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They may sound like two opposite world but actually my understanding is that microcredit and world entrepreneurs search to unite humanity's sustainable progress through the following beliefs:

the word entrepreneur originated in France in the late 1700s to study how to map empowerment of every human being's productive freedom and deepest ability to make a lifelong difference; for the first 141 years of its journalism The Economist used this human lens to severely contest with leaders : their industry sector responsibilities and what truths they were compounding

- probably the last text of this sort was filed by my father around 1984 as the conclusion to his trilogy of surveys celebrating the empowerment of humanity by system change and entrepreneurial revolution

24 years lateer we have this update page from St James London on the day dad and Dr Yunus hosted a lunch for 28 inquistive frinds or Future Capitalism

For all these sorts of reasons we are interested in mapping how to connect networks of world entrepreneurs. On the second day of Dr Yunus' book launch in the Uk we sampled 450 world entrepreneurs at the wes summit and made some joint pledges like these:

WES pledges

Chris Macrae pledged to become a strategic partner and develop a series of collaboration cafe events, seminars and a book club around the wes08 themes and Muhammad Yunus's book, Creating a World Without Poverty. These will be in London and New York.  For more information, please contact either info@deltaeconomics.com or chris.macrae@yahoo.co.uk.

Femi Longe of Africa Plus Plus pledged to leverage the resources of the African Diaspora to participate in the development of the continent.  Africa ++ aims to surface opportunities for involvement with sustainable interventions and support the realisation of individual ideas on engagement.  Please contact femi@africaplusplus.org for more details.

Sofia Bustamante and the Brixton Hub pledged to create a confluence of ideas and actions of people's efforts after wes08 and big events generally through social action committees. For more information, please go to http://www.turnupthecourage.com/

op-ed by Norman Macrae

THE IMPORTANCE OF DR YUNUS

By Norman Macrae

The Nobel Peace Prize for 2006 was controversially awarded in Oslo to a "banker for the poor" in once basket case Bangladesh. Since the microcredit system pioneered by this Doctor Muhammad Yunus really has raised record millions of Bangladeshi women from the world’s direst poverty, Yunus was greeted on his recent visit to London largely by the misunderstanding Left. But as an octogenarian Thatcherite, I also had lunch with him and thrill fully to his stated aim to "harness the powers of the free market to solve the problems of poverty", and his brave belief that he can "do exactly that". This apparent appearance of a viable system of banking for the poor has important implications we had better start by examining how microcredit almost accidentally came about.

 

 

START IN A STARVING VILLAGE

During Bangladeshi’s terrible famine year of 1974, Dr Yunus ( who had attained his doctorate in economics in a fairly free market American university) was back at his 1940 birthplace of Chittagong, Professor of Economics at the university there. He took a field party of his students to one of the famine threatened villages. They analysed that all 42 of the village’s small businesses (tiny farm plots and retail market stalls) was indeed going bust unless they could borrow a ridiculously tiny total $27 on reasonable terms.

 

First thought was to give the $27 as charity. But Yunus lectured that a social business dollar that had to be paid back from careful use in an income generating activity, was much more effective than a charity dollar which might be used only once and frittered away. All of those first 42 loans were fully repaid, and lent back, and after 9 years further experiments Yunus in 1983 founded his Grameen (which means Village) Bank. Its priority was to make loans that were desperately needed by the poor instead of the usual banking priority to make the safest loans to the rich who could provide collateral against what they happened to want to borrow.

 

In the next 23 years, Grameen provided $6 billion of loans to poor people with an astonishing 99% repayment rate. In 2006, it had seven million borrowing customers, 97% of them women (who tend to be the poorer sex in rural Islamic societies) in 73000 villages of Bangladesh. Microcredit had by then reached 80% of Bangladeshi’s poorest rural families and over half of Grameen’s own borrowers had risen above the absolute poverty line.

 

When a Grameen bank manager goes to a new village, he has entrepreneurially to search for poor but viable borrowers . He earns a star if he achieves 100% repayment of loans, and another star if he attains achievement of the 16 guarantees that all customers are asked to pledge, ranging from intensive vegetable growing through attendance of all children at school, to abolition of dowries. A branch with five stars would oftenb transfer to ownership by the poor women themselves. A branch with no stars would be in danger of closing, so borrowers tend to rally round with suggestions, such as which unreliable repayers to exclude.

 

An early income generator was the profession of telephone ladies. They borrowed enough to buy a cheap mobile phone from a Grameen subsidiary. They world draw fees for phoning to see if more profitable prices for crops were available in a neighbouring village, and from anybody who wanted to hire the phone to contact the outside world. This is a job that could only become important in a microcredit setting; the owner of a mobile phone in richer suburbia would not find many customers to hire her set. Village garment-makers were soon exporting clothes to far countries which made free trade by the importing countries important. One special desire of Yunus was to improve the nutrition of poor children in the villages of Bangladesh, and he formed a social business with the large French food multinational called Danone. Grameen-Danone test marketed to find what sorts of fortified yogurt Bangladeshi children would like. Although Danone at first wanted large plants with refrigerated systems, Grameen won the debate to make then small plants who bought local milk and very cheap local distributors who knew which families had children who might buy the cheap yogurt fresh. Danone had to agree not to pay any dividend from the sales of the yogurt in Bangladesh so as to keep the price cheap at a few US cents per cup, but its $1 million investment remains returnable and it has learnt a lot about sales of a new product in poor countries.

 

THE FUTURE

Will such Social Businesses spread as far as Yunus hopes? I doubt this. Great leaps like Microsoft’s invention of good software are often made by small but initially hugely profit making small businesses. But it is easy to see a Grameen-Microsoft social business providing software suitable for poor countries where even adults are often illiterate. My view is that the Grameen experiment may prove to be most important for what might be called its macroeconomic impact. When more formal banking for the rich is intermittently in crisis, this may be happening now. In this 2008, conventional bankers to the rich have trotted in panic behind the American giants who grossly mislent on subprime mortgages, and then sold these loans on in "securitised", and exploding and even "derivitavised" packages to weaker funds and banks who have frantically tried to disguise from their shareholders and from themselves how unmarketable and worthless some of these assets are. If all bank statements in early 2008 had been utterly and appallingly honest, runs by depositors out of them could already have accelerated out of control. Such banking crises are likely to recur before and after next January when a new American president takes office. To judge from the protectionist economic nonsense at least two of the three candidates have talked in the primaries, a tyro president would be quite liable to bumble such a crisis into an even a 1929-1933 type of world slump. Britons should remember that our prime minister in 1929 was our last previous dire right wing Labour Scot, and that he had to coalesce in 1931 with a Baldwin who was as deaf as today’s Cameron to why it is better to widen budget deficits in a slump.

 

A lesson in how to run village businesses and not to handle bank crises comes also from Japan. When I wrote my first book on Japan’s economy nearly 50 years ago, Japan had about two dozen lightly taxed exporting multinationals who bought their components marvellously cheaply. The car factories bought their ball bearings from tiny village firms, and the banks attached to Toyota etc kept on lending even when some peasant’s first bearings did not past muster but gradually propelled him to work with or under a brighter neighbouring peasant whose products did. That seemed inefficient to American experts and in the early 1960’s I had a translated debate on Tokyo television with an American who said that such slack banking would ruin the country. I rejoiced as Japan then quintupled its living standards in the next twenty years and its banks became temporarily the most powerful and prosperous in the world. The crash came when in the late 1980s American business schools convinced Japanese factories that components must be bought just-in-time. The big banks turned to financing suppliers who could do this (which were not those striving to be cheapest). Banks lent mainly to new firms who could provide collateral which meant to richer ones. Once they were lending mainly to the rich they blew up such a bubble that the nearest golf course to Toky o was said to have a greater land value than the whole state of California. When this bubble burst, all the banks had bad debts, which the government helped them to hide so Japanese living standards stop rising fast since circa 1989. This is the threat to the whole rich world today.

THE IMPORTANCE OF DR YUNUS

By Norman Macrae

The Nobel Peace Prize for 2006 was controversially awarded in Oslo to a "banker for the poor" in once basket case Bangladesh. Since the microcredit system pioneered by this Doctor Muhammad Yunus really has raised record millions of Bangladeshi women from the world’s direst poverty, Yunus was greeted on his recent visit to London largely by the misunderstanding Left. But as an octogenarian Thatcherite, I also had lunch with him and thrill fully to his stated aim to "harness the powers of the free market to solve the problems of poverty", and his brave belief that he can "do exactly that". This apparent appearance of a viable system of banking for the poor has important implications we had better start by examining how microcredit almost accidentally came about.

 

 

START IN A STARVING VILLAGE

During Bangladeshi’s terrible famine year of 1974, Dr Yunus ( who had attained his doctorate in economics in a fairly free market American university) was back at his 1940 birthplace of Chittagong, Professor of Economics at the university there. He took a field party of his students to one of the famine threatened villages. They analysed that all 42 of the village’s small businesses (tiny farm plots and retail market stalls) was indeed going bust unless they could borrow a ridiculously tiny total $27 on reasonable terms.

 

First thought was to give the $27 as charity. But Yunus lectured that a social business dollar that had to be paid back from careful use in an income generating activity, was much more effective than a charity dollar which might be used only once and frittered away. All of those first 42 loans were fully repaid, and lent back, and after 9 years further experiments Yunus in 1983 founded his Grameen (which means Village) Bank. Its priority was to make loans that were desperately needed by the poor instead of the usual banking priority to make the safest loans to the rich who could provide collateral against what they happened to want to borrow.

 

In the next 23 years, Grameen provided $6 billion of loans to poor people with an astonishing 99% repayment rate. In 2006, it had seven million borrowing customers, 97% of them women (who tend to be the poorer sex in rural Islamic societies) in 73000 villages of Bangladesh. Microcredit had by then reached 80% of Bangladeshi’s poorest rural families and over half of Grameen’s own borrowers had risen above the absolute poverty line.

 

When a Grameen bank manager goes to a new village, he has entrepreneurially to search for poor but viable borrowers . He earns a star if he achieves 100% repayment of loans, and another star if he attains achievement of the 16 guarantees that all customers are asked to pledge, ranging from intensive vegetable growing through attendance of all children at school, to abolition of dowries. A branch with five stars would oftenb transfer to ownership by the poor women themselves. A branch with no stars would be in danger of closing, so borrowers tend to rally round with suggestions, such as which unreliable repayers to exclude.

 

An early income generator was the profession of telephone ladies. They borrowed enough to buy a cheap mobile phone from a Grameen subsidiary. They world draw fees for phoning to see if more profitable prices for crops were available in a neighbouring village, and from anybody who wanted to hire the phone to contact the outside world. This is a job that could only become important in a microcredit setting; the owner of a mobile phone in richer suburbia would not find many customers to hire her set. Village garment-makers were soon exporting clothes to far countries which made free trade by the importing countries important. One special desire of Yunus was to improve the nutrition of poor children in the villages of Bangladesh, and he formed a social business with the large French food multinational called Danone. Grameen-Danone test marketed to find what sorts of fortified yogurt Bangladeshi children would like. Although Danone at first wanted large plants with refrigerated systems, Grameen won the debate to make then small plants who bought local milk and very cheap local distributors who knew which families had children who might buy the cheap yogurt fresh. Danone had to agree not to pay any dividend from the sales of the yogurt in Bangladesh so as to keep the price cheap at a few US cents per cup, but its $1 million investment remains returnable and it has learnt a lot about sales of a new product in poor countries.

 

THE FUTURE

Will such Social Businesses spread as far as Yunus hopes? I doubt this. Great leaps like Microsoft’s invention of good software are often made by small but initially hugely profit making small businesses. But it is easy to see a Grameen-Microsoft social business providing software suitable for poor countries where even adults are often illiterate. My view is that the Grameen experiment may prove to be most important for what might be called its macroeconomic impact. When more formal banking for the rich is intermittently in crisis, this may be happening now. In this 2008, conventional bankers to the rich have trotted in panic behind the American giants who grossly mislent on subprime mortgages, and then sold these loans on in "securitised", and exploding and even "derivitavised" packages to weaker funds and banks who have frantically tried to disguise from their shareholders and from themselves how unmarketable and worthless some of these assets are. If all bank statements in early 2008 had been utterly and appallingly honest, runs by depositors out of them could already have accelerated out of control. Such banking crises are likely to recur before and after next January when a new American president takes office. To judge from the protectionist economic nonsense at least two of the three candidates have talked in the primaries, a tyro president would be quite liable to bumble such a crisis into an even a 1929-1933 type of world slump. Britons should remember that our prime minister in 1929 was our last previous dire right wing Labour Scot, and that he had to coalesce in 1931 with a Baldwin who was as deaf as today’s Cameron to why it is better to widen budget deficits in a slump.

 

A lesson in how to run village businesses and not to handle bank crises comes also from Japan. When I wrote my first book on Japan’s economy nearly 50 years ago, Japan had about two dozen lightly taxed exporting multinationals who bought their components marvellously cheaply. The car factories bought their ball bearings from tiny village firms, and the banks attached to Toyota etc kept on lending even when some peasant’s first bearings did not past muster but gradually propelled him to work with or under a brighter neighbouring peasant whose products did. That seemed inefficient to American experts and in the early 1960’s I had a translated debate on Tokyo television with an American who said that such slack banking would ruin the country. I rejoiced as Japan then quintupled its living standards in the next twenty years and its banks became temporarily the most powerful and prosperous in the world. The crash came when in the late 1980s American business schools convinced Japanese factories that components must be bought just-in-time. The big banks turned to financing suppliers who could do this (which were not those striving to be cheapest). Banks lent mainly to new firms who could provide collateral which meant to richer ones. Once they were lending mainly to the rich they blew up such a bubble that the nearest golf course to Toky o was said to have a greater land value than the whole state of California. When this bubble burst, all the banks had bad debts, which the government helped them to hide so Japanese living standards stop rising fast since circa 1989. This is the threat to the whole rich world today.


History of WES - World Entrepreneur Summits

Inaugural launch by Rebecca and Dennis Harding of Delta Economics , Westminster London WES08, January

May: Kenya Regional World Entrepreneur Summit 
-a co-production of Delta Economics and http://www.sacomacfe.com/

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