John Cusack said it best. When asked “Which living person do you most despise?” in the June issue of Vanity Fair, Cusak replied:

“Very tough question. They exist in the realm of war profiteers. These men and women are the lowest form of human consciousness, truly and completely spiritually fucked. Theirs is an amazing satanic dance: create a new market with war, bar competitors from the aftermath, then pay your own companies at a cost-plus basis, which guarantees profits, all at the taxpayers’ expense. They are the biggest welfare freaks on the planet.”

If microfinance is to enter the 21st century’s world of capital markets, it must take heed of critical evaluations and modify just as any other financial system does. Keeping microfinance under the careless sunbath of recent idealism will not help it develop into a sustainable, adaptive, world-wide financial system. Rather than letting this idealism eclipse pragmatism, microfinance institutions should read HBR’s article carefully if they are to become promising investments in the private sector.

And for investors, public and private: detailed evaluations of those institutions in which you are investing is key if the most reliable and best performing are to be singled out and further developed. Treating microfinance institutions as charitable organizations rather than as sound business enterprises – writing careless checks rather than calculating an investment – is against the market-based approach that Yunus intended. Public investors should especially consider HBR’s closing recommendations, most important of which is a country’s current business environment: has a country created an environment conducive to the establishment of businesses and development of the private sector? Do laws force potential entrepreneurs to wait hundreds of days rather than a week to register their business? Ultimately, if the macro framework isn’t established, micro-enterprise will never develop beyond that: micro.

While HBR’s critical assessment may seem rough, the real world of finance isn’t cuddly. If microfinance institutions want real legitimacy in the eyes of future investors and seek to grow out of the world of dependent charity and into the world of international finance, then they would do well to learn from this critique and the many to come. Honesty, after all, is best.

John Cusack said it best. When asked “Which living person do you most despise?” in the June issue of Vanity Fair, Cusak replied:

“Very tough question. They exist in the realm of war profiteers. These men and women are the lowest form of human consciousness, truly and completely spiritually fucked. Theirs is an amazing satanic dance: create a new market with war, bar competitors from the aftermath, then pay your own companies at a cost-plus basis, which guarantees profits, all at the taxpayers’ expense. They are the biggest welfare freaks on the planet.”

If microfinance is to enter the 21st century’s world of capital markets, it must take heed of critical evaluations and modify just as any other financial system does. Keeping microfinance under the careless sunbath of recent idealism will not help it develop into a sustainable, adaptive, world-wide financial system. Rather than letting this idealism eclipse pragmatism, microfinance institutions should read HBR’s article carefully if they are to become promising investments in the private sector.

And for investors, public and private: detailed evaluations of those institutions in which you are investing is key if the most reliable and best performing are to be singled out and further developed. Treating microfinance institutions as charitable organizations rather than as sound business enterprises – writing careless checks rather than calculating an investment – is against the market-based approach that Yunus intended. Public investors should especially consider HBR’s closing recommendations, most important of which is a country’s current business environment: has a country created an environment conducive to the establishment of businesses and development of the private sector? Do laws force potential entrepreneurs to wait hundreds of days rather than a week to register their business? Ultimately, if the macro framework isn’t established, micro-enterprise will never develop beyond that: micro.

While HBR’s critical assessment may seem rough, the real world of finance isn’t cuddly. If microfinance institutions want real legitimacy in the eyes of future investors and seek to grow out of the world of dependent charity and into the world of international finance, then they would do well to learn from this critique and the many to come. Honesty, after all, is best.