Participants in the Dialogue: Francisco Javier Duque (Colombia) Arturo Garcia (Mexico) Juan Infante (Peru) Winnie Lira (Chile) Adair Meira (Brazil) Kapil Mondol (India) Albina Ruiz Rios (Peru) Fabio Rosa (Brazil) Tomasz and Barbara Sadowski (Poland) Rosario García y Santos (Uruguay) Pradip Sarmah (India) J.B. Schramm (U.S.A.) Mark Swilling (South Africa)

Yunus Reflects on his Election to the Ashoka Global Academy for Social Entrepreneurship       "The Ashoka Global Academy for Social Entrepreneurship is a good idea in the sense that there are a lot of social entrepreneurs who are busy solving their problems, and getting their work done as they dreamed they would," Yunus said. "This is their work, 24 hours, and they don't have a chance to sit back and reflect. It's very important that this takes place – the reflection.       "The academy would be a kind of place, or time, where you can sit together and reflect together: what is it you are doing? What can be done, and what are the issues? Sometimes you thought you are addressing the right issue, but in the discussion you see some blank spots – that this is something I never thought of. Then you start thinking and you see the link between all these things.       "So discussions and dialogue open up the horizon, and you yourself feel elevated: 'That now I see the path. I didn't see the path, I saw the pieces. Now I see the totality of that – when I link myself with another person, and another person, and so on.'       "That is very important. Some of the things you do, you do instinctively. You have never verbalized it. You have never understood what you did. Now, under questioning, you are trying to explain. And in explaining, you are not explaining to the person who asked the question. You start explaining to yourself, because you never had the occasion. Nobody asked that question before.       "It's a winner all the way around – the academy idea is very good for reflections and linkages, for other ideas and to look forward – visioning. It leads to a visioning process. What do we do? What does it all mean? Are the pieces integrated with each other, or are they just pieces? – we are not thinking about putting it together; they are just hanging in the air.       "So then you say, 'Ah, there is some empty space in between that we need to cover.' And once you do that, then things become so much simpler. So this is how I see the academy idea." Read about Muhammad Yunus' agenda for the future: Halving Poverty By 2015 – We Can Actually Make It Happen

Participants in the Grameen-Ashoka International Dialogue program

Members of the Ashoka global network of social entrepreneurs met at the headquarters of the Grameen Bank in Dhaka, Bangladesh last month to begin building a common global agenda for promoting business-social ventures. "The

Photo by Kris Herbst Muhammad Yunus

future of the world lies in the hands of market-based social entrepreneurs," said Muhammad Yunus, founder and manager of the Grameen Bank and its growing family of profitable enterprises that are devoted to fighting poverty.

"The more we can move in the direction of business, the better off we are – in the sense that then we are free; we have unlimited opportunities to expand and do more, and replication becomes so much easier. We can create a powerful alternative to the orthodoxy of capitalism – a social-consciousness-driven private sector, created by social entrepreneurs."

Fourteen social entrepreneurs from South Africa, India Mexico, the United States, five South America countries and Poland participated in the Grameen-Ashoka International Dialogue meeting on business-social ventures. They all are founders of innovative organizations working in areas such economic development, education, the environment and health care.

These organizations generate revenues to help cover a portion of their operating costs, but they have not yet achieved the profitability, global impact or massive scale of the Grameen Bank.

Photo by Kris Herbst Adair Meira (left) with Muhammad Yunus

"All of us are militant social activists," said Adair Meira, director of the Pró-Cerrado Foundation (FPC) in Brazil. "We want a different kind of world, but we also have arrived at a point where we need our businesses to be sustainable."

FPC provides job training and placement and environmentally friendly business management skills to disadvantaged youths in Brazil and is preparing to launch a microenterprise development program to support self-employment for youth, Meira said. He presented a plan for Banco Forestal, a sustainable forestry business that would create jobs and economic development in the central savannah lands of Brazil, improve the environment, and slow rural-to-urban migration.

"We are activists," agreed Juan Infante, an organizer of urban revitalization projects in Lima Peru and former director of a Peruvian government agency that develops micro and small enterprises. "We are not able yet to recognize ourselves as businesspersons whose projects have high social impact. We have to open our minds to understand the market and the world. That way, we will be better able to help ourselves."

"What Grameen has done for me is to demonstrate that it is possible not just to think globally, but to act globally. Its strategy probably has the greatest impact to eliminate poverty compared to any other strategy. I don't think you will find another program that affects more people."

Opening New Vistas of Opportunity

Grameen is known throughout the world for microcredit, but receives less recognition for its quiet efforts in recent years to build a stable of free-standing for-profit businesses – some of which are already highly profitable. "The world knows a lot about Grameen Bank microfinance, but they don't know about this family of companies," said Susan Davis, launch director of Ashoka's Global Academy for Social Entrepreneurship and chair of the Grameen Foundation USA. These businesses are part of Grameen's effort to find productive ways to invest its banking profits, and are intended to be owned by, and generate profits for, the borrowers of the bank.

Photo by Kris Herbst

Susan Davis (left) with Muhammad Yunus

One of the key lessons that Grameen offers is the importance of generating businesses revenues to invest in productive enterprises and social benefits for the poor, meeting participants said.

Photo by Kris Herbst Kapil Mondol

"I realized that money brings money," said Kapil Mondol, founder of VSSU in India. His organization operates microbanks that provide savings accounts for the poor and issue microloans from the deposits, worth US$2.5 million thus far, generating investment from a community's own resources. "I have learned that if we are going to replicate, we really need a lot of money."

"It opened up a whole new vista of opportunity that I was only dimly aware of," Swilling said. "For me, the key strategic framework that emerged from the meeting revolves around this notion of a 'social enterprise' as an alternative to both a traditional for-profit corporation, and a traditional donor-funded NGO.

"A social enterprise combines the motives of an NGO with the business acumen of a corporation in order to create a new vehicle for social transformation. I believe that the vision Yunus has is a genuine 'third way,' rather than the meaningless 'third way' that Blair and the European Social Democrats refer to. A social enterprise that can mobilize large-scale resources and make an impact on poverty in an ecologically sustainable way without making a few very rich, is the key to a more just future for all."

Building a Family of Profitable Enterprises

"Since the late 1980s, we have been involved in a series of new experiments where the idea is to combine business objectives with development and social objectives,"

Photo by Kris Herbst Khalid Shams

said Khalid Shams, Grameen Bank's deputy managing director and second-in-charge after Yunus. "We have attempted to focus on sectors where poor people didn't have access, but they had some sort of comparative advantage in achieving something, and in accessing new technology, information and markets."

Grameen's Fisheries and Livestock Foundation evolved out of the fish pond project as a joint venture with farmers. It gives farmers the technology and training they need to practice sustainable fish farming and livestock husbandry. They contribute their labor and split the proceeds from the fish harvests with Grameen on a fifty-fifty basis.

As a result, some 4,000 farmers created small enterprises that have helped them rise above the poverty line. They produce 2,000-3,000 tons of fish annually, providing a source of protein in a nation where malnutrition is widespread in the rural areas. The project generates enough revenue to cover all its operating expenses, and has expanded to include support for other small enterprises in dairy farming, production of bio-gas from animal manure, forestry, and agriculture.

A Big Company Owned by Little People

Grameen Bank made the leap from rural banking and agricultural enterprises into high technology when it successfully applied for a license to provide cellular telephone service in Bangladesh in 1996. Since then, GrameenPhone has grown to be the largest cellular phone company in all south Asia countries, with more than one million subscribers in Bangladesh.

"GrameenPhone is a very profitable company," Yunus said proudly. It earned after-tax profits of about US$50 million in 2002, and is the second largest taxpayer in Bangladesh after British Tobacco.

GrameenPhone's mission is to help alleviate poverty by creating a nationwide phone network that extends beyond the cities into rural areas. Grameen Bank provides financing to poor village residents who lease a telephone and create a profitable enterprise by offering phone service to the rest of their village, charging for calls on a per-minute basis.

GrameenTelecom buys airtime in bulk and sells it to these "phone ladies," who resell it at a slight mark-up to make a profit. Grameen Bank administers the billing for the phone ladies, most of whom are illiterate.

By the end of this year, GrameenPhone's phone ladies in some 46,000 village will be providing telephone service where there had been no service available. They earn an average annual income of about US$800, twice Bangladesh's per capita annual income, and rural phone service comprises 17 percent of the activity on GrameenPhone' system.

Beyond increased income, the phone ladies enjoy increased social status and mobility. Village residents have gained access to relatively

A Grameen "phone lady"

inexpensive phone service for talking to relatives in other cities and countries. They use the telephone to check prices of crops and other goods in local markets before selling, giving them greater bargaining power, and to help cope with natural disasters.

GrameenTelecom plans to make an initial public offering of its shares of GrameenPhone stock on the New York, Oslo and Dhaka stock exchanges as soon as global economic conditions are favorable, Yunus said. "Our ultimate goal is to take these shares of GrameenPhone and sell them to Grameen borrowers," he said. "So this will be a telecommunications company that not only brings telephone service to poor women – it is owned by poor women."

"GrameenPhone is one enterprise that has been able to combine its business objective with its development objectives – especially the social and economic development objectives," Shams said. "The motto of GrameenPhone is 'Phones in the hands of the people'."

"Now the cash cow is more exciting than the cows," which Grameen borrowers purchase with microloans, Davis joked. "We hope there will be many more cash cows coming from the other ventures." These ventures include Grameen companies that are entering the markets for garment export manufacturing, business software applications, Internet service provision, venture financing for small enterprises, information technology services and education, and renewable energy for rural areas.

"We are hoping these other companies will make a profit," Yunus said. "Gradually we will sell the shares of those companies to the Grameen Bank borrowers." Because managing a portfolio of the shares for all these ventures could be an overwhelming task for bank borrowers, Grameen plans to bundle them into a mutual fund that balances the investment risks.

"We don't see the poor women in the Grameen Bank as merely borrowers," but as investors who can gain wealth from the capital appreciation of their shares in Grameen's businesses, Yunus said. That is why, rather than opposing globalization, "I am saying civil society has to get active. The big companies can be owned by the little people and compete with the big business owners that are trying to cheat them."

Fee for Service, Not Charity

Grameen's rejection of charity or patronage for the poor provides a key lesson, meeting participants said. Grameen prefers to engage the poor in the mainstream economy by requiring them to pay fees for all its services, and repay their loans on schedule before they can do further business with the bank.

"Currently I don't charge for our services, but I see the importance of charging for all of our services, even if it's a minimum price," Duque said. "I consider patronizing to be a cancer."

"Poor people don't need charity or patronage," Infante agreed. "They need to be treated as peers, as people who can be in charge of their own development. They are talented and they are entrepreneurs who can carry out economic activities. They need help with capital and training to develop their skills."

Grameen demonstrates the power of relying on poor clients to be trustworthy and responsible – to pay back their loans, for example – and then goes a step further by actually relying on the poor to finance its operations, said J.B. Schramm. His College Summit organization helps high-potential but mid-tier high school students from low-income backgrounds – those with Bs and Cs and mediocre SAT scores – apply to enter college, when they ordinarily wouldn't try to get a higher education.

When looking at Grameen, J.B. Schramm said he and other meeting participants saw a "distinction between trusting the poor and relying on them. For example, in my organization, we trust that if we give our students tools, they will get themselves to college and they will graduate. But that is very different from relying on the students – and Grameen relies on the poor to fund Grameen's very lifeblood.

"I got an idea from seeing the Grameen phone ladies, and how Grameen switched these women – who would normally be phone users –

Photo by Kris Herbst J.B. Schramm calls his home in the United States from a "phone lady's" telephone in a rural Bangladesh village

to phone sellers," Schramm said. "That made me think of our students."

After College Summit organization trains students to apply to college, high schools pay "a good amount of money" to have them train other high school students to apply to college, Schramm said. "But thinking of the phone ladies, I thought of our other partners, the colleges. Normally colleges recruit our students at their high school. But what if we switched it and had the colleges pay those same students to be college recruiters with their peers? That's an idea our team is going to start working on.

"I was interested in coming to this meeting because our organization is shifting away from a charity model to a fee-for-service model, and our business plan will get us to covering marginal costs with fees for service. The strategic decision I am taking away from this meeting is to try to have 100 percent of our expenses covered by fees for service."

How to Succeed in Business

Some of the meeting participants expressed concern about their ability to be successful in competitive business markets. "We need to be very careful when we approach the market so that we select market niches where we have expertise and can succeed," Ruiz said.

"Some of us have mental blocks," Infante added. "We are reluctant to deal with market issues. The '60s and '70s are still present in our minds. We need to acknowledge that these are skills that we need to develop, otherwise we aren't going to be able to develop our organizations, nor develop the enterprises of people that we want to push forward."

But Swilling expressed optimism. "We have a lot more to offer in setting up business-social ventures and guiding investment than we think," he said. "There are a lot of business people in the world who want to set up social venture businesses, but they don't have the 'software.' They just don't know how to do it.

"Our software is changing society, doing good, helping people. There are a small number of people in the world that have the software that provides the social understanding that is needed now, and we are in that club. We must realize this.

"My view is it is easier for a social activist to get into business, than for a businessman to get into social activism. We see things they cannot see."

Where Do We Go Next?

Participants in the Grameen-Ashoka International Dialogue discussed four areas for future collaboration. Changemakers.net will track these and other developments:

1. Global social venture fund: "I think the time is right" to establish a fund that would capitalize social entrepreneurs' business-social ventures around the world, Swilling said. "This is what we need so we can support social entrepreneurs," Yunus agreed. "The global social venture fund would be a place where venture capital is available for social entrepreneurs." Dialogue participants expressed an interest in working with other Ashoka Fellows to create a fund in which social entrepreneurs participate in raising capital and screening business-social projects for investment.

2. Global solutions bank: Juan Infante presented a plan to develop a "solutions bank" that amasses an inventory of all the innovative business-social ventures in the world. It will work to develop a worldwide movement in support of social change.

3. Toolkit for social ventures: This toolkit would list the critical resources and strategies needed to create business-social ventures, and provide strategies for overcoming the key obstacles to success.

4. Organic agriculture: Arturo Garcia, who has developed cash crop self-help cooperatives that are owned and operated by 12,000 peasants in Mexico would like to share the organic farming techniques developed there. He will be discussing collaborations with Swilling, whose ecovillage project includes a 100 hectare-farm that is the largest black-owned organic farm in South Africa and sells produce to major supermarkets. Garcia's cooperatives are forming alliances with other citizen's organizations in developed countries to create markets for their produce. Swilling is developing a network of organic farmers with Tarak Kate, who supports a network of 400 organic farmers in India's Maharashtra State, and with Gerrit Hendriks, who is certifying organic farms in the Western Cape of South Africa. "I think there is an opportunity for a global organic farmers' marketing cooperative," Swilling said. "It would be a commercial venture that aims to get organic produce from the developing countries into other developing countries and first world markets."