The Economist writes:

Microfinance is in vogue thanks partly to the IFIs, which provided grants, loans and training to untested microcredit institutions. The private sector shunned the riskout of ignorance, a lack of expertise and fears that making money from the poor would look predatory. The pioneering work of donors means there are now some 10,000 microfinance institutions lending an average of less than $300 to 40m poor borrowers worldwide.

Only a fraction of the world’s 500m impoverished micro-entrepreneurs have access to the financial system. There is not enough donor or socially responsible money in the world to meet the demand. That’s why microfinance needs private-sector capital. Aid agencies, philanthropists and well-meaning social investors can help attract it by investing only where commercial outfits will not. When the children come of age, the best parents step aside.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.