Bangladesh Inspects Grameen Bank and Muhammad Yunus. Bangladeshi government officials say they are worried that the handling of the Norwegian money may point to broader problems at Grameen.
Mahbubul Mokaddem Akash, an economist at the University of Dhaka who has been critical of Grameen Bank, said that while Mr. Yunus might be personally incorruptible, the bank needed strong governing practices and transparency if it was to thrive once its charismatic founder departed. “The main focus should not be on personal corruption but on prudential management of the institution,” Mr. Akash said. Social Innovation Conversations. Deception in Microfinance: Is Talk of Mission Just Window Dressing? (May 6, 2010) Only organizations that place the mission of helping borrowers improve their economic circumstances above profits should be considered microfinance practitioners.
I was very excited to see the article in The New York Times questioning the business practices and transparency of some of the organizations making loans to very poor people around the world. There are clearly abuses going on, and much greater scrutiny needs to be applied to everyone who is applying the increasingly popular “microfinance” label to their activities. To my mind, only organizations that place the mission of helping borrowers improve their economic circumstances above profits should be considered microfinance practitioners.
Earning a reasonable profit by making microloans, when circumstances permit, is fine and good. At Opportunity Fund, we charge our microloan borrowers 8% interest, which does not cover the full cost of delivering the loans and the business coaching we provide to our clients. NYT: Many Borrowers of Microloans Find the Price Is Too High. Jane Hahn for The New York Times Anita Edward says she has borrowed money three times from LAPO, Lift Above Poverty Organization, for her hair salon, Amazing Collections, in Benin City, Nigeria.
More Photos » Actors like and lent their boldface names to the cause. Muhammad Yunus, the economist who pioneered the practice by lending small amounts to basket weavers in Bangladesh, won a Nobel Peace Prize for it in 2006.