Grameen social business loan service in Bangladesh

1. Grameen social business loan service in Bangladesh Dr. KaziAbdurRouf York Center for Asian Research Faculty of Environment Studies, York University Noble International University, USA Paper presented at the Noble Institution for Environmental Peace (NIEP) Seminar Toronto. Date: January 14, 2016

2. Presentation contains three parts Grameen Bank microenterprise loan GrameenNabinUddugta (NU), new entrepreneur, social business loan (NUSBL) and Their impact on the second generation of GB borrower in Bangladesh.

3. Background of Grameen Nabeen Uddugta (new entrepreneur) Social Business Funding Project in Banglsdesh Grameen bank has been providing micro-credit to marginalized people in Bangladesh since 1976 Grameen Bank started micro enterprise loan (a little bigger size loan than micro credit) in 1999 Grameen Nabben Uddugta social business loan started in 2008 After resigning Muhammed Yunus from Grameen Bank in 2011, he has structured Yunus Center social business design lab in 2012 NU social business funding project is implementing by Grameen sister organizations designed by the Yunus Center social business design lab in Bangladesh since 2013

4. Grameen new entrepreneur social business loan (NUSBL) program TheGrameen new entrepreneur social business loan (NUSBL) program is designed by MuhammedYunus NUSBL program implementing agencies are Grameen sister organizations GrameenKallayan GrameenShaktiSamajikBabsha Grameen Telecom Trust Grameen Trust

5. Table 1: Distribution of social business equity funding to NUs by Grameen sister organizations

6. Table 2: Year- wise Grameen Bank and Grameen sister organizations social business investment funding to NUs

7. Purpose of the study Purpose of this empirical study is To know the policy, procedure and strategy of this new social business loan product of Grameen sister organizations, and To identify challenge that is facing the second generation of GB borrower in running his and her small social business in Bangladesh.

8. Objectives of the Study The study Examines whether second generation borrower of GB participates in the family and in the community in green enterprise in a more egalitarian way than his/her parent; To examine whether he or she involves in recycling/repairing green businesses than consumer credit, Is NU advocating for the Sixteen Decisions of GB (a holistic socioeconomic and environmental messages) Is NU discussing social issues like rural unemployment and social injustice with her/his neighbors To look at whether second generation borrower of GB encouraging his/her neighboring unemployed young to be involved in small business in Bangladesh.

9. Research Questions What are the policies and strategies, terms and conditions of GB micro enterprise loan to the borrowers of GB and social business loan apply to the recipient of new social entrepreneur? What incentive GB is providing to second generation new entrepreneur of GB ? How is second generation borrower motivated to pursue social business loan? What is the business performance of second generation compared to first generation borrower of GB ? Does GB graduated borrowers and their children encourage their neighboring children for schooling? Do NUs involve in public wellbeing services and develop community local living economic value in the community? What are challenges he/she facing to run his/her business in Bangladesh.

10. Definition and elements of Grameen type social business According to Muhammed Yunus, a social business is a non-dividend company dedicated entirely to achieve a social goal Here investor gets his/her investment money back over time They never receive dividend beyond that amount Sole purpose of the business is to solve a predetermined social problem in a sustainable way Social business can operate in free market economy like profit making business However, goal of social business is not for profit maximization rather overcome poverty, attain financial and economic sustainability Investors get back their investment amounts, but no dividend is given beyond investment money Workforce gets market wage with better working condition and Investee does business with joy.

11. Significance of Grameen social business loan program in Bangladesh Bangladesh youth working age labour force population is 24% However, Bangladesh youth (age 15-24) unemployment rate for females is 9.3%, for male 8.6%, total 8.9% (Asia Pacific Youth Employment Network, 2012) Thousands of unemployed youths are benefited and self-employed through this program The success of the NU social business loan program could be one of the youth entrepreneurship development model in Bangladesh and in world.

12. Table 3: NUs’ educational qualifications

13. Table 4: Category-wise social business numbers

14. Theoretical and Methodological Approach of the Study Developed a questionnaire to collect data using survey method Questionnaire containing open-ended and structured question The study randomly selected interviewees for face-to- face interview in Bangladesh Twelve interviewees randomly selected from each grameen sister organization Total grameen organizations are five, total sample size is 60 Study uses participatory observation, literature review, institutional ethnography method Gathered cliental story Collected information on institutional legal structure, funding model, operational strategy, procedure, and challenge faced by NUs and grameen implementing agencies Maintain a diary and take field notes to record interviewee’s main idea Use Grameen Bank secondary data from its annual reports and manuals Data collected in Bangladesh during September 2014-April 2015 Collected data process , tabulated and analysis in Toronto during May-December 2015

15. Grameen micro-enterprise loan 12% Grameen Bank borrower has received micro enterprise loan from GB GB micro enterprise loan size ranges $400- $ S8000. Micro enterprise loans are using by the fast moving borrowers of GB After completing the higher education, many second generation children of GB borrower start businesses Some of them take over their parents’ businesses.

16. Yunus Center Piloting Grameen Social Business Loan since 2013 MuhammedYunus has been piloting the new social business investment project through Yunus Center Social Business Design Lab since 2013 There are two types of workshops are conducting by Yunus Center social business lab: Social business General workshop and the Social business executive workshop Yunus Centre has been organizing general social business workshops/seminars once in every month , but social business executive workshop is not conducting in every month Method of grameen social business funding system is based on equity partnership between NU and investing grameen sister organizations.

17. Screening process to deliver grameen social business loan to NU in Bangladesh Field worker of the Grameen sister organization visits rural unemployed young and find out potential new entrepreneur ( NUs) in villages Field worker of grameen sister organizations discuss Grammen social business equity investment partnership system with the potential NU Their communication methods are one-o-one counselling, conducting open house workshop and seminar in the villages Business analyst of the sister organization put the business proposal in a format designed by Yunus center social business design lab NU presents his business plan at Dhaka Yunus Center design lab workshop Nu’s social business plan reviews and approves in Yunus Center design lab workshop NU receive business equity investment partnership funding immediately after approval of business plan in the workshop

18. Yunus Center social business design lab Yunus center social business design lab is structured to brainstorm, train and involve its participants in social business Many new ideas have generated in the workshops that assist NUs to get more business ideas Yunus center facilitates link among Grameen sister organizations and new entrepreneurs It also organizes conversations among successful social business NUs and potential NUs.

19. Grameen micro-credit, micro-enterprise loan and social business funding

20. Grameen micro-credit, micro-enterprise loan and social business funding

21. Benefits of Grameen NU social business loan (NUSBL) GSBL service is an anti-colonial localization process that empowers marginalised people It is a sustainable business development model in Bangladesh NU is involved in businesses like community information center, sports/music/theatre club Web page designing, multimedia studio Fisheries , poultry and livestock farming, poultry feed manufacturing and selling Equipment leasing, garments manufacturing and marketing, Manufacturing leather products and ceramic products NUSBL program keeps youth in rural area that protects him/her from to urban migration Grameen sister organizations mentor youth entrepreneurs to develop their entrepreneurs skills and This NUSBL program facilitates self-employment among rural youths in Banglsdesh

22. Findings- 1 Grameen Bank average micro-enterprise loan size is ranges from $450-$8000 5,431,907 micro enterprise loan borrowers of GB have received $ 2,443 million loan Micro enterprise loan amounted 6.06 % of grameen bank total loan disbursement Grameen social business loan receives by second generation of GB borrower NUs’ GSBL average loan size is $470 More than 90% of NUs receive social business loan for the first time NU sends his/her business daily income statement to Dhaka grammen monitoring cell by SMS Grameen field staff identifies potential business entrepreneurs and assist them receive GSBL GSBL implementing agencies are assisting to develop NUs capability and capacity building to run their business

23. Findings continue- 2 Grameen sister organizations support local business initiatives and assist to build NU’s business confidence They assist NU gets new business idea, develop business plan, aware market information and business safety net These organizations also link NU with similar other business initiator Business analyst share how to minimize and recoup with business and to recoup with financial risk NU receives post–loan delivery services like post-business counselling, post-funding mentoring business and business management training etc.

24. Business items of NUs Set-up kindergarten school, coaching center, child care center in the neighbourhoods Set-up community information center and community club Open IT center, electronics repairing centers and electronics selling centers in the villages Veterinary clinics, naturopathy business Law farms and social forestry

25. Study outputs, outcomes, and potential usefulness of the research Study findings has send to Yunus Center and grameen sister organizations Hope GSBL implementing agencies find their strengths and weaknesses, threats and potentialities by reading the report Disseminate the finding of the report to the faculties and students of Environmental Studies, York University, and York Center for Asian Research (YCAR) Social business organizations, educationalists, social economy researchers, policy makers, and business students can benefit from this study This report would particularly benefit to the second generation of GB borrowers and NUs those who receive micro-enterprise loan and grameen social business funding in Bangladesh.

26. Table- 5: First oan size (TK) of NU

27. Table 6: NU’s business similar to parent’s business

28. Table 7: Ways of motivation of NUs to engage in business (multiple responses)

29. Table 8: Number of employees hired by NU his/her business

30. Table 9: Hiring employees from within/outside home by NUs

31. Table 10: Reason for received NU loan (multiple responses)

32. Table 11: Small business management training receiving status of NU

33. Table 12: NUs’ ways of business expansion

34. Table-13: NUs agreed to spread business idea to their neighbour children

35. Table 14: Neighbouring children inspired to start business motivated by NUs

36. Table 15: NUs like to teach business to their neighbouring children

37. Table 16: Business advise to neighbouring children by NUs

38. Table 17: NUs are facing problems/challenges in their businesses

39. Table 18: NU’s Involvements in community activities

40. Table 19: Follow and practice socioeconomic, environmental notions

41. Table 20: NUs’ involvements in green businesses

42. Implication of the study This research generates a new knowledge of social and green financing This study could help social business implementing agencies to improve their social business loan programs By reading this report, social business funding Grameen sister organizations and other social enterprise agencies could benefit.

43. Conclusion This policy empirical research report creates a new knowledge in the field of social enterprise management in the field of entrepreneurship development There is a huge market for social business equity financing in Bangladesh Therefore, it is better implement this program by an organization that is fully assigned to implement the program GB and grameen sister organizations have been instrumental in providing income-generating opportunities to poor people particularly for empowering woman through the extension of collateral-free banking in Bangladesh since 1976 This policy empirical research provides information on Grameen Bank (GB) second generation borrower and their social entrepreneurship developmental status in Bangladesh

44. Conclusion- continue 2 Grameen social business loan program is experimenting and implementing by grameen four sister organizations Expand the NU social business equity investment funding program to both inside and outside Grameen borrowers’ families Surprising Grameen bank has reduced its NU social business funding services after 2012 As GB has huge network across Bangladesh and there is a huge demand for social business equity loan among fast moving borrowers of GB, GB could continue social business funding services to its first moving borrowers

45. Thank You Comments/Questions