Social Business

Most of the photos were taken by Brandi List.

We have been visiting and learning about social business. A social business is a company that measures it growth in social benefits rather than profit. A business makes an initial investment and once the company becomes self-sustaining the social business begins to pay back the original investment.

Once the investment is paid back, the business that invested does not recieve any additional profit. Instead, any profit made is reinvested to provide more more product or services to more poor people.

There are two kinds of social businesses. One that is owned by the poor and one that exists to provide benefits to the poor.

Grameen Bank is an example of the first and Grameen Danone is an example of the second. Danone (Dannon yogurt) invested money to create Grameen Danone and it exists to make nutritious yogurt for the poor and provide employment for the poor.  Danone invested 50% and Grameen invested 50% in 2006.

In Bangladesh, poor people do not get the nutrients that they need. One out of two children is suffering from malnutrition. This leads to poor development and perpetuates the cycle of poverty. Grameen Danone has created a small plant in Bogra that makes nutritious yogurt  fortified with needed vitamins and protein. Each yogurt has 30% of the nutrients a child needs each day.

There is a regular flavor and a mango flavor and they are sold at 6 taka and 8 taka per 60 gram cup. There are 80 gram sizes that are sold for slightly more (the thought is that richer people will want the larger sizes). The plant is now self-sustaining and Danone will slowly be paid back. They don’t know how long it will take to be paid back but when asked if they see this as a donation or investment, the Danone representative was adamant that it was an investment.

The yogurt is sold in two ways:

  • Grameen ladies who sell yogurt door to door
  • A network of stores in the urban areas

The employment benefits include that Grameen Danone hires Bangladeshi people to work in the factory and purchases milk daily from local and Grameen farmers.

The yogurt is called shokti doi which means yogurt to give strength.

To market the yogurt, they did mini events in villages and TV ads with Dr. Yunus.

Some learnings that happened along the way include that you cannot increase the price without plummeting sales, you must understand culturally that the families and community must support the ladies going door to door to sell the products and that you must be creative in lowering your costs.

One innovative way that they lower cost is to empty and clean the plastic yogurt cups that can’t be sold (perhaps they are expired) and they sell these cups for recycling, therefore lowering their packaging costs.

The Yunus Center is the pulse of social business. The web site is: http://www.yunuscentre.org/. Their explanation of social business is (taken directly from their Web site):

Social Business
Social business is a cause-driven business.  In a social business, the investors/owners can gradually recoup the money invested, but cannot take any dividend beyond that point.  Purpose of the investment is purely to achieve one or more social objectives through the operation of the company, no personal gain is desired by the investors.  The company must cover all costs and make profit, at the same time achieve the social objective, such as, healthcare for the poor, housing for the poor, financial services for the poor, nutrition for malnourished children, providing safe drinking water, introducing renewable energy, etc. in a business way.The impact of the business on people or environment, rather the amount of profit made in a given period measures the success of social business.  Sustainability of the company indicates that it is running as a business. The objective of the company is to achieve social goal/s.
The seven principles are (also taken directly from Yunus Center Web site):
  • Business objective will be to overcome poverty, or one or more problems (such as education, health, technology access, and environment) which threaten people and society; not profit maximization
  • Financial and economic sustainability
  • Investors get back their investment amount only. No dividend is given beyond investment money
  • When investment amount is paid back, company profit stays with the company for expansion and improvement
  • Environmentally conscious
  • Workforce gets market wage with better working conditions
  • …do it with joy
  • We also visited Grameen Eyecare in Bogra which provides eye exames, eye surgeries and glasses. It is a beautiful facility. Each month, Grameen Eyecare does camps in the villages to bring eye testing and eye glasses to the people. There are a few photos from the facility, too.

    Grameen Veolia

    Today we visited the village of Goalmari where Grameen has teamed up with Veolia to create a water plant to treat surface water at a low cost.

    The poor are able to purchase 10 liters of water for about one taka (there are 72 takas in a US dollar). The plant started in 2009 with an investment by Goalmari of $600,000. The water is treated by three chemicals then pumped to 11 different taps. “Dealers” work the taps and receive a commission from each liter sale. The water is used by 3,500 families that did not have access to clean water before (other than boiling).

    The plant works on a small scale to ensure that it works correctly before rolling the idea out to other villages. The plan for this plant is to serve 9,000 families. They also plan to build 5 more plants in other villages by 2012. The current plant is now self-sustaining meaning that this social business breaks even and does not lose money. When more families purchase water and it begins to make a profit, Veolia will be paid back. Once they are paid back (which could take awhile) then additional profits will be invested to provide more water to more of the poor.

    Imagine the significance of providing clean water to anyone in any country. Seeing the first plant was exciting. It is a part of history that will hopefully become a normal part of infrastructure.

    I have included a few photos. We could not take photos inside the plant. I did include a photo of a poster used to educate people about clean drinking water.

    Tomorrow, I leave for a village and then fisheries so you won’t hear from me for eight days.

    I will have amazing photos when I return.