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.

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