Many people solve their minor problems with a generous attitude, giving a hand to their neighbours with the exact needs but fewer resources. I am thinking, for example, about the immediate needs of running and drinking water, where one can pay to expand the works to benefit others, too.
However, some individuals discover that essential and expensive needs are unmet and set out to do something to solve them by themselves. In every part of the world, we find initiatives from people with great sensitivity and solidarity who began to act, advanced and grew until reaching millions of people in need.
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I remember, for instance, the Aravind Eye Care System, where Dr V., an ophthalmologist and surgeon, began in a small way to care for vision and help people without the means to access cataract surgery that would restore their vision and enable them to go back to work. From very tiny beginnings, in 1976, with a Clinical of 11 beds in Madurai, Dr Venkataswami (Dr V), when retiring from the medical Doctor in a Public Hospital, proceeded with his dream of giving back the sight when possible —initially, only 40% paid for the services received. The remaining 60% didn’t spend as they were poor.
Today, the Institution owns (in 2022/23) 14 Hospitals, 6 Community Eye Clinics and 107 Vision Centres:
The number of patients served that year was:
Total outpatients Examinations…………..5,76 Million
Surgeries, Laser & other procedures…… 704,378
Spectacles dispensed …827,729
50% of procedures are free or steeply reduced payments.
The Grameen Bank, known as the Bank for the Poor, has been successful and had a robust social impact. It was founded in Dhaka by Professor Muhammad Yunus, now the interim President of Bangladesh.
On his way to the university, he used to meet tens of poor people who were undergoing a slow death, day after day, because they had nothing to eat. And when, alongside his economics classes, he tried to do something for them, he made a small survey of the needs of 42 people/families, who needed 27 dollars to buy the raw materials, to elaborate and sell them, earning something to support themselves and their families.
It was very little money for so many people. Paradoxically, the banks did not lend because they never lent to low-income people. The only solution for them was to go to the usurers who did lend, but with very high interest rates, which left nothing for those who had done all the work.
It was hard for M. Yunus to convince the bankers that he would be a loan guarantor if the repayment failed. They could accept the solution as long as the guarantor was nearby, but it could never be a stable autonomous solution, counting on the many people seeking micro-loans.
Unable to find an institutional solution at the time, arising from the banking sector itself, Yunus created the Grameen Bank in 1983 and was able to provide micro-loans to millions of poor people who wanted to work, knew what to produce and where to sell it, and who lacked only a tiny amount of money.
With the knowledge he had earned, M. Yunus made some bold statements to convince the commercial banks of a set of truths that were not at all clear to them:
A – It is a profitable business to lend small amounts to low-income people. They are very responsible when it comes to satisfying their commitments. Despite the minimal amounts, there were many low-income people to lend to. The profit from each loan was insignificant; however, with the massive number of loans, total profits were satisfactory to continue investing in technologies and cover all the operating costs.
The Grameen Bank depended on commercial banks for the capital to lend. He could have turned to the World Bank, but he didn’t because the objectives differed: the World Bank makes large loans to public Institutions, and Grameen makes micro-loans to individuals.
With Grameen up and running, it became clear that the idea of microcredit was of great value and, as a result, it spread in many developing countries. Yunus never asked where one would invest the credit. People experiencing poverty knew better how to generate the amount needed to repay the loan and have enough to feed their families.
Grameen made clear that it wanted to give loans to women entrepreneurs for their sense of responsibility as they knew the family’s needs better and rarely failed to repay.
He found that those living below the poverty line usually took eight years to overcome it. That is why he developed several parallel initiatives, such as a mobile phone company, in which many people bought a mobile phone to make airtime available to others as a paid service.
He also created other companies to buy and sell handcrafted products in Europe and the United States. Artisanal products are not valued enough in areas close to production. It is worth exporting to be appreciated and well sold.
Professor C. K. Prahalad, based on his Consultancy experience and the study of diverse situations, wrote the title of his book, The Fortune at the Bottom of the Pyramid.
It is a highly suggestive title with several applications in various sectors in India, as people need products and services, be they rich or poor. I think mobile telephones, which few people used due to high installation and operating costs, were initially prohibitive. However, operating expenses decreased substantially as their use increased, resulting from new, more advanced, cheaper technologies. Even though they earned very little from each customer, as they were hundreds of millions, the total value of the benefits was satisfactory for the operators, who could continue to invest and modernize their systems.
In 1995, with the liberalization of the telephone system, there were 5 million fixed lines, as the telephone was considered a luxury. Soon after, outstanding operators/entrepreneurs entered the market, providing a solid dynamic for expansion and high-quality mobile communication. Over 1.120 million active mobile network lines work alongside 31 million ground lines today. The costs of installation and operation are among the lowest in the world.
The same can be said of pharmaceutical products: when produced in small quantities, their cost per unit is high. But when there are many consumers in need, in millions, the price per unit drops drastically, allowing many more people to use them due to the lower prices.
(The Author is Professor at AESE-Business School (Lisbon), at I.I.M. Rohtak (India), author of The Rise of India)
