Social businesses: a weapon to fight poverty

Roopen Roy

(Roopen Roy is the Managing Director of Deloitte Consulting, India. Views are personal).

Many policy thinkers in India are enamored by Western economic models. If we have to figure out intelligent strategies to lift 250 million Indians from abysmal poverty, let us accept that there are no proven Western models. Our problem is daunting in scale and baffling in complexity. We need completely new and bold imagination and some daring dreaming.

When resources are limited and the problem is huge, creativity must be boundless. We have to harness the best of Western technology and combine it with the knowledge and intelligence of our finest community leaders, thinkers and entrepreneurs. Not ivory-tower jholawallahs but people who are immersed in the real issues and who intimately know the problems of the rural and urban poor. Finally, the implementation must be infused with the integrity, passion, dedication and zeal of missionaries in the finest traditions of the ascetic East.

Examples exist across the river rather than beyond the oceans. I know of two such warriors against poverty. They are Dr. Muhammad Yunus, founder of Grameen and Dr. Fazle Hasan Abed, the Founder of BRAC (acronym for Bangladesh Rural Advancement Committee). I have had the honor and privilege of working with both their organizations in a consulting capacity in Bangladesh. In the first part of this two part article, I will focus on Grameen.

Recently, Muhammad Yunus was in India. Much to the surprise of the Indian NGO community, he asserted that India is well positioned to tap the huge potential for growth of social business within the existing legal and regulatory framework and without the need for tax breaks or subsidized loans. A social business could take any legal form. It is cause-driven and not profit-driven and is designed to act as a change agent for the world.

Here was his exact counsel, “Entrepreneurship and innovative skills are major positives of India. The social business is not a charity as it can be run through raising funds from the market. The surplus generated by the social business is reinvested in the business. In the Indian context, social business can be possible in a number of areas such as water, health, poverty and urban poverty, education and environment.”

Arm-chair revolutionaries have criticized Grameen for being too close to MNCs but does it matter? It is absolutely true that several of Grameen’s social businesses have been created in collaboration with MNCs. One of the first such joint-ventures was with Danone, a French multi-national dairy products company in 2005. The Grameen-Danone social business reduced malnutrition among the children of Bangladesh. The Grameen-Danone company produces a yogurt for children and sells it at a price affordable to the poor. This yogurt is fortified with all the micro-nutrients which are missing in the children’s ordinary diet ¾ vitamins, iron, zinc and iodine. If a child eats two cups of yogurt a week over a period of eight to nine months, the child gets all the micro-nutrients and become a healthy child .The metric of the success of this company is not the amount of profit generated but the number of children escaping malnutrition.

Grameen has another joint-venture social business with Veolia, a large French water company. The Grameen-Veolia Water Company was created to bring safe drinking water in the villages of Bangladesh where arsenic contamination of water is a huge problem. Villagers are buying water from the company at an affordable price instead of drinking contaminated water.

Grameen and BASF have entered into a collaboration to produce chemically treated mosquito-nets in Bangladesh as a social business. The objective is to produce and sell these mosquito-nets as cheaply as possible to make it affordable to the poorest.

The Grameen Healthcare company is targeting a white space with its philosophy of social business. They are trying to develop health centers in the villages to keep healthy people healthy by focusing on prevention. They offering check-ups and micro health insurance services. Leveraging Grameen Phone, a group entity, they are pushing the envelope on telemedicine by combining with leading manufacturers to design diagnostic equipment that can transmit images and data in real time to city-based health experts

As the world ages, there will be a huge shortage of nurses and paramedics to care for the old and the sick in the prosperous West. The model of the IT industry of delivering services remotely through digitization will not work here. One option is health tourism i.e. to physically bring patients to low cost countries like India or Thailand for medical treatment. Another option is to promote migration to retirement communities located in more affordable economies with salubrious climates. Countries like Spain and Portugal and states like Goa and Kerala are planning to become such destinations.

But a vast majority of people in the West will prefer to stay at home. They will need thousands of doctors, paramedics and nurses. Grameen Healthcare has identified an impending shortage of these skills in the global workforce. They have set up of a series of Nursing Colleges as a social business to train girls from Grameen Bank families as nurses. Globally the shortage of nurses is enormous and growing. There is no reason why the vast number of young girls should “be sitting around in the villages while these attractive job opportunities remain unfilled”. A similar initiative is underway for doctors and paramedics.

I will end with what Yunus himself believes, “We need a new way of thinking about economics that is not prone to creating series of crises; instead, it should be capable of ending the crises once for all. Now is the time for bold and creative thinking—and we need to move fast because the world is changing fast. The first piece of this new framework must be to accommodate social business as an integral part of the economic structure.”