Grameen Shakti, for a sustainable future

We spent today at a couple of the sister organisations of the Bank. First, it was a visit to Grameen Shakti, an organisation seeking to provide renewable electricity and energy to the rural poor, largely off the national grid, which is currently 47% of the population. Even those 53% with coverage suffer from almost daily power outages. 

The company has been operating since 1996, and has so far installed solar panels in over a million homes, an incredible feat earning the company numerous international awards. It hopes to reach its second million by 2015, currently installing c.25,000 systems each month. That 46 other organisations have only implemented one million solar panels between them puts this achievement into perspective. 

There are obvious benefits to the provision of renewable energy to rural areas. Namely the improvement of vital services such as healthcare and education. Access to light also extends business hours, a vital aid to the survival of some of Bangladesh’s poorest citizens. Solar power is also used to aid agriculture in controlling irrigation systems, and to power telecommunication towers across the country. 

The operation is also driving real social change in the form of female empowerment. Grameen Technology Centres, responsible for the installation and maintenance of the power supply, are operated by 150 female engineers, with a further 3,000 local female technicians trained. 

There are a number of loans available with differing levels of downpayment, interest rates and repayment periods based on personal situation and the size of the solar panel purchased. Grameen Shakti boasts an incredible 95% recovery rate of these loans, suggesting that the electricity offered is having a real impact upon the successful practice of rural business and agriculture. 

Grameen Shakti also operates two other main projects, one for the provision of biogas, largely made from manure, and the other the provision of Improved Cooking Stoves. To date, the company has provided rural areas with 25,619 biogas plants, each serving different sized groups or families. There are obvious immediate benefits to this for the families, namely a cheaper supply of energy, and certain global benefits, such as reduced demand for non-renewable resources. There is, however, the obvious downside that the methane produced has four times the global warming potential per particle as carbon dioxide. 

The Improved Cooking Stoves offer a cooking solution using less biomass, producing less emissions, and creating a healthier indoor cooking environment, with a pipe to extract smoke produced in cooking. To date, over 261,000 have been installed. 

A recent Environmental Impact Assessment on the collective projects has shown staggering results for carbon emission reduction. Thus far, 124.26 million litres of kerosene have been saved, equating to $109million. The total emission reduction comes in at a cool 293,262 tonnes of C02 per year! The obvious benefit to Bangladesh, though not necessary the environment, is that the country can now sell on any carbon credits saved. 

The operation has amazing opportunities to expand, and even greater opportunities for replication. There seems to be no good reason why such a system cannot operate in more developing countries of a similar climate, the system is a win-win for almost all involved. We were told the project is indeed being replicated, in countries such as Nepal, though seemingly at no great speed. 

The project can (and must, though in perhaps a different form) now spread to urban areas, where the consumption of, and cost of using, non-renewable energy is staggering. The company claim to want to address areas without any energy first, but I’m sure there is no harm in starting to plan an approach to urban areas that can see solar-power and biogas replace alternative forms of energy generation. Indeed, Grameen Shakti has already introduced a huge biogas plant 24km from Dhaka, with agreements in place with various rural municipalities to provide manure.  

The work of Grameen Shakti is amazing and must continue, even broadening to cover other questions of sustainability and environmental degradation. I need to learn more about all of the projects Shakti is undertaking to make a more full analysis, but from what we learnt today there is certainly more that it can do, on a social business and NGO level. A fund for green entrepreneurship, encouraging sustainable small businesses in rural areas, supporting sustainable forestry, tightening protection of national parks and thus wildlife conservation, and improving recycling facilities are all potential projects for the future (though of course based on an imperfect knowledge of current projects).    

Social Business

After a fantastic and relaxing weekend away in Srimangal (north-east of Bangladesh, right on the Indian border, where most of the country’s tea is grown), it was back to the office this morning for a set of presentations on our respective village trips. 

We had an interesting afternoon learning about the Yunus Centre, an effective offshoot of the Grameen Bank. The Yunus Centre exists to promote and develop social business, a term coined by Muhammad Yunus to refer to a business that operates on a non-loss, non-dividend level, existing to address a certain social problem. 

The concept is effectively a merger between a traditional profit maximising business and a charity, where a social business operates with the efficiency and process of the traditional business but with a socially-beneficial motive. For example, the Grameen Family worked with Danone to address the issue of malnutrition in Bangladesh. Research suggested that many rural poor in Bangladesh were missing out on key nutrients, which were put into a special yoghurt and sold in order to recoup operating costs and repay initial investments, so as to become a self-sustaining business. Veolia have a similar operation in Bangladesh with water, Uniqlo with clothes and Intel with software. 

An initial obstacle Danone, and others, encountered was how to make the business profitable (or at least breaking even) whilst reaching the right customers. Danone, and most others, have taken the subsidising approach. The yoghurt is sold to the rural poor for say 4/5 taka, an effective loss for the company, whilst it is (rebranded and) sold at urban supermarkets for say 25 taka, making a profit and thus covering the aforementioned loss. 

The role of the Yunus Centre, then, is to promote this form of business around the world, and help those who want to establish social businesses. The Centre is very often approached by such entrepreneurial individuals with ideas, and it can help by researching the project and the feasibility of taking it to market. To date, the centre has helped 150 companies in over 40 countries. 

In terms of raising awareness for social business as an alternative to charity, the Centres is driving the creation of Social Business Cities, defined as a city with three social business operating, and one university performing relevant research. The Centre works with such universities to aid their own research, often putting potential business models to the test. 

The Yunus Centre also works on the development of Social Business Funds, effectively pools of money that anyone can borrow from (once a business plan has been fully approved) to be repaid with only a little bit of interest to cover administration costs. The Fund is supported by individuals and companies, with the Centre asking for some of the CSR budget of certain large companies. The Centre is also looking to, in the future, develop a more efficient social business indicator, social business courses at universities, social business certification and perhaps even a social business stock exchange. 

For me, the notion of social business was the thing that really grabbed me whilst reading Banker to the Poor (chapter 27). The concept is still in its infancy, having been nurtured here in Bangladesh for only 5-6 years, but I believe it is one that has an exponentially influential future in the development of our economic and social future. The 2008 financial crash made it apparent that economists and politician seem to have only one model of economic growth, supported by the traditional profit-maximising companies. As Western nations look to redraw their economies, and ponder the question of reconciling economic growth with social and welfare support, the concept of social business should be one entertained at the highest level. I was saddened to hear that so far only Glasgow University has really got behind the concept in the UK, hopefully this can change in the near future. 

Back from the village!

I’ve just returned from the village - what an amazing experience, and throughly a relief to get out of Dhaka (after only two days here!).

We stayed at a Grameen Bank Branch in the village of Norshindhi, about two hours north of Dhaka. The Branch boasted 5,302 current loanees, and a phenomenal recovery rate of 99.12%. The Branch houses the operating bank downstairs, photos below, and upstairs bedrooms, a kitchen and a living area. The bedrooms were very simple (see photos), electricity constantly went out, and there were mosquitos everywhere, but despite all of that the fact that almost all of the branch staff lived upstairs, along with one’s wife and two children, gave the place a real homely and fun feel. We were even invited to break the fast with the staff and their families, a photo is below of us eating Iftar. 

We spent the three days in the village with our translator Younus (pictured below with the branch manager) visiting numerous borrowers and also centre meetings. Many borrowers stories followed a familiar pattern. We first visited a young man who was running his mother’s phone shop with his brother. His mother was a loanee and also the first Grameen telephone lady in her village, a project ran by Grameenphone a number of years ago. She has since expanded the business to sell sim cards, some handsets and provide internet use on one computer. Next step, I presume, is to turn her shop into a cybercafe to give the village access to the internet. Another similar story was that of the most successful borrower at the second centre meeting. She had started with a 500tk loan (roughly £4) to buy a calf. Through successful repayments, her current loan is for 100,000tk, and she has used her recent successes to send her son to Saudi Arabia to work and send back money whilst she has grown her clothes-making business in the village.

We also met a fantastically well educated Higher Education Loanee, who was studying English Literature at a university in Dhaka. His vocabulary was much more diverse than mine, and I’m not surprised given that he claimed to read Shakespeare outside of his course (which included Thomas Hardy and John Milton). He claimed to have finished school and been stumped as to how he could pay for a university education, before the ‘guardian’ that was the Grameen Bank stepped in. His university education has enabled him to offer private tuition to pay his younger brother’s way through the ‘best university in Bangladesh’, and he plans to seek a job as a professor or in the civil service when he graduates, given the honour and wages bestowed upon both. Interestingly, we also spoke about the state of women’s education in Bangladesh. He stated that they have equal, even occasionally preferential, treatment within the educational system, and that as this new generation graduate from university and take important jobs, society will be much changed. 

We also met a lovely old lady called Ruisa, who was benefitting from the Struggling Members Loan, a small amount offered to those who survive by begging. Ruisa said she got to an age where she was too old to work, her husband had died and her two sons were unable to support her, so she started begging. She was recommended the Grameen Bank by a friend, and initially took a 500tk loan. She used her loan to buy saris at a local market, and sell them in the village, and has been so successful that she is now on her sixth loan of 3000tk. The Struggling Members Loan, however, means that there is no deadline for repayment nor a fixed repayment schedule, one can simply repay it when they are able to. She would love to take a Basic Loan, she claimed, but would struggle to make the fixed repayment schedule. It seems there needs to be some form of institutional bridge between the Struggling Members Loan and Basic Loan, otherwise, as Ruisa admitted herself, many will need to continue begging to survive. I was touched by the story of Ruisa and how hard she was working at her age to raise herself out of destitution and poverty, and decided I would support her by buying a beautiful sari from her. 

The most striking thing about the trip was simply seeing in the flesh a process and institution that I had read so much about. Sitting in the Branch Office as borrowers came in to take out new loans, or in a Centre Meeting (collection of 10 or so groups of borrowers) where women came to repay their weekly installments or pay into their savings or pension schemes with the Bank. Previously the system was just a story in a book, written about a faraway land, yet this week has made it so apparent the amazing work the Bank is doing. Driving through the village it was incredibly apparent that it was a hub of activity and enterprise. 

There were, however, some elements of the trip that proved a disappointment since reading Banker to the Poor and arriving with such high and in reality unrealistic expectations. The position of women, for example, seemed not to have shifted as much as I thought it may have. It seemed to be the case that the wife would take the loan, and simply give it to the husband for the family business, that generally the husband would lead. Maybe this is an exaggeration, but observations definitely showed a village centre of 90% men, whilst the only women we really saw were near or in their houses. Of course they were often working, making clothes or bags for example, but these activities were very much house-bound. 

Most members seemed to suggest an inadequate provision of healthcare and education also. We were told when we visited the Area Office (looks after 10 or so Branches) that only one Branch benefits from Grameen Healthcare, and whilst other NGOs such as BRAC are doing a lot to provide healthcare, there is still some way to go. We were also told there that in the past Grameen provided and supported schools much more than it does now. The most pressing concern seemed to be with high schools, though the primary school we visited (below) had around 700 pupils to 11 teachers.

We were told that the village visit will be the highlight of our trip, and I’m sure that will turn out to be true. As lovely as it was to get out of Dhaka, seeing real lives changed by such a simple process of support that I’d read so much about was both rewarding and inspiring. Whilst the Bank has done an amazing service to Bangladesh thus far, however, there is still more that can be done to help the lives of those who are willing to work so hard on their own initiative.