Fight populism, unemployment with micro-credit, social businesses: Yunus

Redesigning the financial system to provide micro credit and creating social businesses are not only crucial to fight poverty and unemployment, but also populism, Nobel laureate and micro-credit pioneer Muhammad Yunus said here on Monday.

Micro credit and social businesses can play an important role in the fight against wealth concentration, the Bangladeshi economist told some 450 delegates from over 50 countries on the first day of the CFA (Chartered Financial Analyst) Institute European Investment Conference.

"Each year, 80 percent of the generated wealth ends up in a few hands. Concentration of wealth is also concentration of social and political power. It is a ticking bomb which creates a feeling of helplessness among the poor," he said.

By giving the poor access to credit and creating employment for young people through social businesses, wealth concentration can be limited, the Bangladeshi economist told the conference attended by representatives of investment firms, leading portfolio managers, analysts, chief investment officers and CEOs.

Instead of giving money to sustain them, governments in Europe should turn unemployment into entrepreneurship by helping young people set up their own business, the economist said.

Yunus also called for more engagement in social businesses which aim at answering the growing demand for heath services, waste management, access to water, and old age support. Unlike a traditional business, these businesses dedicated to social causes rather than profit can play an important role and involve multinational companies, he said.

By way of example, he cited his own first social business in collaboration with French food giant Danone which produces affordable yogurt for malnourished children in his native country. Potato Soup, another social business developed in France that hires unemployed people to address the problem of potato waste, has become so popular that it has spread to Belgium, Greece, and Morocco, according to him.

Yunus revolutionized finance for the poor when he started providing small loans to Bangladeshi villagers at affordable interest rates without requiring collateral. Grameen Bank, the micro-finance organization and community development bank he set up 30 years ago in Bangladesh, provides 1.5 billion U.S. dollars-worth in loans every year. Yunus and Grameen were jointly awarded the Nobel Peace Prize in 2006.

His micro-credit concept has been used worldwide. Grameen America has now 18 branches in New York and other major cities, reaching 85,000 borrowers, and its lending passed half a billion U.S. dollars this year.

"Repayment rate is over 99 percent and all borrowers are women," said Yunus. Endit