The what and how of Social Business

One of the most significant Nobels of the last decade was awarded to a certain Muhammad Yunus from Bangladesh, whose Grameen Bank and its philosophy of “Micro-lending” helped millions of people out of poverty, both in his home country and around the world.

Being a solution-oriented visionary, Yunus has conceived and continues to conceive several ideas other the micro-lending, and all of them have contributed to his developmental enterprises. One such genius idea is that of Social Business. Yunus defines social business as “a non-dividend company dedicated to solving human problems.” Unlike other supposed solutions, the idea of social business was not formulated by economists in a rich university away from actual human problems. Instead, it was a realisation that Yunus had over decades, testing its practical applications through hit and trial method.

At the core of social business lies the concept of the selfless nature of man in the business. The very idea seems like an oxymoron and bound to fail, as conventional economic wisdom tells us that business is impossible without selfish motives. However, in his experiences around the world, including Bangladesh, rural United States and the poorest parts of Africa, Yunus has found that irrespective of their economic status, people can be and often are altruistic, which is what we need to tap to grow.

Social Businesses are economic institutions that hit the perfect middle ground between exploiting nature, workers and consumers for profit (like conventional businesses) and replying on measly funds from others to work for social development (like NGOs). They take initial funds from the investors to start manufacturing the product, comply with all the ecological and labour norms, sell the product to the consumer at the production cost price, and finally return the investors their initial investments only, without adding any profits. If any profit at all is generated in the process, it is invested back into the business to grow, so that more people can benefit. The beauty and elegance of this system lie in its simplicity. When one thinks about it, it just seems like common sense, with the first thought being “Why is someone realising this only now?”

Okay, the idea seems to work well in theory, but does it work in practice as well, or is it just another of the many economic daydreams? The best person to answer that perhaps would be the man behind it all, Yunus, who writes in his book “The world of three zeroes:”

“The concept of social business got international attention in 2006 when Grameen Bank launched a joint venture with Danone, the multinational food product company from France. Grameen teamed up with danones chairman and then-CEO, Franck Riboud, to create a company that brings yoghurt fortified with vitamins, minerals and other essential nutrients to under-nourished children of rural Bangladesh. We sell the yoghurt to poor families at an affordable price, charging just enough to make the company self-sustaining. Beyond the return of Danone’s and Grameen’s original investment capital—the equivalent of about a million euros—neither Grameen, not Danone makes any money from this venture, according to the terms of our formal written agreement. We have one yoghurt plant already operating in the vicinity of Bogra, a city north of the capital in Dhaka, and in time we hope to have more such plans throughout the country.
Grameen Danone Foods helps to alleviate the impact of poverty in severe mutually reinforcing ways. Most obviously, the yoghurt itself brings health benefits to children who otherwise suffer from diseases associated with malnutrition, as verified by a 2013 study conducted by a team of scientists with support from the Global Alliance for Improved Nutrition (GAIN). And the presence of a yoghurt factory in Bogra has brought other benefits to the community. The milk used in production is supplied by the local farmers, giving them an additional source of regular income. Local women sell the yoghurt commissions they earn. And local people trained by Danone run the factory itself as well as its distribution and marketing channels, bringing further the vitality to the rural economy.”

This is just one of the many examples of the success of the social business, which along with other ideas put forth by people like Yunus, might just be the economic model of our generation. Most importantly, it makes us rethink our assumptions about economic sustainability, as well as human nature itself.

Aishwarya Says

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

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