No doubt you've heard of microfinance. It's the social entrepreneurial business of giving tiny loans to very poor people (usually women) to seed small enterprise. The women can use the money to make clothes, cloth, food, crafts or other items and sell them. This also seeds capitalism in non-capitalistic countries, enables the women to escape abusive husbands and to become literate. It empowers the women to send their children to school and to help other women start their own businesses. It pulls whole families and villages out of grinding poverty.
Nicholas Kristof, writing in the New York Times, said that seeding such businesses in places like Pakistan actually fights terrorism. I believe he is correct. He also said that microfinance has been more successful in Asia than Africa. Interesting. The founder of the microfinance agency Kristof wrote about was founded by Wharton undergraduate alumna Roshaneh Zafar. (I got my MBA from Wharton, so this is exciting to me.)
Read Kristof's whole column :
http://www.nytimes.com/2010/11/14/opinion/14kristof.html
Showing posts with label microfinance. Show all posts
Showing posts with label microfinance. Show all posts
Wednesday, November 17, 2010
Thursday, May 28, 2009
What Are Microcredit and the Grameen Bank?
Muhammad Yunus, winner of the Nobel Peace Prize, gave the commencement address at Wharton this year. And Knowledge@Wharton interviewed him. Everyone interested in improving the state of the world or in microfinance should read this interview. It squashes a lot of misconceptions and explains how microcredit works with the Grameen Bank, which has nearly eight million borrowers.
Here is an excerpt from the interview:
"Another aspect that I want to draw attention to -- there are many microcredit programs going around advertising themselves saying, "Oh, this is a great opportunity to make money." And they encourage people who want to make money to join in and do that. Again, we say, "Look, our purpose is not to excite people about making money. Our purpose is to help people get out of poverty. The focus is not on profit making. The focus is on helping people to get out of poverty. Those who are seeing this as an opportunity to make money have to raise their interest rate to the extent that they make a lot of money. The interest rate issue becomes a sensitive one. We are saying interest rates should be kept as low as possible, preferably to cover costs. If you want to make a little profit on top of it, it should be a very modest profit, so that it doesn't look like this was your intention. Those who are doing that -- using microcredit, microfinance, to make a lot of money -- we keep saying that this is not microcredit in the sense that we do it. We came here to fight the loan sharks, not become loan sharks ourselves. This is their moving into the direction of loan sharks. We want to disassociate ourselves from them."
Please read the whole interview.
Here is an excerpt from the interview:
"Another aspect that I want to draw attention to -- there are many microcredit programs going around advertising themselves saying, "Oh, this is a great opportunity to make money." And they encourage people who want to make money to join in and do that. Again, we say, "Look, our purpose is not to excite people about making money. Our purpose is to help people get out of poverty. The focus is not on profit making. The focus is on helping people to get out of poverty. Those who are seeing this as an opportunity to make money have to raise their interest rate to the extent that they make a lot of money. The interest rate issue becomes a sensitive one. We are saying interest rates should be kept as low as possible, preferably to cover costs. If you want to make a little profit on top of it, it should be a very modest profit, so that it doesn't look like this was your intention. Those who are doing that -- using microcredit, microfinance, to make a lot of money -- we keep saying that this is not microcredit in the sense that we do it. We came here to fight the loan sharks, not become loan sharks ourselves. This is their moving into the direction of loan sharks. We want to disassociate ourselves from them."
Please read the whole interview.
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