It also produced this letter which was drawn to my attention.
The burden of the first part of this was that microfinance results in poverty
....in nearly 25 years of academic and consulting work in local economic development, my experience is that microfinance programmes most often spell the death of the local economy. Put simply, to the extent that local savings are intermediated through microfinance institutions, the more that country or region or locality will be left behind in a state of poverty and under-development. This is an “iron law of microfinance”.Having some small knowledge of the business I was stirred into the repost:-
The trouble with iron laws, be they of the command economy or the market, is that they tend to crush the people who lack economic or political power.
I'm involved in microfinance because the market in this country and elsewhere refuses to service the sector fully and transparently. If the banks would lend responsibly to our customers I would be more than happy to put my feet up and read more books.
Sadly the law allows subprime lenders to charge outrageous interest. There is evidence, as the FT letter suggests, that the big boys are moving into this area and using the lack of regulation, control and transparency to generate even more profit.
Bangladesh, Mexico etc are poor countries for a complex of reasons and, truly, a dynamic economy is the fastest way to lift a substantial part of the population out of poverty, but it is naive in the extreme to suggest that it can all be simply resolved…
...through channelling much, if not most, of their savings into seriousMy (usual) response is that it is never quite as simple as that.
growth-oriented sustainable business projects.
My views were described as trenchant
I made a note to myself to be less trenchant in future!
In the meantime, a happy time to all our readers.
I'm off, through the wonders of steam radio, to listen to some music from some place called Kings.
