SOCIAL BUSINESSES ARE THE FUTURE

Nobel Peace Prize winner Muhammad Yunus urged Stanford students to use their talents to develop "social businesses" to solve pressing problems such as global warming, unemployment and poverty.

Yunus is famous for thinking small, but in a big way. He is a pioneer "micro-credit entrepreneur" whose Grameen Bank has 7.5 million impoverished borrowers with loans averaging less than $200 and a payback rate of 98 percent. He also focuses on silver linings: The world's economic crisis offers "an enormous opportunity" to design a fairer financial system, he said in a talk Friday at Stanford.

Now it's a question: who's more creditworthy, the rich or the poor?" Yunus said, drawing laughs from the standing-room-only audience. "So why don't we create a financial system that's an inclusive system?"

Technology offers a powerful weapon against poverty, Yunus said. He urged technology-minded students to live among the people they seek to help before designing their "high-impact social ventures."

This year, Grameen Bank opened a branch in Queens, New York, where Yunus said there are now 380 borrowers, all women, with average loan amounts of $2,200 without collateral and a 99.5 percent repayment rate.

"We follow the same procedures as in Bangladesh and when other things are collapsing it's as strong as ever."

New York borrowers have created businesses in areas such as child care, elder care, housecleaning and flower arranging.

"Today we're small, but if we can enlarge it to, say, 10,000 borrowers costs will be covered with an interest rate of 15 percent," Yunus said.

Grameen also makes interest-free loans to beggars in poor countries, he said. With average loans of $15, the bank encourages the beggars going house to house to carry cookies, candies or toys to sell, giving people the option to give money or buy something.

"More than 7,000 have stopped begging completely and the remaining 90,000 or so are part-time beggars, mixing begging and selling at the same time.

"It's an amazing experience to be of some help to a beggar," he said. "They're very smart -- they know which houses are good for begging and which are good for selling. They don't have to go to business school; they already know about market segmentation."

Yunus outlined numerous other Grameen ventures, including a hospital and a partnership with the French company Groupe Danone to produce low-cost yogurt containing nutrients Bangladeshi children are missing in their diet. Grameen also has partnered with a French water company, Veolia, to offer clean water in Bangladeshi villages at a price of a penny for 10 liters.

"People can bring their own container, take 10 liters and that's it," Yunus said. "If it works and pays back, then we can repeat it.

"Once you develop a prototype you develop a seed. Now multiply the seed and it can be everywhere.

"That's the challenge to young people in a school like Stanford -- to develop a social business, because that's where the future lies," Yunus said.

"We see every day how human beings are packed with unlimited capacity, unlimited potential. They're not helpless people; they're as capable as anyone else. It's that society never gave them an opportunity to unwrap that gift. It's a matter of removing the barrier.

"We have not allowed the bulk of the population on this planet to unleash their creativity and talents, and that is our loss," he said.

(Writer Chris Kenrick, a former editor at the Weekly, can be e-mailed at christina_kenrick@yahoo.com.)