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article imageNobel Peace Prize winner wants to revolutionize aid spending

By Andrew Moran     Oct 2, 2010 in Business
Montreal - Bangladeshi economist and Nobel Peace Prize winner, Muhammad Yunus, has a suggestion for the government of Canada, which could change the way governments around the world provide foreign aid: A fraction of aid could be dedicated to "social business."
For decades, governments and international bodies have distributed aid to countries around the world the same way: Food, security and financial aid. Is there a new way that could successfully develop a nation that needs aid? The father of microcredit and microfinancing does.
Bangladeshi Nobel Peace Prize winner, Muhammad Yunus, is suggesting that the government of Canada should spend between 10 and 15 percent of its foreign aid money on what is called "social business," which could recoup the money, according to the Chronicle Herald.
“It would be good use of the money rather than giving the money and not knowing what happens . . . or knowing it won't come back to you,” said the prominent economist at a press conference in Montreal, reports The Canadian Press. “They have created a social-business fund for Bangladesh for the money they (already) donate to Bangladesh. If it works in Bangladesh, they'll take this idea to other countries also. After all, they (already) give the money every year and Japan is sometimes the biggest donor in the country.”
What is a social business? It is a for-profit business that attempts to make an impact on the community, or region, by fixing social problems. Yumus notes that they are significantly different than charities because they are taxpaying, revenue generating and self-sustaining organizations.
“You're not giving people (the) option so they're always putting in money to make money. If you give the option, you'll be amazed at the response you'll get and some of them (money managers) are taking it seriously.”
In the end, Yumus is hopeful that Canada will be open to the idea in a similar way that Japan’s public officials have: “Canada always had a very open-minded foreign aid agency. They are receptive to ideas. I hope Canada will pick it up.”
The government of Canada spends $5 billion out of its $280 billion annual budget on foreign aid.
More about Muhammad yunus, Foreign aid, Nobeal peace prize
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