Muhammad Yunus’ visit to Westmont College on Friday is causing a stir among students and faculty, who are engaging both optimistically and critically with the Nobel Prize winner’s ideas on microfinance, economic empowerment and social business.
After Yunus speaks at the Westmont President’s Breakfast — to be held in the Grand Ballroom of Fess Parker's DoubleTree Resort — he will again take the podium for a panel discussion with students in Westmont’s Murchison Gym. Four student panelists will have the opportunity to pose questions to Yunus.
Yunus is the first person since Martin Luther King Jr. to achieve the trifecta of the Nobel Peace Prize, the U.S. Presidential Medal and the U.S. Congressional Medal. He founded Grameen Bank in 1976 to make fair loans to the poor.
Over the years, the bank has loaned to more than 8.4 million borrowers, helping them gain a better quality of life. More than 250 institutions in nearly 100 countries operate micro-credit programs based on Grameen’s model.
Kristabel Stark, a fourth-year political science major chosen as a panelist, has interned for Opportunity International and is also the founder of Westmont’s Microfinance Club.
“One thing that I’m personally interested in is this difference between social business and non-profit,” Stark said. “Social businesses are this idea of having a for-profit business that is reinvesting its profits into social issues.”
Stark said she hopes to ask Yunus about whether it is “better to have a nonprofit and operate under the legal system as a nonprofit, or be a for-profit and turn your profits back into impact for your clients.”
Second-year business student Kha-ai Nguyen also has been asked to represent Westmont as a panelist. She is co-director of a student-run group called Urban Initiative, which raises student awareness about poverty and homelessness through educational events and immersion and service trips to Urban areas.
Nguyen said she is excited to apply Yunus’ message to her passion for urban issues, and is curious about whether “microfinance can be applied to urban settings, especially those in the United States.”
She also hopes to ask Yunus about the impact of microfinance upon family life for women: “How is microfinance giving women an opportunity to have a voice in their family?”
The optimism of Westmont students and faculty surrounding the potential impact of microfinance is not unbounded, however.
“There’s a lot of debate within microfinance about the proper ways to do microfinance,” Stark said. “I really want to push [Yunus] on that a little bit.”
One potential pitfall of microfinance lending, Stark said, is the failure to pay back small loans, which increases the dependency of financially vulnerable people. Because of this, there has been a great deal of controversy over the best method for using microfinance as an effective development tool.
“Microfinance is supposed to be how people become self-sufficient and be a sustainable means to development,” Stark said, “but it can also lead to dependency if it’s used in the wrong way.”
Westmont business professor Rick Ifland addressed some of the problems of microfinance in his lecture, “Globalism, Micro-finance and Social Business,” as part of the Westmont Downtown lecture series at the University Club earlier this month.
Although he openly admires Yunus’ innovation, Ifland explained that he takes exception to some of the things that Yunus says.
He expressed concern about the potential pitfalls of microfinance, mainly the inherent problem of credit risk. Loan default on microfinance endeavors often puts the poor in a worse position than they were in before incurring new debt.
Ifland also believes Yunus to be too pessimistic about the potential for corporate social responsibility. Although Yunus has suggested that traditional big business is not equipped to deal with social problems, Ifland disagrees, arguing that for-profit businesses do benefit people.
“Individuals can engage the marketplace to do social good,” Ifland said.
Individual engagement in the marketplace for social good is exactly the goal Ifland has in mind for a project currently in the works in his Westmont class, “Business at the Bottom of the Pyramid.”
Fourteen students, who had to apply for the unique opportunity to take the class, will travel with Ifland to Port-de-Paix, Haiti, during their spring break, March 10-14.
According to Ifland, Haiti is one of the world’s eight “failing” states, which means that “the government is in such disarray that there is little hope of helping the most desperate citizens.”
Ifland’s cultivation of long-term relationships with ongoing ministries in the Port-de-Paix area has opened the door for him and the students “to bring hope to those seven families and their community.”
They will work with seven small business owners in Port-de-Paix who were chosen by a local missions group, the mayor, and the area’s chief justice. The entrepreneurs will own moped taxi services, a small food store, a clothing boutique, and a used clothing store.
“It is important to note that we are there to celebrate their efforts and to help facilitate their success,” Ifland said. “This is about them, not about us.”
According to third-year student Ryan Naumu, students have been able to Skype during class with their contacts in Haiti as they plan strategies. He is excited to meet a local entrepreneur, Rosenie, who is trying to establish her beauty boutique and bridal service more permanently.
“Our role is to support Rosenie with a business plan, help her determine operational goals, and create the systems by which she can prosper and manage her business,” Naumu said.
In an effort to circumvent some of the potential problems that go along with financing entrepreneurs with limited means, the project will permanently employ three Haitians, including a local attorney, to monitor the businesses and report back.
Ifland said that to make this investment model sustainable, “daily revenue will be accounted for and then divided into four sections: payment to the owner for their hard work, a small portion each day to pay back the loan, a small portion to [the owner’s] savings account, and some profit set aside for replenishment of their inventory, supplies, etc.”
Despite urging Westmont students not to accept rhetoric and advocacy “without sufficient underlying facts to support the claims,” Ifland is enthusiastic about Yunus’ upcoming visit.
“I have confidence that [Westmont students] will be able to see the benefits of micro-finance, the pitfalls of micro-finance, and how they will personally engage the issue,” he said.
Westmont students and faculty are preparing to engage critically with Muhammad Yunus’ message, but their realism is marked by a sense of optimism.
“It should be a wonderful time of learning for our entire community,” Ifland said.