By Zubeida Mustafa
LAST Friday Prof Muhammad Yunus, nicknamed the banker for the poor from Bangladesh, was nominated for the Nobel Peace Prize 2006. It is an honour that he and the Grameen Bank, the institution he founded, fully deserve.
Though it has not been generally noted, Prof Yunus has moved on from his original initiative of providing easily accessible micro credit without collateral to the poor, especially the doubly oppressed — that is the women.
Now he has postulated his theory of the social entrepreneur (SE) becoming a social business entrepreneur (SBE) to make his projects self-reliant.
Prof Yunus is critical of the market (which we call the private sector). He describes it as “an exclusive playground of the personal gain seekers” who “overwhelmingly ignore the common interest of the communities and the world as a whole”.
He sounds the alarm bell when he warns that with the dizzying speed of expansion of the economies, with personal wealth reaching unimaginable heights, globalisation threatens to wipe out the weak and the poor.
But he appears to have accepted the fact that the marketplace is there to stay. Hence he proposes an approach to avoid this catastrophe: recognise the role of the social entrepreneur who is social-objective driven. Prof Yunus starts from the premise that the SEs are not interested in profit maximisation. “They are totally committed to make a difference to the world and give a better chance in life to other people,” he observes.
According to him, these entrepreneurs seek to achieve their objectives by creating sustainable business enterprises. They thus emerge as social business entrepreneurs (SBE) which is a moment worth celebrating since they have overcome, what he calls, “the gravitational force of financial dependence” and moved from the world of philanthropy to the world of business.
The social business enterprise will strive for profits but the qualifying factor will be its over-arching social goal.
Prof Yunus has already put his philosophy into action. The Grameen Bank has 20 companies in its network and now it has entered into a joint business venture with the French food giant, Danone, that had a sale of $16 billion in 2005. Prof Yunus says he will use the prize money to finance this project.
Can the Nobel laureate’s ideas be implanted in Pakistan’s conditions? This should be food for thought especially at a time when the thrust is towards entrusting the private sector with the responsibility of fulfilling the social needs of the people. Take the education sector. A few days before the Nobel prize was announced, the federal minister of education released the findings of the first national education census held in 2005.
This sheds interesting light on the division between the public and the private sectors of the responsibility of educating Pakistan’s youth. Of the 245,682 institutions covered by the survey, 81,103 (33 per cent) were found to be in the private sector. In other words, the government is rapidly moving towards its goal of shifting the load of education to the private sector.
Significantly, the pattern of ownership of educational institutions that emerges from the census is also somewhat worrying. The institutions in the private sector are not evenly spread out at all levels.
Thus the private sector has more schools at the secondary and middle levels (61 per cent) than the government has. Again the private sector operates more technical, vocational and professional institutions, such as polytechnics and monotechnics, (70 per cent) than the government is running.
Obviously, the private entrepreneurs are investing their money where the profit is. These institutions are the ones that teach the skills which make a person employable. Hence they are in greater demand. Since ours is now a market driven society, people wishing to enrol in these institutions have to pay the relatively high fees demanded by them.
A comparison between the private and public sector institutions at any level finds that as a rule the private schools/colleges and universities impart education of a better academic standard.
The paradox in the situation is that the government is spending a hefty sum per capita — more than the private sector — on the poor quality education it is imparting to the masses. Thus the government’s expenditure is calculated to be Rs9,746 per head on educating 21.258 million students from the primary to the post-graduate and professional levels.
The private sector’s expenditure is more difficult to calculate because, as the census document states, 9,000 institutions did not provide the financial information (for reasons of tax evasion?). But according to a rough estimate the private sector spends Rs8,940 per head to educate 12.121 million students.
Yet the private institutions are performing better. They have more accountability and the parents feel that they get a hearing and their complaints are addressed.
A mother from the low-income class who withdrew her children from a government school in Korangi and had them enrolled in a private school in the same locality said that in the government institution the headmaster/class teacher was not even present to listen to what she had to say.
It is also felt that the private institutions have a more effective administration and are relatively efficient in their working. Since they are result oriented, the teachers and the management are more focused and motivated.
Even though they operate in a sellers’ market and face little competition, they have to show a reasonably good track record to attract their clientele.
These advantages notwithstanding, the private sector institutions, barring a few noble exceptions, exhibit the typical characteristics of an entrepreneur operating in a free market. Their fiscal management is directed towards maximising profits.
They stretch each rupee to by charging relatively high fees and in many cases exploit the teachers. The high fees make many private institutions unaffordable for the masses.
On the contrary, in the public sector educational institutions the fees are a nominal Rs 10 or so a month and the teachers are not under so much pressure. If anything, those who are not too conscientious take advantage of the lack of effective monitoring and many of them actually become partners in the corruption that is rampant in the education departments. Where school management boards exist their role is not very effective. Small wonder the education authorities have failed to deliver in spite of their massive spending.
The census reports that 12,737 institutions in the public sector are “non-functional”. This is not a small number. The biggest failure of our education managers has been their inability to motivate the teachers and sustain their motivation to put in their best performance.
In this dichotomy between the private and the public sector, it may not be easy to find a solution that protects the interest of the user. As Prof Muhammad Yunus observes, “The market is always considered to be an utterly incapable institution to address social problems. To the contrary, the market is recognised as an institution significantly contributing to creating social problems.
Since the market has no capacity to solve social problems, this responsibility is handed over to the state. This arrangement … did not last long… we are back to the artificial division of work between the market and the state.” This is what has happened in Pakistan as the education census amply demonstrates.
Are we ready to introduce Prof Yunus’s revolutionary concept of the social business entrepreneur in Pakistan? The problem is that the worlds of philanthropy and of business are so far apart in this country that they do not meet institutionally. The social entrepreneurs depend on public donations to sustain their enterprises.
Many big businesses donate to them generously. But this relationship is an ad hoc one. The government has now been encouraging the corporate sector to donate at least one per cent of its pre-tax profit to philanthropy.
Can we ever hope that the private schools that make hefty profits will divert a substantial share of their profits to set up institutions that charge modest fees to impart high class education to the children of the poor and impart equally good education to them?