Our current economic system is focused only on profit maximization. This has not only created an insatiable appetite for growth but has given rise to systemic inequalities and the overexploitation of the environment. The pandemic and recent climate disasters have exposed these problems and call for the need for a new economy. Nobel Laureate Prof. Muhammad Yunus suggests an alternative model to this system: a concept called Social Business.
A Social Business encourages regenerative development; it is a financially sustainable business that puts its social cause at the forefront. Investors can invest in the company to achieve a social cause and, after a certain length of time, the investor can withdraw the amount invested. Unlike profit-making companies, a Social Business’ success is determined by the amount of societal influence it can have within the current system. Grameen’s Social Business model has proved to solve social problems while meeting its operational costs and has been particularly beneficial during the pandemic. In this article, we highlight examples of how social businesses address global healthcare inequities and have proven to be resilient even during the pandemic by design.
The potential of Social Business in the global healthcare ecosystem
The global pandemic has highlighted the importance of an equitable and value-driven healthcare system that is both financially sustainable and has a social impact. This concept is entirely plausible as shown by the case of Grameen GC Eye Hospital, one of the very few hospitals in the world that is officially a Social Business, which strives to prevent cataract blindness in rural Bangladesh. The hospital delivers high-quality eye care treatment and surgery, particularly to low-income households, but middle- and high-income families may benefit from it, too, depending on their financial circumstances.
Vision impairment affects at least 2.2 billion individuals worldwide. It may have been avoided or corrected in at least 1 billion or almost half of these cases. The yearly worldwide costs of productivity losses related to vision impairment from untreated myopia and presbyopia alone are estimated at US$ 244 billion and US$ 25.4 billion respectively. Poverty inhibits the poor from receiving adequate and high-quality eye care in developing countries, and the Grameen GC Eye Hospital has tackled this social issue by implementing large-scale Social Business methods to provide long-term healthcare outcomes.
Grameen GC Eye Hospital is an example of a business that is self-sustainable while also achieving a social cause, that is providing eye care to people in low-income households to avoid blindness. This encourages sustainable and regenerative development and focusing on social impact. This is missing from traditional businesses as businesses mostly cater to customers who pay the most and not social impact.
If the Social Business methodology is incorporated into national healthcare agendas in developing countries, it may assist healthcare providers in initiating a process for identifying clinical needs, discovering solutions to meet those needs, and developing a strategy to implement a route to commercialization and provide solutions as a ‘service’ to medical centres.
Social Business during pandemics: The remarkable resilience of Grameen America during the COVID-19 pandemic
During the COVID-19 pandemic, Grameen America, a microfinance institution modelled after the Nobel winning institution Grameen Bank, has shown remarkable resilience in dealing with the disaster. All around the world, such Grameen model-based institutions are serving more than 100 million people, the majority of whom are women from low-resource settings, including in large economies like the United States. Grameen America is the country’s fastest-growing and largest microfinance institution, and its operations are facilitated through the lenses of Social Business,i.e, being financially sustainable while achieving social impact long before the pandemic started.
As the organization puts its social goal ahead of profit maximization, it was able to easily modify its policies in response to the pandemic and to assist its members, for example by eliminating interest payments until July 2020, extending loans and offering special recovery loans to deal with the economic fallout of the Pandemic. It also created the Grameen America Economic Relief and Recovery Fund, with a funding objective of $72 million, to adapt to the needs of the people during the pandemic.
For most financial institutions, the last year has been one of the extremes, but for Grameen America, the pandemic has been an opportunity to achieve its social mission and cater to the needs of the poorest. The virus had a disproportionate impact on the areas Grameen America serves. Over 60 members of the Grameen America community passed away during the pandemic, and 40 per cent of Grameen members said that someone in their family had been personally affected. In March-April 2020, 85 per cent of them were afraid that their enterprises would not make it through the summer. The company also sponsored community organizations that provided access to food banks since 45 per cent of the Grameen America members experienced food insecurity.
Andrea Jung, CEO and President of Grameen America in an interview given to Harvard Business Review, has described the Grameen community during the COVID-19 pandemic as “resilient”. Starting in August 2020, Grameen America had a 99.6% payback rate on all its recovery loans. One of the most striking elements that they observed during the pandemic is a strong commitment of the members of Grameen o helping one another heal physically, financially, and emotionally, a possible testament to the peer to peer bonding that the Grameen Bank model is based on. The secret to the long-run sustainability of Grameen America is its ability to express and expand financial inclusion in more growth-oriented activities and achieve cost-efficiency through a social business model.
Poverty is a constant pandemic harming people’s potential. It is caused by the structures of the current economic system, which are built upon a fundamentally flawed image that regards humans as purely selfish beings. The apathetic financial system, which gives disproportionate power to the wealthy and excludes the poor, is an expression of that flawed system. Conversely, poverty’s solution, selflessness, is not crafted in any laboratory, can be felt but not seen. In today’s world, financial inclusion is a valid and indispensable form of economic support for the poor, and Social business-based initiatives like Grameen America are providing solutions to uproot the foundations of social inequality.
There is no going back, we need a new beginning:
Public policy and public governance are dynamic fields. From the Weberian model to the New Public Management Model, to the more recent discussions about entrepreneurial public governance, public policy is always welcoming to innovative ideas of solving social and public issues. Social Business is inherently entrepreneurial and provides a more sustainable and socially responsible alternative to traditional businesses. As can be seen from our two case studies, public governance could benefit from the systematic thinking, resilience and adaptability of Social Business as it delivers innovative ways to solve social problems in sectors as diverse and timely as Health and Finance. The varied responses to the COVID-19 pandemic and how it has spilt over to all aspects of our public and private lives indicate that public governance needs to change with the times and the situation. The Social Business model could be a good lesson in this.
The historic success of Grameen since the 1980s and the adoption of the concepts of microcredit and social business globally is a testament to its global applicability. The Grameen Bank has issued over $24 billion in collateral-free loans to more than 9 million borrowers since the 1980s. Grameen receives an average of $1.5 million in weekly payments on every given working day. 97 per cent of the borrowers are women, and over 97 per cent of the loans are repaid, a percentage greater than what any other banking system sees. Grameen’s Social Business-based model is used in over 60 countries, and international organizations such as the World Bank have pioneered Grameen-style financing schemes to attain socio-economic sustainability in the Global South.
Grameen’s success lies largely in its creation of a market niche and its significant outreach to women among the poorest of the poor. Grameen has equipped itself with the potential capacity to operate with resources greater than those of conventional markets: the trust and faith of its clients is the key to the organisation’s success. The secret to the long-run sustainability of Grameen is its ability to express and expand financial inclusion through Social Business practices towards more growth-oriented activities and thus achieve cost efficiency on a sustainable basis.
In a new beginning, we should wish to deepen our present understanding of socio-economic variables that drive peace, conflict and justice in developing countries, and how poor policymaking leads to further poverty and misery in less developed parts of the world.
Most economists are particularly intrigued by how state and non-state factors collectively overcome and mitigate the social inequalities inherent in our economic system. On this, a policymaking-driven economic system driven by the principles of Grameen will provide us with opportunities to explore how disempowered communities could collectively perform well in combating the intense social barriers they face while participating in economic activity.
A new beginning will open new doors for showcasing our increased strength in quantitative economics and inequality studies, and a ‘Grameenized’ entrepreneurial ambience would equip us with the necessary understanding of the roots and grounds of poverty, as well as empowering us to explore various socioeconomic phenomena that arise as economies transition from resource-intensive to more sustainable models of growth. We desperately need an economic system that supports us in our pursuit of innovations at the intersection of economics and policy development by helping us to reshape the field of international development through the introduction of paradigms such as systems thinking, Social Business and need-led innovation.
21st-century Economics begins with people, and it is people’s incentives, motivations, and resources that development practitioners should plan on making sense of through their work. Thus, a paradigm shift in the global entrepreneurial industry could be considered a requirement to start a successful recovery in the post-COVID 19 world. We should hope to eventually build an economic system that intrigues corporations, politicians, and non-governmental organisations to embark on projects that are environmentally conscious, self-sustainable and treat the eradication of poverty as one of their core objectives. We should aspire to shape public discourse on policies concerning poverty alleviation in the Global South and environmentally conscious public-private partnerships throughout the rest of the world. Social Business is perhaps the best tool for regenerative development because it combines the philanthropic purpose of a charity with the efficiency and financial sustainability of a traditional business.
Grameen’s Social Business model has proven beneficial during the pandemic and, as a result, might help the world as a whole if it were more broadly applied. A new beginning driven by Social Business would inspire us to build bridges of unity, solidarity and empathy across communities and empower us in dismantling the continued existence of oppression and injustice in the Global South.