I wrote last Friday about microcredit and a book entitled A Billion Bootstraps. When I got home that night a funny thing happened. I turned on the television, flipped it to channel 10, and there was microcredit pioneer and Nobel Prize Winner Muhammad Yunus on NOW's "Enterprising Ideas" series.
[Carlos] DANEL: If we think that capital markets are the devil, we're never going to solve poverty [Maria] HINOJOSA: The entrepreneurs behind Compartamos will tell you that it's the lure of profits that will motivate people to lend to the poor. DANEL: We have to stop looking at this as a zero-sum game and look at how we can bridge business and social objectives together in a successful way. HINOJOSA: Simply put, the business objective is to make money. But how much profit is too much? That's the question being asked by the company's high profile critics, including Muhammed Yunus, the Nobel Prize-winner who pioneered the idea of modern microcredit thirty years ago. YUNUS: When you are maximizing your profit-you are not looking at whether the poor people are getting out of poverty. You are always looking at your bottom line, how much money we are making out of this business with the poor peopleIt seems to me that the big difference is in who owns the bank. Maria Hinojosa sums it up.
Muhammad Yunus' Grameen bank is also a for-profit business. But there's a big difference. Any profits there go directly back to the borrowers, who are also owners of the company. Not so at Compartamos. [...] Recently, microlending as an investment idea has gained a lot of momentum. A small but growing number of international banks and investment firms are realizing that microcredit can also be good business. Citigroup, Morgan Stanley, Deutsche Bank, TIAA-CREF all have backed multi-million dollar microcredit deals...If done right, these banks could positively affect millions of lives. If you're interested in this topic, you can learn more about it, or watch Friday's program online, here. Other resources would be Yunus' own book, and for an economist's view on ending poverty, take a look at Jeffrey Sachs' aptly named and extremely popular book from 2005, The End of Poverty . Sachs also has another title being published by Penguin early next year called Common Wealth that looks like it should be fascinating.