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.