business question

GRAMEEN BANK

SOCIAL ENTREPRENEURSHIP

GROUP 1

CHENYU ZHANG Linkedin Profile

NANCY VERMA Linkedin Profile

LOUIS TIPPER Linkedin Profile

USAMA BIN SANA, PMP® Linkedin Profile

[email protected] [email protected]@[email protected]

INTRODUCTION

What is Social Entreprenership?

Broadly speaking, social entrepreneurship is a new, innovative business venture that influences change. A social entrepreneur has a specific cause that they care about, and they develop a business model around making a positive impact. The main goal is to create lasting social change through business. (Martin and Osberg, 2007).

Martin, R. and Osberg, S. (2007). Social Entrepreneurship: The Case for Definition. online available at:https://www.ngobiz.org/picture/File/Social%20Enterpeuneur- The%20Case%20of%20Definition.pdf

GRAMEEN BANK

Education Dhaka University Bachelors and Masters in Economics

1957

1940 19 57

Muhammad Yunus Born on 28 Jun 1940

Vanderbilt University PHS in Economics

Q4 1965

1961 19 71

Chittagong University Lecturer

Microfinance Program

First of its kind in Bangladesh

Q1 1976

1974 Q1 Q2 Q3 Q4

FAMINE Famine hit Bangladesh

Nobel Prize Launch new product line

Q4 2006

2006 Q1 Q2 Q3 Q4

Grameen Bank Established first Microfinance bank in Bangladesh

Q3 1986

AMBITION

Yunus, who was motivated to tackle extreme poverty, especially among women. His vision is to help the poor achieve economic autonomy and social progress through microfinance.

ACTIVITY?

In Social Entrepreneurship, what should come first?

1. Impact? 2. Profit?

Ideology

CHARITY Charity is not the answer.

DEPENDENCY It creates dependency and

takes away individual’s initiative to break through the cycle of

poverty.

OPPORTUNITY Loans offer people the

opportunity to take initiatives in business or agriculture.

POTENTIAL Human beings, including the poorest has endless potential

FOCUS ON WOMEN EMPOWERMENT

Offered credit to many poor, women, illiterate and unemployed people.

REPAYMENT RATE AND SUSTAINABILITY

Access to credit on reasonable terms such as the group

lending system and weekly – installments payment

event timeline

1974 Famine in Bangladesh

1976 Started as a Project

1983 Became Independent

Bank

1990 Got funding from Central Bank of

Bangladesh

1991 Had more than 1

million clients

1998 Repayment Issues

2001 Announced Grameen

Bank II

2006 Noble Peace Prize

Early Stage challenges

As most startup businesses do, Grameen Bank needed funding to develop and expand Funding

If the Grameen Bank organised itself in the same way as the national commercial banks it would be at risk of problems which plagued these banks such as: corruption, nepotistic recruitment, politicisation of lending portfolio.

Achieving the right

organisational structure

Funding Solutions 1970’s /80’s

1990’s

In the very early stages Yunus funded Grameen Bank with his own money

Gained backing from donor funds who had seen little progress from projects ran by governmental agencies e.g. $800,000 provided by the Ford Foundation to the Grameen Bank in 1981.

By the mid 1990’s most of Grameen Bank’s funding came from the central Bank of Bangladesh

Jonathan Morduch. “The Role of Subsidies in Microfinance: Evidence from The Grameen Bank,” Journal of Development Economics 60, October 1999, 229 – 248.

Early Ford Foundation Support for the Grameen Bank: Lessons in Philanthropic Accountability, Risk, and Impact., Steven Lawry The Hauser Center for Nonprofit Organizations Harvard University,October 2008 Working Paper No. 44

Solution to organisational challenge

- In 1983, Yunus lobbied the government to pass a Grameen Bank ordinance

- This allowed Grameen Bank to exist as a parastatal agency, overseen by a board comprised of Yunus and a small number of state officials.

- This enabled Yunus to keep most of the control over the direction and operations of Grameen bank

The Grameen Bank Ordinance

More threatening problems started to manifest themselves in the late 1990’s

Falling repayment rates Exacerbated by severe flooding in 1998.

A developing Financial crisis Saw a fall in foreign exchange reserves from a peak of $3.4 billion In April 1995 to about $1.7 billion in October 1997. This was a catalyst for other issues

The Debt Trap Not only were repayment rates falling, but they were being covered up, creating what has become known as a debt trap for the poor

“The Story of the Grameen Bank: From Subsidised Microcredit to Market-based Microfinance”., David Hulme., 2011

“Grameen Bank, Which Pioneered Loans For the Poor, Has Hit a Repayment Snag”., Daniel Pearl., 2001

3 Solutions ultimately saved Grameen Bank

1

1 - Bank staff carefully analysing their portfolio at a local level.

Screening borrowers and the issuing of new loans to raise repayment rates, rescheduled old loans and, when necessary, writing-off loans that could not be recovered

2

2 -Mobilising grants from aid donors to offset these losses.

Unclear exactly how this was done, but some commentators suspect it was by presenting the Bank’s financial problems as being due to the floods of 1998, rather than being more systemic

3

3 - Redesign the Bank’s products.

Enabled them to compete with the many other providers of microfinance in the country (which had prospered from Grameen’s initial breakthrough). Ultimately leading to Grameen II.

PIVOTAL SUCCESSES ACHIEVEMENTS

• BELGIUM: King Baudouin International Development Prize, 1992

• BANGLADESH: Independence Day Award: 1994

• MALAYSIA: Tun Abdul Razak Award, 1994

• City Dental College Gold medal: 1995-96

• UNITED KINGDOM: World Habitat Award, 1997

• INDIA: Gandhi Peace Prize, 2000

• USA: Petersberg Prize, 2004

• NORWAY: Nobel Peace Prize, 2006

• MCCI 100 Years Award: 2014

• ICMAB Best Corporate Award: 2014

• UNITED KINGDOM (UK): Best Corporate Social Responsible Bank Award: 2014

• Borrowers. Predominantly women from low-income households

• Muhammad Yunus, Founder

• Dipal Barua, Deputy Managing Director

• Jobaida Karim, an Early borrower

• Government and Policymakers (Bangladesh)

• Donors and International Organizations (World Bank, Development and Donor Agencies)

• Employees and Volunteers (NGOs, UNDP)

• Local Communities

• Grameen Foundation (separate entity working on projects/programs)

KEY STAKEHOLDERS

PROS AND CONS ABOUT MEDIA COVERAGE

Pros

• Strong customer base

• Wide adoption

• International recognition (Awards

• Support from International Bodies

• Funding for expansion

Cons

• Strong criticism

• Worldwide Allegations

• Threat to business model

• Support from International Bodies

Source: https://www.muhammadyunus.org/news/1616/questions-by-critics-on-grameen-bank-and-the-facts-n

BUSINESS OPERATIONS WITHIN SOCIAL CONTEXT

Source: Hazeltine, Barrett., & Bull, Christopher. (2003). Field guide to appropriate technology. Academic.

•4-5 people in group

•2 receive loan

•Products

• Bank Officer & staff

•The Bank Branch

4-5 villages Bank Staff

MechanismSoft Loans

Activity 1

Which chocolate brand is a perfect example of social entrepreneurship?

1. Mars 2. Divine 3. Toblerone

Activity 2

Do you think Grameen Bank has done more good or evil?

1. Good 2. Evil

QUESTIONS?

THANK YOU

GRAMEEN BANK

SOCIAL ENTREPRENEURSHIP

GROUP 1

CHENYU ZHANG Linkedin Profile

NANCY VERMA Linkedin Profile

LOUIS TIPPER Linkedin Profile

USAMA BIN SANA, PMP® Linkedin Profile

[email protected] [email protected]@[email protected]

INTRODUCTION

What is Social Entreprenership?

Broadly speaking, social entrepreneurship is a new, innovative business venture that influences change. A social entrepreneur has a specific cause that they care about, and they develop a business model around making a positive impact. The main goal is to create lasting social change through business. (Martin and Osberg, 2007).

Martin, R. and Osberg, S. (2007). Social Entrepreneurship: The Case for Definition. online available at:https://www.ngobiz.org/picture/File/Social%20Enterpeuneur- The%20Case%20of%20Definition.pdf

GRAMEEN BANK

Education Dhaka University Bachelors and Masters in Economics

1957

1940 19 57

Muhammad Yunus Born on 28 Jun 1940

Vanderbilt University PHS in Economics

Q4 1965

1961 19 71

Chittagong University Lecturer

Microfinance Program

First of its kind in Bangladesh

Q1 1976

1974 Q1 Q2 Q3 Q4

FAMINE Famine hit Bangladesh

Nobel Prize Launch new product line

Q4 2006

2006 Q1 Q2 Q3 Q4

Grameen Bank Established first Microfinance bank in Bangladesh

Q3 1986

AMBITION

Yunus, who was motivated to tackle extreme poverty, especially among women. His vision is to help the poor achieve economic autonomy and social progress through microfinance.

ACTIVITY?

In Social Entrepreneurship, what should come first?

1. Impact? 2. Profit?

Ideology

CHARITY Charity is not the answer.

DEPENDENCY It creates dependency and

takes away individual’s initiative to break through the cycle of

poverty.

OPPORTUNITY Loans offer people the

opportunity to take initiatives in business or agriculture.

POTENTIAL Human beings, including the poorest has endless potential

FOCUS ON WOMEN EMPOWERMENT

Offered credit to many poor, women, illiterate and unemployed people.

REPAYMENT RATE AND SUSTAINABILITY

Access to credit on reasonable terms such as the group

lending system and weekly – installments payment

event timeline

1974 Famine in Bangladesh

1976 Started as a Project

1983 Became Independent

Bank

1990 Got funding from Central Bank of

Bangladesh

1991 Had more than 1

million clients

1998 Repayment Issues

2001 Announced Grameen

Bank II

2006 Noble Peace Prize

Early Stage challenges

As most startup businesses do, Grameen Bank needed funding to develop and expand Funding

If the Grameen Bank organised itself in the same way as the national commercial banks it would be at risk of problems which plagued these banks such as: corruption, nepotistic recruitment, politicisation of lending portfolio.

Achieving the right

organisational structure

Funding Solutions 1970’s /80’s

1990’s

In the very early stages Yunus funded Grameen Bank with his own money

Gained backing from donor funds who had seen little progress from projects ran by governmental agencies e.g. $800,000 provided by the Ford Foundation to the Grameen Bank in 1981.

By the mid 1990’s most of Grameen Bank’s funding came from the central Bank of Bangladesh

Jonathan Morduch. “The Role of Subsidies in Microfinance: Evidence from The Grameen Bank,” Journal of Development Economics 60, October 1999, 229 – 248.

Early Ford Foundation Support for the Grameen Bank: Lessons in Philanthropic Accountability, Risk, and Impact., Steven Lawry The Hauser Center for Nonprofit Organizations Harvard University,October 2008 Working Paper No. 44

Solution to organisational challenge

- In 1983, Yunus lobbied the government to pass a Grameen Bank ordinance

- This allowed Grameen Bank to exist as a parastatal agency, overseen by a board comprised of Yunus and a small number of state officials.

- This enabled Yunus to keep most of the control over the direction and operations of Grameen bank

The Grameen Bank Ordinance

More threatening problems started to manifest themselves in the late 1990’s

Falling repayment rates Exacerbated by severe flooding in 1998.

A developing Financial crisis Saw a fall in foreign exchange reserves from a peak of $3.4 billion In April 1995 to about $1.7 billion in October 1997. This was a catalyst for other issues

The Debt Trap Not only were repayment rates falling, but they were being covered up, creating what has become known as a debt trap for the poor

“The Story of the Grameen Bank: From Subsidised Microcredit to Market-based Microfinance”., David Hulme., 2011

“Grameen Bank, Which Pioneered Loans For the Poor, Has Hit a Repayment Snag”., Daniel Pearl., 2001

3 Solutions ultimately saved Grameen Bank

1

1 - Bank staff carefully analysing their portfolio at a local level.

Screening borrowers and the issuing of new loans to raise repayment rates, rescheduled old loans and, when necessary, writing-off loans that could not be recovered

2

2 -Mobilising grants from aid donors to offset these losses.

Unclear exactly how this was done, but some commentators suspect it was by presenting the Bank’s financial problems as being due to the floods of 1998, rather than being more systemic

3

3 - Redesign the Bank’s products.

Enabled them to compete with the many other providers of microfinance in the country (which had prospered from Grameen’s initial breakthrough). Ultimately leading to Grameen II.

PIVOTAL SUCCESSES ACHIEVEMENTS

• BELGIUM: King Baudouin International Development Prize, 1992

• BANGLADESH: Independence Day Award: 1994

• MALAYSIA: Tun Abdul Razak Award, 1994

• City Dental College Gold medal: 1995-96

• UNITED KINGDOM: World Habitat Award, 1997

• INDIA: Gandhi Peace Prize, 2000

• USA: Petersberg Prize, 2004

• NORWAY: Nobel Peace Prize, 2006

• MCCI 100 Years Award: 2014

• ICMAB Best Corporate Award: 2014

• UNITED KINGDOM (UK): Best Corporate Social Responsible Bank Award: 2014

• Borrowers. Predominantly women from low-income households

• Muhammad Yunus, Founder

• Dipal Barua, Deputy Managing Director

• Jobaida Karim, an Early borrower

• Government and Policymakers (Bangladesh)

• Donors and International Organizations (World Bank, Development and Donor Agencies)

• Employees and Volunteers (NGOs, UNDP)

• Local Communities

• Grameen Foundation (separate entity working on projects/programs)

KEY STAKEHOLDERS

PROS AND CONS ABOUT MEDIA COVERAGE

Pros

• Strong customer base

• Wide adoption

• International recognition (Awards

• Support from International Bodies

• Funding for expansion

Cons

• Strong criticism

• Worldwide Allegations

• Threat to business model

• Support from International Bodies

Source: https://www.muhammadyunus.org/news/1616/questions-by-critics-on-grameen-bank-and-the-facts-n

BUSINESS OPERATIONS WITHIN SOCIAL CONTEXT

Source: Hazeltine, Barrett., & Bull, Christopher. (2003). Field guide to appropriate technology. Academic.

•4-5 people in group

•2 receive loan

•Products

• Bank Officer & staff

•The Bank Branch

4-5 villages Bank Staff

MechanismSoft Loans

Activity 1

Which chocolate brand is a perfect example of social entrepreneurship?

1. Mars 2. Divine 3. Toblerone

Activity 2

Do you think Grameen Bank has done more good or evil?

1. Good 2. Evil

QUESTIONS?

THANK YOU