People: Our External Stakeholders

1. People: Our External Stakeholders Business in Context: 2007

2. Riziya Begum is not poor anymore! • Riziya and her husband were amongst the million of poor farmer in her country, growing rice and living day-to-day. “Sometimes I ate – sometimes I didn’t have food” she says. • She bought her first cow with a loan equivalent to R 240 from a SPECIAL BANK, and eventually bought land with the money she earned from selling cows. • She then was able to send her son to work in Saudi Arabia with the money she earned from selling some of the land. He was then able to start buying her things such as a TV, which the family had never possessed, while she bought more land on which to build homes for her two sons. • Her greatest success is her daughter, Aklima, who is the first girl in many generations who is actually going to school! Riziya is going to take out a Higher Education Loan from her SPECIAL BANK to send Aklima to university when the time comes. Business in Context: 2007

3. … and Beggars CAN be Choosers! • This SPECIAL BANK also set up an interest-free loan programme for beggars. • Although there’s no obligation to pay the loans back, they do, because if they use the money to buy small items to sell and pay back the loan amount, they can get another (and often bigger) loan. • With a loan of R 110, Sajeda Begum started buying eggs from the market in the early mornings, taking them home and boiling them and then selling them for a mark up of 15 cents each to factory workers at the end of their shifts. Her net profit of R 3 per day is enough to feed her family and make repayments on her loan. “No more begging!” she says. “I hope to borrow another R 400 to expand this business – it makes money!!!” • So far this programme has turned 78 000 beggars into merchants. Business in Context: 2007

4. Hi! My name is ………… Business in Context: 2007

5. Muhammad Yunus – winner of the 2006 Nobel Peace Prize! • Yunus started by lending R 200 from his own pocket in the belief that the poor, particularly poor women could be empowered as entrepreneurs if only they had the means to start their own small businesses. • So he started a SPECIAL BANK called Grameen Bank in his home country of Bangladesh - one of the world’s poorest countries • It took 3 decades to receive worldwide recognition but now has transformed thinking in the banking, development and non-profit worlds. The thinking that it is business not governments that will lead the way forward to solve social problems. • The Grameen approach to microlending hinges on the belief that people don’t need the threat of seized assets as an incentive to pay back loans. To prove the point they boast an audited repayment rate of 98% - far higher than the standard for loans requiring collateral! Business in Context: 2007

6. How does this ‘special’ bank work? • Grameen Bank is self-sustaining, charging interest rates of 20% on basic loans and lending ONLY the money it gets in from members REPAYING LOANS. • Loans always start out small (between R 70 to R 150) and then increase as members develop solid repayment histories. Some now borrow as much as R 150 000! • Critics who argue that microlending is too small to make a significant difference may be surprised to hear that 5% of Grameen Bank’s borrowers escape poverty every year, enough to double the annual poverty-reduction rate of Bangladesh from 1% to 2%. Business in Context: 2007

7. The “Social Business Enterprise” The world has been aware of poverty for a long time. As long ago as 1915, the Harvard Business School even offered a course called ‘Social Factors in Business Enterprise’. Yet …… • A recent United Nations study concluded that the richest 2% of the world’s adults, mostly Americans, Europeans and Japanese OWN MORE THAN ½ OF GLOBAL HOUSEHOLD WEALTH! • 3 billion people – almost HALF THE WORLD’S POPULATION STILL LIVE IN POVERTY!!! • Even the USA – the world’s wealthiest country has 36 million people living below the poverty line So what is to be done? Business in Context: 2007

8. The Social Business Enterprise continued … Well – Yunus asked the following questions: “What if we lived in a world where companies didn’t measure their performance only in terms of revenue and profitability? What if, for example: • pharmaceutical companies also reported on the number of LIVES SAVED by their drugs every quarter, and • Food companies reported on the number of CHILDREN RESCUED FROM MALUTRITION every quarter?” In the autumn of 2005, Yunus invited the CEO of Danone to come and build a Social Business Enterprise making Danone Yogurt in Bangladesh at a cost of +/- R 3,8 million. Business in Context: 2007

9. The Social Business Enterprise Business Model The yogurt factory only provides direct jobs for 20 people but: • The yogurt is priced at 50 cents a cup to make it affordable • The yogurt factory buys milk from the people who borrow money from the Grameen Bank to purchase cows in order to produce that milk • Microvendors who have also borrowed money from Grameen, sell the yogurt door-to-door • Grameen has 6,6 million members – a ready market for the yogurt • All the revenues from sales are re-invested in the business and Danone gets its R 3,8 million capital investment back after 3 years (no interest – but no loss) • +/- 1 600 people earn income from the process • Danone gets to establish its ‘brand’ as A SOCIALLY RESPONSIBLE CONSUMER GOODS COMPANY IN A DEVELOPING COUNTRY!!! Business in Context: 2007

10. “The new wave in business is forget corporate social responsibility and philanthropy – how do you integrate the social issue into your core business? The idea that Danone has of creating a social dividend for shareholders – that’s cutting edge. No-one else has come up with this interesting model. It supports your brand, returns your capital, you’re not going to lose money, and you give your shareholders a vision of doing something good.” Marc van Ameringen Global Alliance for Improved Nutrition Geneva: Switzerland Business in Context: 2007