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Microfinance's Growing Pains

Crash course time, readers: microfinance. It's granting tiny loans to people in poverty. These loans are almost always repaid and the idea is...


Crash course time, readers: microfinance.It's granting tiny loans to people in poverty. These loans are almost always repaid and the idea is that they make entrepreneurs out of people living hand-to-mouth. It's like a smallish trampoline made of money that allows you to safely walk the tightrope of poverty (see illustration).It's been all the rage ever since Muhammad Yunus won the Nobel Peace Prize for his Grameen Bank in Bangladesh.Microfinance institutions have exploded across the developing world. Kiva's one of them. In this video Nicholas Kristof goes to Kabul to visit his "business partner," a baker he probably gave $50 to through Kiva, and demands interest in the form of delicious bread. Kiva's a success story and its growth has been impressive.But microfinance might be getting ahead of itself. There are four microfinance lenders under investigation in Uganda alone. A new Harvard Business Review piece argues it's time for more scrutiny.Harvard Business Review: buzz-kill or voice of reason?We got the tip from Philanthropy 2173.Graphic from ybpguide.com.
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