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Each generation of business students has a prototypical hero. Past generations have revered masters of possibility: the self-made millionaire, the architect of the corporate takeover, the Silicon Valley entrepreneur.
Throughout my career, I have come to admire many different kinds of leaders, but perhaps none more than the father of microcredit, Muhammad Yunus. As founder and managing director of Bangladesh’s Grameen Bank, Prof Yunus has been lending to the poor for more than three decades, and in 2006 won the Nobel Peace Prize, which made him a global icon. In my view, no one has done more to expand our sense of what business can and should do to contribute to economic and social welfare, especially among the world’s poor.
Having long admired Prof Yunus’s work, I was eager to host him as Wharton’s MBA graduation speaker last spring. What I did not anticipate was our community’s overwhelming response to his visit. He could hardly take two steps without students rushing over to shake his hand. They were enthralled by him.
It is easy to see why. Prof Yunus greets everyone with a welcoming smile and a sense of humility, taking great pleasure in the exchange of ideas. And although he is an immediately recognisable figure, it is never about him: it is about improving the lives of the world’s poor. His image is part of why he has been so successful. In making it easy for anyone to approach him, he has encouraged good ideas to spread. For Prof Yunus is not just a visionary with a global audience; he is a great communicator and teacher.
The origin of the microcredit concept is by now well known. As head of the economics department at Chittagong University in the early 1970s, Prof Yunus took an interest in Jobra, a poor village adjacent to the school. Feeling strongly that academic institutions should use their knowledge to help their neighbours, he developed a programme that engaged students in finding creative solutions to Jobra’s economic problems. His work ultimately led to perhaps the first micro-loan in 1976 – $27 to a group of 42 bamboo furniture makers, at a rate that would allow them to make a profit and pay him back. Grameen Bank was born.
Grameen is a business that addresses a social ill, turning a profit to be reinvested at the same time that it helps those in need. By providing tiny loans to very poor people – most of them women – Grameen empowers people to start small businesses that will lift them out of poverty.
Though it has become fashionable to question microfinance, the venture’s success is quantifiable. As of November 2009, Grameen had provided $8.6bn in small loans to almost 8m people, with a nearly 97 per cent repayment rate. Ninety-four per cent of the bank’s shares are owned by borrowers, and 65 per cent of borrowers have risen above the poverty line. Microfinance is now a $30bn global industry. Grameen has been joined by some of the big investment banks in the microfinance space. For a man in a distressed nation to have made such a significant impact on the global stage is extraordinary.
As with most successful leaders, Prof Yunus continues to seek new opportunities. Grameen is now a family of companies, extending the principles of microcredit to such services as healthcare, insurance and telecommunications. Prof Yunus remains devoted to the concept of social business, which must ultimately be self-sustaining, not dependent on government or foundation grants. It must turn a profit – but all profits are used to reinvest in the business itself.
Business schools have an obligation to create knowledge that will enhance social and economic welfare. This is Prof Yunus’s mission too, which made him the perfect speaker for our students. He is a banker, but he is also an academic who has made a genuine impact in the fight against economic inequality.
Our students understand this. More of them than ever are pursuing careers in microfinance and social entrepreneurship. At Wharton, they have led the charge for new courses and programmes in social impact. A popular badge reads, “greed is so last year”. Under their leadership, we may see the emergence of a new economic architecture – one focused on expanding prosperity for all, rather than on maximising profit for a few.
Business schools can and must be a force for good in the world. Prof Yunus is a personal role model and many of our students join me in revering this humble man who is able to mobilise resources throughout our global economy.