards other human beings, to the point of selfishness, and that the economic system that they wish to create is only focused on profit maximisation. As a counter, Yunus offers examples of the millions involved in activities that focus on making the world a better place, like teaching, nursing, social activism, volunteer work and philanthropy.
Clearly, altruism is a basic human trait as well. Yunus defines an alternate economic system built around social businesses, enterprises where, instead of profit maximisation, solving human problems is the goal. He sees both profit maximising businesses and social businesses existing together, each requiring its own support infrastructure.
Social businesses are not charities and are expected to generate financial surpluses, but instead of distributing these to investors, they are re-invested back in the business. Investors get their capital back and, at times, a nominal return. Yunus gives numerous real-life examples of social businesses across the globe to illustrate the need for developing a separate infrastructure for such enterprises. The examples that range from the US to France to Uganda and India, illustrate the need for social venture funds, social business incubators, cutting edge technology and skilled human resources to build and expand social businesses.
These businesses apply the same principles as traditional businesses but define success not as shareholder value maximization but as the achievement of goals related to solving social challenges.
For instance, Golden Bees in Uganda sells beekeeping training and equipment to farmers and has built a marketing network for its honey in Kampala through 80 supermarkets. The business is now focusing on higher margin products like beeswax and propolis, and is planning to target international markets by improving product quality.
To be efficient and operate at scale, Golden Bees needs to run like a business, and to ensure that farmers get the best possible price for their products, it needs to have ‘social’ goals. Yunus uses the United Nations’ Sustainable Development Goals as the benchmark against which social businesses should try to define their own business goals.
So, how is India doing in putting together infrastructure for social businesses that tackle our own problems of poverty and unemployment. Like elsewhere, social business challenges in India are access to capital and technology, and the human resources to bring them together into an efficient, effective social business.
According to a McKinsey report, socially responsible and purpose-driven financing (“impact investing”) of $1.1 billion came into India in 2016. This is minuscule compared to global impact investments that are expected to reach $300 billion by 2020.
Clearly India has to do more to attract impact investments. While microfinance has penetrated deep into rural India and supports self-employment, it does not usually create social businesses, which need larger loan sizes and corresponding borrower capacity to manage businesses that employ others. This means creating a network of specialised finance providers and incubators, an enabling legal and governance network, skill development and encouragement to youth to consider a career in social businesses. Yunus particularly singles out the Reserve Bank of India’s grant of licenses to small finance banks as a good step in this direction.
While social businesses are often small with corresponding financing needs, there is nothing small about the idea of social businesses, which can be a David taking on the Goliath of poverty, unemployment and climate change in India.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.