01/20/2011

Nobel Prize Winner Yunus on microfinance gone wrong

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NEW YORK - SEPTEMBER 26:  Microfinance pioneer...
Image by Getty Images via @daylife

Commercialization has been a terrible wrong turn for microfinance, and it indicates a worrying “mission drift” in the motivation of those lending to the poor. Poverty should be eradicated, not seen as a money-making opportunity.

There are serious practical problems with treating microcredit as an ordinary profit-maximizing business. Instead of creating wholesale funds dedicated to lending money to microfinance institutions, as Bangladesh has done, these commercial organizations raise larger sums in volatile international financial markets, and then transmit financial risks to the poor.

via Sacrificing Microcredit for Megaprofits – NYTimes.com.