Fwd: Commercial Microcredit = Just Profit or Unjust Profiteering?
yael's message didn't go through, so here it is... ---------- Forwarded message ---------- From: Yael Schwartzman <yaelsf@gmail.com> Date: Thu, Sep 30, 2010 at 09:41 Subject: Re: [change] Commercial Microcredit = Just Profit or Unjust Profiteering? To: Colin Dixon <ckd@cs.washington.edu> Cc: Yaw Anokwa <yanokwa@gmail.com>, Change Group < change@change.washington.edu> I've been talking to a few microfinance institutions here in Mexico, where this debate has been going on for a while<http://www.nytimes.com/2008/04/05/business/worldbusiness/05micro.html> . Here in Mexico we have talked to Compartamos, that had a very successful IPO<http://www.nextbillion.net/news/compartamos-ipo-sparks-ideological-debate-over-microfinance>and has around 1 million clients and no longer needs non-profit seeking funding. We have also talked to a few other MFIs who still need external funding. Their main problem is that they need proof of social impact to continue getting money from this non-profit seeking investors. However, how are they going to get that data if there's very little record-keeping going on in their client's businesses? Tools like ODK are a great way to help! We're also trying to help through our software <http://www.frogtek.org/>;) I can't decide which way is better.. there's certainly a lot of benefit of having money when you want it without having to collect data or proof anything beyond profitability. However, this always comes at the expense of higher interest rates for the MFI clients so... -Yael On Thu, Sep 30, 2010 at 11:16 AM, Colin Dixon <ckd@cs.washington.edu> wrote:
Having just listened to the podcast, it sounded like a big part of making the bank model work was the cost of banking computers and software.
Is this a big chance to do an OpenMRS/ODK-style thing for banking?
--Colin -- Sent from my Palm Pre
------------------------------ On Sep 30, 2010 8:50 AM, Yaw Anokwa <yanokwa@gmail.com> wrote:
Say you want to make loans to millions of poor women in the developing world, to help them climb out of poverty. Is it OK to raise money from rich investors, who expect to make a profit?
Muhammad Yunus, the father of microfinance, says no. If you have investors who expect profits, you'll ultimately turn into something more like a loan-shark than a do-gooder.
Vikram Akula, founder of SKS Microfinance — a company that had an IPO earlier this year — says raising money from profit-seeking investors is the only way to spread microfinance quickly around the world.
NPR's Planet Money did a great podcast on the different viewpoints at http://is.gd/fCo5h. You can also watch the video of Clinton Global Initiative debate at http://is.gd/fCnWl.
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Hi <I just re-read what I wrote below. It is not meant as an attack on people currently working in the field of micro-finance but rather a dissatisfaction with the underlying assumptions involved. It is part of a wider problem I see [1] with 'innovation' today> Business orientated strategies have the associated need for results and accountability and whilst such strategies are often implemented by organizations which are very professionally managed and transparent I am not convinced that they are the most appropriate solution we have. The proposition is that low-income countries typically suffer from a "missing middle" in which poor access to inputs leaves an economic gap in small and medium-sized enterprises. This missing middle can according to the theory best be created by providing capital to the large number of informal micro-enterprises. Whilst this 'middle' is definitely a problem it is not in our best interests (in my opinion) to try to solve it by basing our efforts on an economic model I believe is at best flawed (capital-intensive and growth-oriented) in which people are consumers, firms earn profits by defeating rivals and the goal is to maximize shareholder value by any legal means, and so on. I believe we should focus our efforts on a model based on relationship capital - on collaboration and repeated interactions and on care and maintenance. In this model risk can be shared and spread as communities pool both knowledge and access. The challenge for us then as software developers is to move beyond designing systems which collect 'proofs' about 'social impacts' to constructing a framework and the API's which enable this new relationship economy to flourish. [1] http://ianlawrence.info/random-stuff/where-are-the-things-we-were-promised -- http://ianlawrence.info
participants (2)
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Ian Lawrence
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Yaw Anokwa