Written by: Janina Peter, Executive Contributor
Executive Contributors at Brainz Magazine are handpicked and invited to contribute because of their knowledge and valuable insight within their area of expertise.
The concept of social business, which challenges the traditional business model of maximizing profit, has been gaining traction in recent years. The economist Muhammad Yunus, who invented the concept of microcredits and founded the Grameen Bank, is a notable advocate of this model. Yunus believes that poverty is not created by poor people but by the economic and social systems that we have designed for ourselves. The ultimate goal of social business is to create a world without poverty.
Microfinance has been instrumental in opening up the financial market to all people, including the poorest. However, it is not without risks. People in the Global South, who are most affected by climate change, socio-political conflicts, and other catastrophes, bear an unfairly high risk. The Grameen Bank, which operates with a much higher level of compassion than other banks, does not penalize recipients who cannot pay back their loans. Instead, they are not granted the next microloan until they pay back their first credit. In some cases, however, this leads to them taking the next loan to build up their business anew in order to pay back their first credit, leading to a cycle of debt.
Microfinance with an innovative twist
Bridging Gaps offers a solution to this problem. Bridging Gaps works together with private-sector companies and local NGOs to provide microloans to suitable entrepreneurs. The local NGO finds entrepreneurs with financial knowledge and experience in the work market, and after completing an entrepreneurship training created by Bridging Gaps, they can apply for a microloan. The applications, including the business plan and ideal payback rates, are put on the website for companies and individuals to express interest in donating to.
Bridging Gaps takes it one step further. If the business fails due to reasons beyond the entrepreneur's control, they are not in default. In these cases, the money handed out is viewed as a donation to alleviate financial stress. In the cases of successful entrepreneurship, the money does not have to be paid back to Bridging Gaps itself but stays in the local groups formed by the NGO. This ripple effect aims to implement sustainable financial structures in the communities of the global south. Bridging Gaps provides a high level of transparency and regular updates on each entrepreneur, creating a network of people on their entrepreneurship journey and inspiring others to jumpstart their businesses.
Bridging Gaps' approach to social business is innovative, inclusive, and sustainable. It offers an alternative to the traditional business model that maximizes profit and reinforces poverty. By empowering entrepreneurs in the global south, Bridging Gaps aims to create a world without poverty.
Janina Peter, Executive Contributor Brainz Magazine Janina is a leader in food systems transformation, using innovation and tech for good. With Bridging Gaps, she is reinventing microloans and empowering underserved communities globally. Using her background in development economics and international studies, Janina has worked for the World Food Programme’s fundraising and advocacy app ShareTheMeal, Thought For Food and its Food Systems Game Changers Lab, and the United Nations Food Systems Summit, among others. Her mission: Creating healthier food systems to achieve zero hunger and zero poverty through innovation.
