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Category: Microfinance

Posts about the practice of microfinance

Next Billion Post: Energy to the BOP Made “Simple”

Next Billion Post: Energy to the BOP Made “Simple”

For my second post at Next Billion, I wrote about a company called Simpa Networks.  Simpa was founded by Jacob Winiecki and Mike MacHarg, two people I have known since I started out in the development game.  Here is a tangential story about the smallness of the world. I used to work for a consulting firm in Boston.  I wanted to work in development but wasn’t sure how to get in the door.  I knew I was interested in solar…

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A Microfinance Documentary for the Empowerment of Women

A Microfinance Documentary for the Empowerment of Women

About three months ago, I got an email from Rachel Cook, an alumnus from my alma mater, Duke University, who graduated with me in 2006.  A mutual acquaintance had read my blog and suggested she reach out to me to get my thoughts on microfinance.  She was flying to Paraguay to put together a pilot for a documentary.  Now, that pilot is complete and she needs our help. I always thought it strange that a documentary had not been made…

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Microbusinesses as Start-Ups and the Problem of Flexibility

Microbusinesses as Start-Ups and the Problem of Flexibility

In a blog post titled “The Rigidity of Microfinance,” Eva Pereira discusses how the structure of microfinance loans inherently stifle risk-taking among clients: Compared to loans in developed countries, microloans have far shorter repayment cycles, oftentimes as short as a week. In Field’s 2009 study she analyzed the effects of allowing borrowers a two month grace period before repayments began. The study aimed to find out how borrowers would behave without the looming burden of an immediate debt repayment. As…

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The Changing Microfinance Industry in India

The Changing Microfinance Industry in India

When most people think of microfinance (which most people do not), they envision a poor person in a faraway country borrowing a few bucks to buy a goat.  In an article titled “Microlender Forecloses on Goat,” The Onion proves once again that it has its finger on the pulse: Representatives from One World Finance, a U.S.-based microcredit provider, confirmed Monday that they had initiated foreclosure proceedings on a goat in southern India following a borrower’s repeated failure to make her…

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Introduction to a Series of Essays

Introduction to a Series of Essays

I am in my final month here, coming to the end of my road after a long trip.  I spent 7 months in the Philippines, two weeks each in Cambodia, Thailand, and Burma, a week in Vietnam, four days in Hong Kong, and an afternoon in Japan.  I am taking time to reflect on my time here and pull together everything I have learned into a set of coherent ideas of what it all means. I arrived in December of…

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The Microfinance Narrative in Action

The Microfinance Narrative in Action

This is the opening paragraph from a recent article about whether or not microfinance is effective: Yohane Mdeme owns a food market in Tanzania. Though poor and with little to no collateral, he applied for a loan of $850 through Kiva.org to expand his small business. Twenty years ago in such a place and for such a client, Mdeme would never obtain the capital to increase his business. No bank would have given out such a small loan, much less…

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The Profit in Serving the Poor

The Profit in Serving the Poor

The philosophical and ethical quandary over the direction of microfinance is an interesting one that gets a lot of play here at Develop Economies.  A drive for financial sustainability and the prospect of making profitable investments in microfinance institutions has brought investors to the industry.  This development opens up a whole new source of endless capital, but brings with it a new set of conditions that were never there before.  For example, a number of private equity firms have begun…

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Creating a Credit Bureau for People Without Credit

Creating a Credit Bureau for People Without Credit

In any industry, when an increasing supply serves a stable demand, the market becomes overheated.  The same is true in microfinance.  As more microfinance institutions serve the same number of target clients, those clients begin taking loans from multiple sources, using one line of credit to pay off the others.  All of a sudden, instead of working with a single bank, now the clients have several different banks to choose from, all of which are vying for their business.  And…

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Yunus on Microfinance: Commercialization is Code Word

Yunus on Microfinance: Commercialization is Code Word

For my non-microfinance readers, the number one debate in microfinance right now is whether or not organizations should be charging higher interest rates (or improving their operating efficiency) in order to access the capital markets, which opens the doors to huge amounts of money, but also an obligation to generate returns for your investors.  Over at the Big Think, a very cool site full of interviews with thought leaders, Muhammad Yunus shares his thoughts on the commercialization of microfinance: Commercialization…

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