Interview: Muhammad Yunus on micro-credit & social impact models for a changed world

by Joseph K. Clark

Muhammad Yunus also sees room for CSR fund flow into social business and moots a social business microcredit bank. As people worldwide, especially the poor, gather themselves and restore their dislocated lives, a lot needs to change and adjust to the new realities. Financial Express Online reached out to Muhammad Yunus, the Nobel laureate from Bangladesh and the founder of the Grameen microcredit model, on how he sees the change coming. As he is often referred to by those who know him or engage with him, Professor Yunus talks of the way he is seeing change happening and the course ahead in micro-lending, a space that he pioneered and inspired many in India around the world. He also talks of social businesses, the not-for-profit operations focused on the social impact that has been engaging his attention for quite some time now. He speaks of virtual meetings replacing physical interactions, albeit some challenges need to be overcome where connectivity is a challenge. He also sees room for CSR (corporate social responsibility) fund flow into social business and moots a social business microcredit bank. Excerpts from the interview:

Muhammad Yunus

One of the essential pillars of the micro-credit movement has been meeting borrowers in groups and their interactions with the field staff from microfinance institutions. A lot hinged on these face-to-face interactions. How do you see this pan out in times of social exclusion, and if physical meetings are a challenge, how will the social collateral be established in the new environment?

Pandemic is a new phenomenon causing massive dislocation in poor people’s lives. But this is not the only disaster that microcredit borrowers have had to face so far. Bangladesh is known as a country of disasters. Situation gets worse because of global warming. Every year some parts of the country go underwater because of a local flood. Then there are national disasters of flood at regular intervals. Sometimes flood water goes over the rooftop of the houses. In one flood, boats and steamers became modes of transportation in Dhaka city. Cyclones, tidal waves are regular visitors in the southern part of the country. These are more serious than a pandemic. Nothing escapes from these disasters — houses, animals, material possessions, lives, and so on.

Microcredit has learned to survive financially and organisationally through these regular disasters. If it could not deal with these, microcredit would have been wiped off long back. Just go through the history of disasters and microcredit in Bangladesh then you’ll see the detailed institutional safety mechanisms built into these programs.

The microlending model also works on frequent meetings – weekly or monthly – collecting and exchanging cash and attending group training. Central to these were the built-in economies of scale as collections by microfinance institutions were made at one location. How will this model change and affect economics? For instance, will it become more expensive as representatives from the microfinance institutions visit each member instead of holding group meetings?

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