Dr. Muhammad Yunus: Father of Microcredit and Social Business

September 8, 2021

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Dr. Muhammad Yunus, the first and foremost Nobel prize winner, social entrepreneur, banker, and economist of Bangladesh. According to the world economic forum’s survey, Dr. Yunus is the 9th most admired personality globally. He has changed the destiny of the ignorant part of our society, especially the women, with his micro-lending and social business concept. Inspired by his social breakthrough concept, more than 100 countries adopted this model; even developed nations like the United States also foster it. In 2006, Dr. Yunus and Grameen Bank were awarded the Nobel prize in peace for creating economic and social development for the deprived part of our society.

Early Life

He was born on June 28, 1940, in Chittagong under the control of the British Colony. He was the third child of Bengali Muslim couple Hazi Dula Mia Shoudagar and Sufia Khatun. He spent his boyhood in a rural village, but in 1944 his family moved to the city of Chittagong and enrolls at the Lamabazar Primary School. Later, he participated in Boy Scouts when he enrolled in the Chittagong Collegiate School. He got an opportunity to travel to countries like West Pakistan, India, Europe, and the USA because of his participation in Boy Scouts. He has always been a meritorious student and ranked 16th in Matriculation Examination out of 39,000 students in East Pakistan.

After completing his Matriculation Examination from Chittagong Collegiate School he enrolled himself in Chittagong College. Along with the study, he was good at extracurricular activities, he received several awards in cultural activities. He completed BA and MA from the Department of Economics department of Dhaka University in 1960 and 1961 respectively. Later, he started working as a research assistant with Nurul Islam and Sobhan in Economic Research during that time he joined Chittagong College as an Economics lecturer. At the same time, he set up a packaging factory.

He received a Fulbright scholarship from Vanderbilt University in 1965. In 1969, he completed his Ph.D program from the same University. There he met Vera, she was a daughter of Russian immigrants, she was studying Russian Literature at that University. They got married in 1970, but that marriage didn’t last long after the birth of their first child Monica. They were separated in 1979.

In 1969, he got an opportunity to be an Economics assistant professor at Middle Tennessee State University, where he worked till 1972. During the Bangladesh Liberation War in 1971, Dr. Yunus was in the US for his work. Like all fellow Bangladeshi, Dr. Yunus was shocked by the news of the East Pakistan Attack on Bangladesh. In 1971, he formed a citizen’s committee in Nashville to raise funds for Bangladesh and convince the US Congress to stop military assistance to Pakistan. In 1972, In spite of having a prosperous career abroad, he decided to return after the liberation war. Dr. Yunus started working in the government planning commission. However, that job was not fascinating to him anymore, so he decided to shift his career path, as a result, he started teaching as an associate professor at Chittagong University. Then he married Afroza Yunus. During the 1974 famine, he had witnessed the sorrows of the poorer society of Bangal, which inspired him to work on the reduction of poverty and unemployment. As a research project, he established Nabajug (New Era) Tebhaga Khamar (three share farm), which the government later adopted as the Packaged Input Programme.

Introduce Micro-Credit

In 1976, when he visited Jobra village near Chittagong University, Dr. Yunus noticed that the Jobra women withdrew money from moneylenders with a significantly large return rate. Moreover, the borrowers even had to give up on their profit to return the loans. According to the TedX speech of Dr. Yunus, he gave $27 dollars to 42 women as a loan, so that they can have their own business and set themselves free from the loan shark. Lending small amounts of money gave birth to the concept of microcredit. To continue the process, he secured a credit line from the state-owned Janata Bank. But it was not an easy task, and he had to persuade conventional banks because, in the first place, they were not ready to cooperate with the process. So, he offered himself as a guarantor, and he also took all the risk of borrowers. Including banks in this process is called Micro- Finance. That is why Dr. Yunus is known as the father of Micro-Finance.

Founded Grameen Bank

In 1983, Dr. Yunus founded Grameen Bank (Bank for the poor) by combining two concepts: Micro-credit and Micro-Finance. This bank is run with the principle of “ Loans are better than charity to finish poverty”. It is the only lawyer-free bank in the whole world that diminishes the collateral banking system. Grameen Bank stands on the reverse psychology of conventional banking systems. They provide small long-term loans on easy terms, so almost anyone can get bank credit. In recent times, the average amount of money borrowed is eight thousand takas. Grameen Bank also provides solidarity lending. Solidarity lending is a lending practice where small groups borrow collectively and group members encourage one another to repay. With this small amount of money, the borrower starts their own business and pays back all the credit with a certain amount of interest rate to the bank. If one person in the group failed to make a profit, the rest of them will collaboratively repay the money. It is the backbone of Micro- Finance.

In 1989, he established the non-profit private organization Grameen Trust, which uses microcredit as a tool following Grameen Bank’s approaches all over the world. The majority of the people thought it would collapse one day, the moneylender will not be able to repay the lent money. But, Dr. Yunus never lost hope, currently, GB is running its operation in more than 35,000 villages of Bangladesh.

According to the GB summary paper, last year it provided $380 million to 3.62 million loan seekers, and the interesting factor is 94% of the customers are women. Dr. Yunuses Grameen Bank has changed the lives of many poor families, they have their own homes, children are going to school, they don’t have to worry about their next meal. After fourteen years of the establishment of GB, 2 million people have been able to start their own business, so we can assume that by the end of 2021 the number increases at an alarming rate. At the age of 71, Dr. Yunus retired from the managing director position.

Though GB has changed many lives by providing small loans, in contrast, there is a portion of those who have to go through a lot of hardship to repay the interest rate. But this opposite side of the story never came in front of the media, because during the 1970-2000 rural part of our country was out of media coverage. But in 2010-2011 they started receiving media attention when people gave interviews regarding those issues.

Establish Social Business 

To promote and implement Yunus’s philosophy and solve issues related to social business, in 2006 Dr. Yunus established the Yunus Center. Right now he is the chairman of the research center and the executive director is Ms. Lamiya Morshed. They are actively working to utilize United Nations Millennium Development Goals in Bangladesh with the aim to make our country free from poverty by the end of 2030. He is also the founding member of Global Elders and Nelson Mandela is the chairman. This year, Dr. Yunus and Grameen Bank were awarded the Nobel prize in peace for creating economic and social development for the deprived part of our society.

In 2011, Dr. Yunus founded Yunus Social Business-Global Initiatives (YSB) with the aim to develop and implement his social business ideas to solve issues related to social problems around the globe. In 2012 he was appointed as the chancellor of Glasgow Caledonian University where he served until 2018.

Dr. Yunus invested $1.4 million of his awarded money to implement his new social business plans. One of the plans is, he will make a low-cost, high-nutrition food processing factory for the poor, and the rest of the money will be directly invested to set up an eye hospital for the poor in Bangladesh. Later, in 2007, he opened a yogurt factory in Dhaka in partnership with French food company Danone. Currently, Grameen 6.6 million members are buying this yogurt for their kids at an affordable price that is 25 taka a cup. These cups are biodegradable, as they use cornstarch, using solar panels for electricity including effectively use rainwater as well. Grameen micro borrowers and micro vendors parallelly work to execute the whole working process. Women take loans to buy cows and sell milk to the front end. Micro vendors in this cycle sell the yogurt door to door. Yunus yogurt factory employs 15-20 people within a 20-mile radius and also provides a source of income for more than 1600 people. Dr. Yunus and Danone planned that they would reinvest the revenue and they would only take out the initial cost of capital to continue the process. Yunus operates his social business like a profit-maximizing business. Though the main purpose of running this business is creating sustainable social impact by creating income for disadvantaged populations or servers them as its primary customers. In 2007, he published a book named Creating a World without Poverty: Social Business and the Future of Capitalism where he demonstrated how creative business ideas can solve society’s ground-level serious problems while maximizing profits.

Inspired by his groundbreaking business ideas more than 100 developing nations adopt his philosophy including developed countries like the USA, to acknowledge his contribution to social development In January 2008, Houston, Texas announced January 14 as Muhammad Yunus Day. Again in 2010, he published another book with the title Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most Pressing Needs.

Dr. Yunus and Grameenphone 

Inspired by the Grameen Bank model, the United States resident Iqbal Quadir founded GrameenPhone, Bangladesh’s leading mobile phone operator, in 1997 with the help of Dr. Mohammad Yunus. Currently, GrameenPhone is the largest Tax provider in Bangladesh.

The basic idea of ​​the Grameen Bank model was that a woman would buy a cow with a loan from Grameen Bank and sell the milk of that cow and gradually repay the loan. Iqbal Quader wanted to keep this model right, encouraging borrowers to buy mobile phones instead of cows.

Mr. Quader’s “Palli Phone” concept was such that Grameen Bank would provide a loan of Tk 12,000 to purchase a Grameenphone subscription, and training would be provided on how to earn from it. Grameen Telecom is a subsidiary of Grameen Bank, it is a joint venture of Norway’s Telenor and Iqbal Qadir, Grameen Bank owns 38 percent of Grameen Telecom’s shares.

At the time of the establishment of Grameenphone, Grameenphone had an agreement with Telenor to reduce the majority stake of Telenor within 6 years as per the agreement with Norwegian Telenor. In his Nobel Prize lecture, Dr. Yunus appealed to Telenor to run Grameenphone as a social business by reducing Telenor’s majority stake and increasing the stake of rural poor women in Bangladesh. Grameen Bank’s unit Grameen Telecom also offered to buy another 13 per cent stake in GrameenPhone. Had the deal been implemented, Grameenphone would have had a 51-percent majority shareholder in Grameen Telecom. The Norwegian Telenor Group, however, rejected the previous agreement with Dr. Yunus, saying it was not legally binding. Which, of course, made Dr. Yunus and Telenor drift apart.

Diversify Business

Dr. Yunus established more than 50 different organizations using the social business model to solve the country’s poverty and development problems. These include mobile phone companies Grameenphone, Grameen Shakti, social venture capital Grameen Fund, Grameen Textiles, Grameen Knitwear, Grameen Shiksha, Grameen Krishi, Grameen Fisheries and Livestock.

“Rural Fisheries and Livestock” was established to alleviate rural poverty through the development of fish farming and dairy farming systems. In addition, Grameen Business Promotion, Grameen Danone Foods Ltd, and Grameen Healthcare Services were established. In 2017, Dr. Mohammad Yunus published another book, A World of Three Zeros: The New Economics of Zero Poverty, Zero Unemployment, and Zero Net Carbon Emissions. He founded Yunus Sports Hub in 2018 with the aim of collaborating with social business as well as sports. Sports and social business continue to work to develop athletes as entrepreneurs through proper training and the provision of bank credit, as well as the full use of sports infrastructure. He also thought of organizing the 2024 Olympics as a social business. It is a $7 billion project, all of which will be used for social work.

Achievements and Awards 

Dr. Yunus won the Ramon Magsaysay Award in 1984 for Community Leadership. He won the Central Bank Award in 1985 for introducing new mechanisms in banking, self-employment, and socio-economic development. He also won several awards, in 1993, the Humanitarian Award, the World Food Prize in 1994, and the World Food Prize Foundation, Independence Day Award in 1987 for his various concept ideas and ventures. He is also a member of the United Nations Foundation.

On the other hand, in 2006, Dr. Mohammad Yunus was awarded the Nobel Peace Prize for his contribution to the socio-economic development of the country’s neglected population. In 2007, he received the Nichols-Chancellor’s Medal from Vanderbilt University. In addition, he has been honored as an advisor to the government of Hainan, China, and has received a total of 62 doctoral degrees from various universities. In 2009, Dr. Yunus received honorary degrees from Glasgow Caledonian University and the University of Glasgow. Be able to receive the Presidential Medal of Freedom award from Barack Obama in 2009. Moreover, in 2021, as the second person in the world to be able to win the Olympic Laurel award for development in education and culture.


Once he had plans to join politics since he had bigger goals to serve the ignored part of society. Later he decided to give up on the plan. Currently, he is actively working to ensure COVID-19 vaccine equality, since some people are trying to protect the vaccine to make a profit.

In Bethell’s words, he has been described as a mesmerizing salesman. He also has been praised by renowned personalities like Bill Clinton, Nelson Mandela including the great Barack Obama. He has smashed numerous rules in banking sectors like the collateral systems. He gives loans to the poor, not to the rich. To men: not to the Women. As he thinks that each individual is an entrepreneur but due to the social oppression they are stuck in poverty. So, we can say that to get rid of global poverty we need more energy and optimism like Yunus.



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