Social Business to Fight Poverty

Roopen Roy

Many policy thinkers in India are enamoured 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 pro ven 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, implementation must be infused with integrity and dedication 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 Muhammad Yunus, found er of Grameen Bank, and Fazle Hasan Abed, the founder of BRAC (Bangladesh Rural Advancement Committee). I have had the honour of working with both these organisations in a consulting capacity in Bangladesh. In the first part of this two-part article, I will focus on Grameen.

Recently, 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 subsidised 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 is 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.”

Armchair revolutionaries have criticised Grameen for being too close to MNCs, but does it matter? It is true that several of Grameen’s social businesses have been created in collaboration with MNCs. One of the first such JVs was with France’s Danone in 2005. The Grameen-Danone social business reduced malnutrition among the children of Bangladesh. Grameen-Danone produces yoghurt for children and sells it at affordable rates. This yoghurt is fortified with vitamins, iron, zinc and iodine. If a child eats two cups of yogurt a week for 8-9 months, the child would become healthy. 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 JV social business with Veolia, a large French water company. The Grameen-Veolia Water Company was created to bring safe drinking water to villages where arsenic contamination 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 Grameen Healthcare is targeting a white space with its philosophy of social business. They are trying to develop health centres in villages to keep healthy people healthy by focusing on prevention. 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 digitisation will not work here. One option is health tourism, that is, to physically bring patients to low-cost countries like India or Thailand. Another option is to promote migration to retirement communities located in more affordable economies with salubrious climates. Cou ntries 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. They have set up a series of nursing colleges as a social business to train girls from Grameen Bank families. 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 villages while these attractive job opportunities remain unfilled”. A similar initiative is underway for doctors and paramedics.

I will end with what Yunus 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 and 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."