> Posted by Center Staff
The thrust:
“Sacrificing Microcredit for Megaprofits,” Dr. Muhammad Yunus’ piece on the opinion pages of the The New York Times on Friday, January 14th. The Nobel Prize winner makes his point: “I never imagined that one day microcredit would give rise to its own breed of loan sharks.”
The parry:
“Muhammad Cronus?,” Matthew Bishop’s next-day response on the blog Philanthrocapitalism. The US business editor and New York bureau chief of The Economist counters: “[T]he idea that leading commercial microlenders like SKS and Compartamos are loan sharks is outrageous.”
The riposte:
“If Mr Yunus has his way,” Bishop writes, “[the] supply of growth capital will be choked off and hundreds of millions of people will be left waiting for financial inclusion.”
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January 19, 2011 at 1:06 pm
Peter Burgess
Dear Colleagues
It may well be a good thing if, as Matthew Bishop suggests, the “supply of growth capital will be choked off”. I have to admit the conversation about moneylenders (banks and capital markets) seems to be more suited to early biblical times than the 21st century. Except for Muhammad Yunus and his followers, little of the discussion is about what the availability of money can really do for the client … just like the dot.com era, and the housing bubble, the microfinance asset class is now in play as a route for investors and entrepreneurs to get rich on top of PR about how much good is getting done! There is value in a social agenda for microfinance … little or no value in one where microfinance is merely a modern era moneylender!
Peter Burgess
truevaluemetrics.org
January 19, 2011 at 9:22 pm
Chuck Waterfield
So superficial of Mr. Bishop. That’s no riposte… that’s a sophomoric straw-man argument.
To say that we need Compartamos and SKS making returns of hundreds-to-one in order to “serve the poor” is ludicrous. Investors can be — and should be — very content with a 20% return on investment. Leave the 50% returns of Compartamos to attract those investors who have the rest of their investment dollars in payday loans and subprime mortgages. There are plenty of decent-minded investors to enable the microfinance industry to truly serve the poor and not just get rich off the poor.
Is not the ideas of those who balance the needs of the poor with their own financial returns who are going to kill the microfinance industry and dry up capital, it is the short-sighted, selfish perspectives of those looking to get wealthy off of microfinance who are killing the industry.
January 20, 2011 at 11:27 am
Elisabeth Rhyne
Two strong counter-thrusts here — anyone else for fencing?
January 22, 2011 at 9:25 am
Cristian Shoemaker
Is there a way forward that can include the capital and desired efficiency of profit seekers, yet truly respect the economic, political and social vulnerabilities of microfinance clients? Will the intellectual positions taken by industry leaders become more akin to ideology than guiding influence, as strategic tensions and operating environments inevitably evolve?