microfinance

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September 13, 2011 | 11:30 AM | By

Microfinance visualized

It’s hard to actually follow the advice of the slogan to “Visualize World Peace.” But below is a pretty cool video that allows you visualize reducing poverty — or at least watch microloans flying all over the world.

Thanks to David Roodman at the Center for Global Development for pointing this out (and for noting that Kiva’s microfinance program is not quite as advertised. But this video at least gives you a good sense of how popular these micro-loans have become … and it’s fun to watch. I think they could’ve picked better music, however. The William Tell Overture?):

Intercontinental Ballistic Microfinance from Kiva on Vimeo.

FILED UNDER: Basics, David Roodman, kiva, microfinance
July 18, 2011 | 11:00 AM | By

Muhammad Yunus on the crisis in microfinance

World Economic Forum

Muhammad Yunus

The Guardian has published an excellent, in-depth interview with Muhammad Yunus that provides perspective on the current crisis in microfinance.

Yunus, the Nobel Prize-winning economist credited with developing this anti-poverty scheme, has been at the center of his own crisis, which overlaps with the general crisis but is largely due to a political power struggle in his home country Bangladesh.

It one of only a few interviews he’s given since the government forced him out of running his hugely successful Grameen Bank for the poor. A few excerpts:

As the saying goes, a prophet is never recognised in his own country. Neither the global acclaim – nor the protestations of both the French and the US government – is making much difference to a government intent on destroying Yunus’s hold on Grameen Bank and the network of social enterprise companies he has developed over the last four decades.

The most likely explanation for the attacks on him is that Yunus’s brief foray into politics in 2007 unnerved (Bangladeshi PM) Sheikh Hasina. He announced he was going to set up a political party but ended up abandoning his the idea after only two months. His huge global reputation and the economic weight of the Grameen brand has made enemies insecure.

That last bit may be the most likely explanation, but perhaps not the only one. There’s plenty of evidence to suggest the attacks on Yunus are not just due to Bangladeshi politics.

As I’ve noted before, there is a fight right now for the heart and soul of microfinance — between those like Yunus who focus on the social mission of microfinance first and those who focus on it as a profitable way to perhaps also help poor people. The criticism of Yunus’ approach to microfinance really only exploded after he condemned the “loan sharks” who seek profits while only claiming to help the poor.

 

FILED UNDER: Basics, microfinance, Muhammad Yunus
July 5, 2011 | 8:00 AM | By

Mysterious microfinance firm re-emerges

Flickr, TW Collins

Clay Holtzman, in his new blog Nonprofit Kingdom, notes that a year ago the Seattle microfinance firm Unitus closed its doors, laid off most of its staff and didn’t really tell anybody (including some major donors) why it did so.

Unitus, which had claimed its primary mission was to help poor people, also happened to have made a lot of money — having invested in an Indian company, SKS Microfinance, which had pursued this anti-poverty financing scheme as a for-profit venture.

Here’s a New York Times piece on the controversy about SKS making money while fighting poverty. Here’s what I wrote at the time Unitus closed its doors and a more recent post I did on the broader implications of all the weirdness. Here’s another post from last year that Clay cites as a good overview by Philanthropy Action.

Now, as Clay notes, Unitus has been resurrected as Unitus Labs. Here’s what Clay says:

Many wondered what the new mission would be, and why Unitus had to close so quickly. Unitus recently unveiled its reorganization plan, and while the charity will use a different approach to reduce poverty, its new business strategy appears very similar to the one that sparked an international controversy last year.

Continue reading →

FILED UNDER: Basics, Clay Holtzman, Global Partnerships, microfinance, Muhammad Yunus, SKS Microfinance, Unitus
May 18, 2011 | 3:22 PM | By

Muhammad Yunus, Craig McCaw, mobile phones and poor people

Tom Paulson

Founders of Seattle's Grameen Technololgy Center share a laugh. From left, Alex Counts, Peter Bladin, Susan McCaw, Craig McCaw

A decade ago, few thought poor people had much use for cell phones and, likewise, few in the cell phone industry had much use for poor people.

The folks who launched Seattle’s Grameen Foundation Technology Center, which yesterday celebrated its 10th year anniversary (and new digs in Belltown), disagreed with both of those assumptions.

More importantly, they proved both assumptions stunningly wrong. Africa, for example, is today home to the fastest growth in mobile phone use. In Seattle alone, there seems to be a new company springing up every month looking to grow the cell phone business in the developing world.

“When we started on this, others in the industry thought Africa was irrelevant,” said Craig McCaw, the wireless magnate who built an empire in the early days of the cell phone industry and who contributed the seed money (a mere $2 million) to launch the Grameen technology center.

“We’re in a unique position right now,” said Peter Bladin, outgoing director of the Grameen tech center, which is a branch of the Grameen Foundation — one of the world’s leading microfinance institutions founded on the poverty-fighting principles of the Nobel Peace Prize-winning pioneer of microfinance Muhammad Yunus.

Progress amid controversy

The field of microfinance, and Yunus himself, has been embroiled in a number of controversies lately — partly as a result of having exploded in popularity as a financial scheme and suffering all the attendant problems of rapid growth (opportunism, mission creep, debates over impact or outright scams).

While many seem to be arguing the merits of microfinance these days, few seem to be arguing anymore that cell phones don’t have a place in poor countries. What the Seattle-based Grameen tech center aims to do is make sure the rapid expansion of mobile telephony also serves the needs of poor people.

Yunus, it turns out, was also an early advocate of using cell phones to fight poverty in Bangladesh, which eventually led to Bangladesh’s largest telecommunications service Grameenphone. With McCaw’s financial assistance, the Grameen tech center was created to expand on Yunus’ vision by funding research projects devoted to making the best of the emerging technologies.

“We wanted to create a center of excellence here,” said Alex Counts, president of the Grameen Foundation, headquartered in Washington D.C.

McCaws made it possible

Counts credited the McCaws with making that possible, briefly noting the turmoil in microfinance but quickly moving on to celebrate all of the many advances being made today in exploiting the ubiquitous cell phone to help poor people improve their lives and livelihood.

“What we are doing is closing the information poverty gap,” said Bladin.

Some of the Grameen Foundation Technology Center’s projects: Giving a smallholder farmer the information he or she needs to improve agricultural productivity or get the best prices for a crop; providing traveling health workers with on-the-go access to critical information they need to care for people; developing software that allows people without access to banks to make payments or transfers on a cell phone.

I’ll explore one of these projects in more detail tomorrow, a project in Uganda known as the community knowledge worker program.

The goal of all of these initiatives, said Bladin, is not merely to make use of the cell phone as just another tool that poor people can also use. The goal of the Grameen Foundation, he said, is to bend technology to serve a much bigger aim: Defeating poverty.

“Too many of these (technology) projects are one-offs,” said Bladin, with the untested assumption that somehow technology alone will help bring people out of poverty — or maybe just another commercial scheme, gilded as a “social” venture, which is only aimed at selling a product or a service.

“Our goal is to figure out how to leave most of the money in the village,” Bladin said.

FILED UNDER: Basics, Alex Counts, cell phones, Craig McCaw, Grameen Technology Center, microfinance, Muhamm, Peter Bladin, Susan McCaw
May 16, 2011 | 8:00 AM | By

World Health Assembly opens to Taiwan outrage, smallpox debate, speeches by Bill Gates and Muhammad Yunus’ arch-enemy

WHO

World Health Organization

The World Health Assembly opens today in Geneva for week-long confab on what to do about global health.

I’ve not attended one of these meetings, which sets priorities for the World Health Organization, but from a distance it always looks like kind of a mess. A well-intentioned mess maybe but a mess nonetheless, partly because almost everything under the sun is allowed a place on the agenda. Continue reading →

FILED UNDER: Health, Politics, Bill Gates, cell phones, maternal health, microfinance, polio, smallpox, World Health Assembly, World Health Organization
May 11, 2011 | 10:00 AM | By

Four answers to the question: Does microfinance work?

That, in a nutshell, was the question posed to a panel of microfinance experts at a Seattle forum earlier this week, sponsored by Global Washington and aimed at examining “The global implications of India’s microcredit crisis.”

The answer: Yes and no. Of course.

It’s actually an important, if impudent sounding, question given that microfinance has long been heralded as the most powerful weapon in the fight against poverty. It’s especially interesting in Seattle because this community is one of the leading international hubs of the anti-poverty scheme.


Tom Paulson

From left, Rick Beckett of Global Partnerships, Chris Wolff with Accion Int’l, Peter Bladin of the Grameen Foundation, David Roodman and moderator Steve Davis

I think it’s fair to say microfinance is no longer regarded without question as a panacea for poverty. In fact, as I have written ad nauseum, it is in something of a crisis. Continue reading →

FILED UNDER: Basics, Accion, Center for Global Develop, Chris Wolff, David Roodman, Global Partnerships, Grameen Foundation, microfinance, Peter Bladin, Rick Beckett
May 9, 2011 | 9:00 AM | By

Has India jinxed microfinance?

Flickr, prolix6x

Indian woman cooking rice

The anti-poverty scheme known as microfinance is in crisis, or maybe several crises.

The political sacking of Muhammad Yunus as head of the pioneering Grameen Bank, allegations of loan-shark profiteering by some microfinanciers and suicides of poor people caught in “debt traps” have led to a drumbeat of negative media stories about microfinance.

The drumbeat is loudest in India where the crisis is most intense. But it has reverberated worldwide, including in Seattle. Continue reading →

FILED UNDER: Basics, Accion, Center for Global Development, David Roodman, Global Partnerships, Grameen Foundation, India, microfinance, Muhammad Yunus, SKS Microfinance
April 13, 2011 | 7:30 AM | By

Millennials doing microfinance and microphilanthropy

Millennials are big on microfinance, and microphilanthropy.

Microfinance is most simply thought of as providing — and managing — small loans or financial services to poor individuals or small communities who otherwise wouldn’t ever get on a regular bank’s radar screen.

Microphilanthropy is similar — philanthropy aimed at helping meet the needs of poor individuals or small organizations that otherwise might get the attention of many large non-profit, humanitarian organizations.

There’s a crisis of confidence in microfinance right now, usually, inaccurately, personified in the recent trials and tribulations of the Nobel Peace Prize-winning economist Muhammad Yunus.

The real crisis is not so much about Yunus as it is due to the rising commercialization and emphasis on profits in this financial scheme. Yunus has criticized some microfinance organizations for acting like “loan sharks,” for losing their focus on the true mission of microfinance — to help people get themselves out of the cycle of poverty.

Here are a few young people in Seattle who remain focused on the true mission.

1) Using tech-industry know-how to help the smallest needs: Nadia and Adnan Mahmud.

The Mahmuds are two impressive and almost accidental microphilanthropists. Their organization is called Jolkona, Bengali for “drop of water,” and until this past March was being run on laptops out of the Mahmud’s kitchen and assorted Seattle coffee houses.

Tom Paulson

Adnan and Nadia Mahmud, of Jolkona

Jolkona was created, I’m not kidding here, partly because Nadia didn’t want to walk back to her dorm room at UCLA and partly because Adnan didn’t want to deal with a lot of email. I’ll get to that in a second, but first let’s talk about what Jolkona does.

In a nutshell, Jolkona helps fund those kinds of projects or individual needs that are so small that the cost to administer them at most large non-profit organizations would be more than the amount of money needed. Jolkona also provides direct feedback so donors can see how their support makes a difference.

Continue reading →

FILED UNDER: Basics, Jolkona, Lumana, microfinance, microphilanthropy, Millennials, Vittana