Comments on: Who is Microfinance Really Helping? Is the Rich Profiting from the Poor?

By: No money, no microfinance: Big companies cutting microfinance spend | myKRO

No money, no microfinance: Big companies cutting microfinance spend | myKRO — Sat, 19 Jul 2008 21:58:51 +0000

[...] few months and, even before that, the news was sparse. I think that ultimately this leads back to Drew’s post from week ago on who is benefiting from microfinance. I agree with Drew that we definitely need both kinds of [...]

By: Michael Van Patten

Michael Van Patten — Thu, 03 Jul 2008 16:09:53 +0000

Regarding the comments above, while I agree that the Microfinance sector will continue to benefit dramatically from contributions by non-profits and organizations like Kiva and Microplace, where below market rates are being paid, in order for this sector to experience the growth needed to have a real global impact it needs to attract the attention of more main stream investors and pay returns commensurate with the risk percieved or actual.

Like any emerging investment sector, Microfinance lacks the standardization and secondary market needed to take it from the non-profit, charitable foundation or purely social arena, to the mainstream capital market arena. Various debt and equity financing structures do exist however they do not offer much liquidity or transparency.

Once more supportive data and research is compiled where benchmarks and returns are more openly documented, you will see more capital allocated to this sector.

I dont think its realistic for this market to depend just on social contiousness to attain the growth needed to touch all that are in need of its services.

By: Kayla Villnow

Kayla Villnow — Thu, 03 Jul 2008 15:25:43 +0000

One of the concepts that I personally love so much about Grameen is that it is assuming that credit should be a universal human right– that people should be extended credit regardless of social or economic standing. Microfinance instituations, for the most part, have found a way to provide that service to the poor of our world in a way that hopefully breeds self-sustainability for both the entrepeneur, as well as for the orgnization/institution.

Like Drew and Chris said, there needs to be room for both. The poor, although lacking in material recources, do not lack in overall resourcefullness or creativity. In addition, as I work for a microfinance org, and have had the chance to form some great relationships with the people I work with–charging interest on a loan, a FAIR interest, actually lends itself to restoring dignity in these people. They are able to pay back interest on their loans, and in doing so, they began to understand themselves as productive and able-bodied members of society. This is important; valuing humanity and fostering dignity are the crux of what every person on this earth deserves.

Microfinance organizations and their entrepreneurs alike will not benefit from exorbitant interest rates, clearly. They will however, benefit from a balance of good-willed charity, and then clean sources of privately LENT money. Many MFI’s would not be able to grow nor succeed without taking out loans themselves, loans which we too (and I mean MFI’s collectively) pay interest on.

Microfinance is still business, but with a heart.

By: Chris Blow

Chris Blow — Thu, 03 Jul 2008 06:50:46 +0000

Absolutely I agree with you: I think there must be a mass-market appeal for microfinance, and that means people can’t always be expected to want to volunteer — to think otherwise is just poor design.