How to Run an NU Program?

Who is a Nobin Udyokta (NU)?

The Nobin Udyokta (NU) or 'New Entrepreneurs' program was created in order to address the problem of youth unemployment by turning unemployed youth into entrepreneurs. This was formulated on the basis of the position Professor Yunus has taken in the context of the unemployment problems of the second generation members of Grameen bank borrowers' families. He is asking them to believe that "We are not job-seekers, we are job-givers" and act as such by giving up job-seeking, and actively pursuing creation of enterprises. Professor Yunus has been insisting that job-seeking is not a natural desire of a human being. It has been artificially planted inside him. On top of it, it has been presented as if it is the only option for most human beings. As a result he often is not conscious about any other options. This has been built into the theory of economics, practices of the economy, and into the educational system itself. Professor Yunus argues that the real option for human beings is to become entrepreneurs. Human beings are basically go-getters. Only when he has basic difficulties in becoming entrepreneurs, he looks for a minor and less-attractive option of accepting a job in an organization. In order to help the young people fulfill their desire to become entrepreneurs, they need mental and academic preparations through appropriate educational system, internship with entrepreneurs, variety of financial institutions to support them at every step of the way so that they can become successful entrepreneurs.

The NU program was initiated with the young generation of the Grameen Bank borrowers’ families, but it has universal application for all young unemployed people around the world, in rich countries, as
well as in poor countries. It can apply also to the unemployed or underemployed people of any age group orany gender including the aged or retired people.
How is the program implemented in Bangladesh

It starts with the creation of Social business Funds, as well as the management structure for implementing the NU program.

i. Several Grameen companies joined the program launched by Professor Yunus. Each of them have created a social business fund, separating out a pool of money to be invested in this program in the coming years.

ii. Each company created a NU Division within its headquarters with dedicated staff for the division. It is headed by a senior executive. The division has a project selection and evaluation unit, a finance and accounting unit, an MIS unit, a problem shooting unit and a management unit. The Division has field staff based in the rural areas where Grameen bank borrowers live. They are thoroughly trained before they are allowed to start their work. Field staff (NU Promoters) advertise themselves and their NU program to all the Grameen families and the villagers, so that everybody has clear ideas about their mission, and work procedures. They take help from Grameen Bank branches and other field offices to spread the news about their work. NU Promoters talk to individual young people, group of young people from Grameen families andtheir family members, particularly their mothers. They explain all the details of the NU program, give them written materials and answer all their questions.

Screening Exercise Lab and Information Blank #1
Once a sizable number of young men and women who have been contacted are interested in the NU program, the village staff organize an Orientation and Identification Camp in the village. Experienced camp leaders will carry out the identification and confidence building process. During this camp, participants will gain a deeper understanding of the rules and procedures of the NU program and will have the opportunity to ask questions to get a clearer picture of what the program entails. At this workshop, the first information blank which deals with personal information about the potential entrepreneur will be administered. Each of these camps can attract 15 to 30 candidates, boys and girls. Senior officials from the headquarters join the camps. Actual projects are discussed and some preliminary questionnaires are administered to know more details about the entrepreneurs and their business plans. Most of the candidates usually have very tiny businesses that are already running. NU Promoters usually accept any existing business up to total asset of $ 6,000. They are willing to finance a business until it reaches a total asset of $14,000. Most of the entrepreneurs who have been selected so far for equity investment from social business funds had total existing asset of under $ 3,500. They received new equity of 100 to 150 percent of the existing assets.
Candidates Are Short-Listed

These camps usually end with a short list of 'potential' entrepreneurs. Intensive discussion goes on with them. Their existing businesses are carefully evaluated; their business plans now go through rigorous examination. New business plans are formulated in consultation with the Promoters.
These candidates move on to the next step and complete the second information blank. This information blank involves more detailed information about the candidates' business goals and plans. The candidates, with help from the promoters, fill out this detailed form and create the first cut of presentation that will be shown during the Social Business Design Lab in Dhaka. At this stage NUs are trained on how to keep accounts and use mobile phones to send six basic data through SMS everyday, containing vital information about their business on each day. This is an obligation that the entrepreneur has to carry out every day, as long as social business fund has an investment in his business. This is an integral part of the MIS of the NU Program.

Home and Work Place Visits
The village level NU selection process will end with visits to the homes and existing businesses of the entrepreneurs with the purpose of getting to know the NU and his family in details. At this visit ,the Promoters will try to understand the NU’s dreams and fears, all the while trying to instill a sense of confidence and answering questions. In addition to getting a chance to learn about the candidate in a more personal setting, the staff will also be able to verify the information that was provided on both the information blanks #1 and #2.

Final Selection at the Design Lab in Dhaka
Once the home and work place visits are completed, the selected NUs are invited to Dhaka to pitch their business plans and ideas at the Social Business Design Labs. They are coached by the headquarter staff on how to make an impressive presentation to a high-powered committee while staying on course with their plans. Power point presentations with pictures taken at their village homes, their mothers and their existing businesses are made to give a 360 degree view of them and their work. Each candidate makes a five-minute presentation with financial details in the presence of CEOs and high level officials of funding organizations during these Labs. Lots of comments and questions are asked by the participants at the Lab. Entrepreneurs are expected to make consistent responses. It is not easy for a village youth to come to Dhaka to face an audience of this high stature. But surprisingly they do very well, since this is about who they are and what they do. Sometimes they turn out to be better experts in their businesses than the members of the audience.

Finalizing the Business Plans.
Design Labs are a very thrilling experience for everybody. They benefit everybody. After the plans are evaluated at the Design Labs, the entrepreneurs have another round of finalization exercise to incorporate the suggestions made at the design labs. After this, the project is ready for the 'go'. The Funds and the entrepreneurs go through a bonding process and prepare themselves for a successful business journey. The handholding process of the Funds for implementation begins. Regulatory issues are addressed, all necessary documentation is completed, monitoring and accounting training is finalized, and then the day comes for fund release. A new NU project is thus launched.

Monthly Social Business Design Lab on the Net
The Social Business Design Labs play an important role in the NU program. It is a platform that allows entrepreneurs to present their business plans in front of a group of experienced experts, investors, business executives, and social activists. A monthly version of it is live streamed over the Internet to an international audience, usually attended by participants from over 70 countries. Six business plans are presented at these publicly held monthly Design Labs. Routine Design Labs are held almost every week internally. In each lab, more than 15 business plans are presented. Average number of business plans examined each month during 2015 is expected to be over 200. By the end of February 2015, total projects approved for funding exceeds 600.

A typical presentation at the Design Lab by an NU includes: • Brief biography of the NU
• Brief history of the relationship of his mother and Grameen bank.
• SWOT Analysis (Strength, Weakness, Opportunities, Threat) • Financial projection and proposed budget o Payback period analysis o Break even analysis o Sources of finance • Photos of existing business, and his mother.

Share Transfer Fee
Each NU may buy back all shares owned by the Fund by paying the book value of the fund's shares plus 20 percent on the equity provided by the fund, by way of share transfer fee. Usually an NU pays this money and becomes 100 percent owner of his business within 3 to 6 years.

NU Monitoring System
Grameen Communications has developed an elaborate MIS and accounting system software for all the NU projects.
In addition to collecting financial information on a daily basis, this system records detailed data about yearly stock of assets, sales and inventory. It is through this
monitoring system that daily figures can be sent via text/SMS messages. All of the information accumulates at the central server, which auto-generates reports for each investor daily, monthly or as desired. The NU can also view his business performance information by logging on to the system. If there is a notable difference in the figures, the Fund representative is able to meet with the entrepreneur to immediately discuss the issue and to create a solution.

Overview of NUProcess Flow At GTT (Grameen Telecom Trust)

1. Screening Exercise organized by GTT with prospective NUs in target area

2. Concept and other documents explained, followed by group exercise for assessment 3. Initial selection done, business plan prepared & presented in SB Design Lab by NU 4. Upon approval of business plan, agreements are signed with NUs, appointing them as managers of the enterprises. 5. Regular reporting by NUs via text messaging 6. GTT trains NUs in financial management, compliance and regulatory affairs 7. On site and off site monitoring undertaken and all necessary incubation services provided to turn the NUs into successful entrepreneurs

Fourteen Commitments of NU:
Here are the commitments made by an NU:

1. I am not a job seeker, I am a job giver.

2. I will be financially sound by being a successful entrepreneur.

3. I will maintain all business transaction records on a daily basis.

4. I will pay my employee wages at market rate.

5. I'll be honest in my business and uphold the principles of NU program.

6. I will always work hard to make the business successful.

7. I will try to become full owner of my business as early as possible.

8. I will do the business with joy and confidence.

9. I will not do anything that pollutes the environment and/or harms people.

10. I will take care of my families’ health and would be aware of all types of health hazards.

11. I will educate my children and make sure they attend schools.

12. I will make sure we have no unemployed young people in my area.

13. I will inspire all youths in my area to become entrepreneurs.

14. I'll be an active member of the NU community and make sure as a community, that we help each other and bring prosperity to our families together. My commitment will also be to enlarge this community continuously so that more and more unemployed youth can become part of this community.

The Relationship between the Fund and the NU
The NU and the Fund are business partners. They are engaged in a business relationship where the NU is a shareholder with token, minority, or majority shares. The NU may become the Managing Partner or the manager . The Fund monitors the performance of the manager/ managing partner without getting involved in the actual running of the business. As the business makes profit, the Fund receives its dividend, until it equals the amount of equity of his initial investment. The objective of the investor is to not only to create a job for a young unemployed person, but to transform a job-seeker into a job-giver and thus create an entrepreneur. In the selling of the shares to the NU, the rule is that the Fund will take an amount equivalent to the original investment amount plus an additional fixed sum of 20% of that amount. This additional amount is called the “share transfer fee”. It is an attractive and advantageous offer for the NU because he is buying the shares at face value, and it is a modest fixed charge over the entire payback period. The Fund remains very active during the entire process, making sure that the NU is well prepared for running his business and that he runs his business efficiently. The Fund provides all the connections and advices to become successful in his business. It continuously monitors the project to avoid any surprises. The 20% “share transfer fee” is a very modest amount for all of the work and constant communication the Fund has provided over the payback period. Borrowing this money would have created an interest burden much bigger than this.

NU

Village

Village Camp

Information blank #1

Short-listed candidates fill out information blank # 2

Home Visits

Presentation at the Design Lab in Dhaka

Evaluation Workshop with staff to incoprorate feeback

Signing of agreement