Fighting Poverty – One Yoghurt at a Time
Wednesday, February 25, 2009
The west’s beleaguered banking system could learn a thing or two from an illiterate Bangladeshi villager called Sobi Rani. She is a Grameen Lady, one of the thousands of grassroots activists who are the bedrock of the Grameen phenomenon, which, with nearly 30 businesses, is probably the largest financially viable social enterprise in the world. The cornerstone is the Grameen Bank, founded 33 years ago by Muhammad Yunus, superstar social entrepreneur and 2006 Nobel Peace Prize winner. The purpose today is the same as it ever was: to provide the landless poor of Bangladesh with real chances of working their way out of penury.
The microfinance bank, which has provided the equivalent of billions of US dollars in small loans to millions of people with no collateral, is built upon a precious resource that our ruined western banks have long ago abandoned – trust.
I would love to round up the CEOs of these banks and push them in front of Rani so that she could explain the secret of sustaining a profitable banking business that has the respect and love of its customers. She “gets” the basics of successful banking – unlike the banking executives in Britain and elsewhere who have been accused of leading their firms to the brink of extinction and their industry into contempt.
Yunus is scathing about a global banking industry now kept afloat by taxpayers’ money: “They don’t mind writing off a trillion dollars in a sub-prime crisis, but they still shy away from lending $100 to a poor woman, despite the fact that such loans have a near 100% repayment record.”
Grameen’s latest joint venture in social business is with Danone, the French multinational company. The idea for a food-based enterprise was hatched when Yunus met Danone chief executive Franck Riboud in Paris in October 2005. Although the $1m Danone put up to build a factory was small beer, both parties have a lot at stake in terms of reputation.
When French football star Zinedine Zidane opened the factory a year later, Grameen Danone Foods (GDF) had an ambitious goal: to manufacture a micro-nutrient “power yoghurt” called Shokti Doi in a purpose-built, state-of-the art factory – solar-powered, of course – that provided jobs for local unemployed people. Sales were to be driven by the bank’s foot soldiers, the Grameen Ladies, such as Rani, who would take the yoghurt door to door in the villages and make a little money on each pot they sold.
As always with any business venture, social or otherwise, reality didn’t match the originators’ glorious vision. A sharp rise in the price of milk pushed the retail price up well beyond the pockets of poor villagers. The Grameen Ladies had little incentive and sales slumped. Rani left her uniform hanging on the door. And, as if that wasn’t enough, the target customers, the undernourished children of the villages around Bogra, didn’t like the taste of the yoghurt.
Danone threw some of the best people from its Paris laboratories and marketing departments at the problems. A new managing director – Wahidum Nabi, who had many years of experience in marketing and sales, much of it with ICI in Britain – was recruited to improve the business. The recipe was changed. A marketing drive was started in Dhaka, the capital, to sell the yoghurt at a higher price so as to allow Rani to charge less in the villages.