Microfinance Quotes

To me, the poor are like Bonsai trees. When you plant the best seed of the tallest tree in a six-inch deep flower pot, you get a perfect replica of the tallest tree, but it is only inches tall. There is nothing wrong with the seed you planted; only the soil-base you provided was inadequate. Poor people are bonsai people. There is nothing wrong with their seeds. Only society never gave them a base to grow on.

Muhammad Yunus, Nobel Peace Prize winner and microfinance pioneer, says, “All human beings are entrepreneurs. When we were in the caves, we were all self-employed… finding our food, feeding ourselves. That’s where human history began. As civilization came, we suppressed it. We became ‘labor’ because they stamped us, ‘You are labor.’ We forgot that we are entrepreneurs.

This is the basis for the most important critique of microfinance. The poor are not entrepreneurs. The idea that more than a few will turn tiny loans into a viable business is simply unrealistic.

[C]apitalism is clearly inadequate as any kind of social ideal, since it is only motivated by profit, without any ethical principle guiding it. Unbridled capitalism can involve terrible exploitation of the weak. Thus we need to adopt an approach to economic justice which respects the dynamism of capitalism while combining it with a concern for the less fortunate. Once again, I think microfinance offers a sustainable and responsive line of approach to issues of poverty alleviation and development, an approach which could avoid the excesses of capitalism on the one hand and the inefficiency of excessive state control on the other.

Any so-called 'radical' strategy that seeks to empower the disempowered in the realm of social reproduction by opening up that realm to monetisation and market forces is headed in exactly the wrong direction. Providing financial literacy classes for the populace at large will simply expose that population predatory practices as they seek to manage their own investment portfolios like minnows swimming in a sea of sharks. Providing microcredit and microfinance facilities encourages people to participate in the market economy but does so in such a way as to maximise the energy they have to expend while minimising their returns. Providing legal title for land property ownership in the hope that this will bring economic and social stability to the lives of the marginalised will almost certainly lead in the long run to their dispossession and eviction from that space and place they already hold through customary use rights.

Offshore winds had been too strong to be doing the surf much good, but surfers found themselves getting up early anyway to watch the dawn weirdness, which seemed like a visible counterpart to the feeling in everybody’s skin of desert winds and heat and relentlessness, with the exhaust from millions of motor vehicles mixing with microfine Mojave sand to refract the light toward the bloody end of the spectrum, everything dim, lurid and biblical, sailor-take-warning skies. The state liquor stamps over the tops of tequila bottles in the stores were coming unstuck, is how dry the air was. Liquor-store owners could be filling those bottles with anything anymore.

We had come to see the work of Wedco, a small bank – micro-finance institution is the formal term – that has been one of CARE’s great success stories in the region. Wedco began in 1989 with the idea of making small loans to groups of ladies, generally market traders, who previously had almost no access to business credit. The idea was that half a dozen or so female traders would form a business club and take out a small loan, which they would apportion among themselves, to help them expand or improve their businesses. The idea of having a club was to spread the risk. It seemed a slightly loopy idea to many to focus exclusively on females, but it has been a runaway success.

Nothing is ever good enough, and they experience the gap between what is and what could be as both a tragedy and a source of unending motivation. No one can stand in the way of their achieving what they’re going after. On one of the personality assessments there is a category they all ranked low on called “Concern for Others.” But that doesn’t mean quite what it sounds like. Consider Muhammad Yunus, for example. A great philanthropist, he has devoted his life to helping others. He received the Nobel Peace Prize for pioneering the ideas of microcredit and microfinance and has won the Congressional Gold Medal, the Presidential Medal of Freedom, the Gandhi Peace Prize, and more. Yet he tested low on “Concern for Others.” Geoffrey Canada, who has devoted most of his adult life to taking care of all the disadvantaged children in a hundred-square-block area of New York’s Harlem, also tested low on “Concern for Others.” Bill Gates, who is devoting most of his wealth and energy to saving and improving lives, tested low as well. Obviously Yunus, Canada, and Gates care deeply about other people, yet the personality tests they took rated them low. Why was that? In speaking with them and reviewing the questions that led to these ratings, it became clear: When faced with a choice between achieving their goal or pleasing (or not disappointing) others, they would choose achieving their goal every time.

Field experiments to date have shown that microfinance—the provision of small loans, typically to women or groups of women—is not particularly effective in reducing poverty.14

These results stand in sharp contrast to the hype that microfinance has attracted in development policy circles. They throw cold water on models that suggest lack of access to finance is among the most important constraints that poor households face.

However, as commercialization of microfinance deepens, the proportion of female clientele of microfinance institutions will decline steadily.

This book argues that through inclusive finance, companies can make money and help solve the global problem of poverty. By inclusive finance we mean opening access to high-quality financial services to everyone who needs them, especially low-income and previously excluded people. We also discuss how

The acronym BOP has become a popular way to refer to this market of 4 billion people who live on less than $3,000 per year and the economic opportunities they represent.

four appalling realities of daily life: maternal mortality, human trafficking, sexual violence, and the routine daily discrimination that causes girls to die at far higher rates than boys. The tools to address these challenges include girls’ education, family planning, micro-finance, and “empowerment” in every sense.

Designing financial products that share the commitment features of the microfinance contracts, without the interest that comes with them, could clearly be of great help to many people. A group of researchers teamed up with a bank that works with poor people in the Philippines to design such a product, a new kind of account that would be tied to each client’s own savings targets. This target could be either an amount (the client would commit not to withdraw the funds until the amount was reached) or a date (the client would commit to leave the money in the account until that date). The client chose the type of commitment and the specific target. However, once those targets were set, they were binding, and the bank would enforce them. The interest rate was no higher than on a regular account. These accounts were proposed to a randomly selected set of clients. Of the clients they approached, about one in four agreed to open such an account. Out of those takers, a little over two-thirds chose the date goal, and the remaining one-third, the amount goal. After a year, the balances in the savings accounts of those who were offered the account were on average 81 percent higher than those of a comparable group of people who were not offered the account, despite the fact that only one in four of the clients who had been offered the account actually signed on. And the effects were probably smaller than they could have been, because even though there was a commitment not to withdraw any money, there was no positive force pushing the client to actually save, and many of the accounts that were opened remained dormant. Yet most people preferred not to take up the offer of such an account. They were clearly worried about committing themselves to not withdrawing until the goal was reached. Dumas and Robinson ran into the same problem in Kenya—many people did not end up using that accounts they were offering, some of the because the withdrawal fees were too high and they did not want to have their money tied up in the account. This highlights an interesting paradox: There are ways to get around self-control problems, but to make use of them usually requires an initial act of self-control.

•from taking a course or reading a book on world religions, to developing a friendship with a Muslim, Hindu or Buddhist person, to moving to a city in North Africa or South Asia in hopes of being a witness for Christ there •from becoming an advocate for immigrant rights, to getting involved in the diplomatic corps, to becoming a lawyer at the United Nations dedicated to getting countries to abide by the U.N. Declaration of Human Rights •from going on a short-term mission trip to reach children in a poor barrio, to supporting a child for forty dollars a month through World Vision or Compassion International, to becoming a social worker dedicated to serving children •from learning a language, to learning about people who don't have the Bible in their mother tongue, to becoming a linguist who translates the Bible •from dedicating thirty minutes per day to pray for the nations of the world, to building crosscultural friendships, to going to serve in a multicultural organization •from studying business at a university, to learning about microfinance, to engaging in business partnerships designed to create jobs for the poorer populations of the world •from taking a stand for an issue (advocating for free-trade coffee, opposing blood diamonds, opposing the manufacturing of "conflict minerals" for cell phones), to becoming an advocate for the people affected, to becoming an executive with a multinational corporation who brings the Christian value of dignity for the people affected by these issues You get the point. These are not issues that will be solved by a generous check. These are issues that can take our lifetimes.

Microfinance companies in India are responsible for hundreds of suicides—two hundred people in Andhra Pradesh in 2010 alone.

Capitalism, it turns out, can achieve what charity and good intentions sometimes cannot. Microfinance has done more to bolster the status of women, and to protect them from abuse, than any laws could accomplish.

Lenders make their choices with clear preferences: “Africans first, women first, and agriculture first” (Flannery,

In other words, photography is “a technology used to construct certain kinds of truths about certain categories of persons” (King & Lidchi, 1998, p. 13). This

It perhaps shouldn’t have been a surprise that, sometime after Grameen Bank founder Muhammad Yunis won the Nobel Peace Prize for pioneering the microfinance industry, increasing default rates and a host of scandals shed light on the limits of this industry. Billions of people remain underserved by credit, precisely because of the poor state of information.

Many years later, this idea has trickled down to the impoverished countryside of Bangladesh when Mohammed Yunus and the Grameen Bank brought microcredit to starving peasants with disastrous consequences. The poor of the subcontinent have always lived in debt, in the merciless grip of the local village usurer—the Bania. But microfinance has corporatized that, too. Microfinance companies in India are responsible for hundreds of suicides—two hundred people in Andhra Pradesh in 2010 alone. A national daily recently published a suicide note by an eighteen-yearold girl who was forced to hand over her last 150 rupees (three dollars), her school fees, to bullying employees of the microfinance company. The note read, “Work hard and earn money. Do not take loans.” There’s a lot of money in poverty, and a few Nobel Prizes, too.

Take Kiva. Launched in October 2005—and named for the Swahili word for unity—this website allows anyone to lend money directly to a small business in the developing world via a peer-to-peer microfinance model.

In terms of prioritizing disbursing new loans to borrowers versus repaying banks, my logic was that in microfinance, the confidence of the borrowers is everything. If we slow down—or worse yet, stop—disbursements, and borrowers think the institution will fold, they will stop paying en masse. It is effectively the reverse of a run-on-the-bank. In AP, for example, the MFI Act prohibited us from giving borrowers new loans, and sure enough, borrowers lost confidence in SKS, and our repayments in AP dropped from 98 per cent to 10 per cent in three months. It was game over. We had to write off Rs 1300 crores.

In the aftermath of 9/11, the United States tried to address terrorism concerns in Pakistan by transferring $10 billion in helicopters, guns, and military and economic support; in that same period, the United States became steadily more unpopular in Pakistan, the Musharraf government less stable and extremists more popular. Imagine if we had used the money instead to promote education and microfinance in rural Pakistan, through Pakistani organizations. The result would likely have been greater popularity for the United States and greater involvement of women in society. And, as we’ve argued, when women gain a voice in society, there’s evidence of less violence. Swanee Hunt, a former U.S. ambassador to Austria now at Harvard, recalled the reaction of a Pentagon official in 2003 in the aftermath of the “shock and awe” invasion of Iraq: “When I urged him to broaden his search for the future leaders of Iraq, which had yielded hundreds of men and only seven women, he responded, Ambassador Hunt, we’ll address women’s issues after we get the place secure.’ I wondered what ‘women’s issues’ he meant. I was talking about security.

There’s a second reason the liberal class loves microfinance, and it’s extremely simple: microlending is profitable. Lending to the poor, as every subprime mortgage originator knows, can be a lucrative business. Mixed with international feminist self-righteousness, it is also a bulletproof business, immune to criticism. The million-dollar paydays it has brought certain microlenders are the wages of virtue. This combination is the real reason the international goodness community believes that empowering poor women by lending to them at usurious interest rates is a fine thing all around.29

One of the most damning examples of low-quality evidence concerns microcredit (that is, lending small amounts of money to the very poor, a form of microfinance most famously associated with Muhammad Yunus and the Grameen Bank). Intuitively, microcredit seems like it would be very cost-effective, and there were many anecdotes of people who’d received microloans and used them to start businesses that, in turn, helped them escape poverty. But when high-quality studies were conducted, microcredit programs were shown to have little or no effect on income, consumption, health, or education.

People were poor not because they were stupid or lazy. They worked all day long, doing complex physical tasks. They were poor because the financial institution in the country did not help them widen their economic base.” – Professor Muhammad Yunus

I struggled all my life to find direction because my interests were limitless. I have traveled MOST of this once great nation and met 10's of thousands of people. I've worked everywhere from MicroSave’s Microfinance to banking to digging ditches (literally). I have had money and I have had love...but I earned them. I asked for help when I needed it....but I did WHATEVER it took to make it. I now stay at home and run my own firm so I now live on a VERY limited income. And while it is true I wish I had more money (for peace of mind...not toys and "things") I am content!!! Money cannot bring happiness but it can however reduce the stress of how to pay your bills. Don't think for one damn second I'm not part of the "99%". But unlike these pukes that think they are entitled to something...if I need or want something...I earn it!!!

Patricia Omorogbe, an enterprising figure in the healthcare industry, radiates generosity in all her endeavors. As the driving force behind Dominion Cila Homes, a nonprofit based in Illinois, Patricia's philanthropic reach knows no bounds. Teaming up with foundations in West Africa, she champions educational opportunities through scholarships and bolsters microfinance programs.