Source: Financial Times
Article available here.
Microfinance is quickly becoming a popular corner of the capital markets as more investment banks and wealthy philanthropists such as George Soros and eBay co-founder Pierre Omidyar see the business of providing small loans to low-income individuals in poor countries as potentially profitable as well as a powerful tool for development.
Professor Aneel Karnani of the University of Michigan argues that ”despite the hoopla over microfinance, it doesn’t cure poverty. If societies are serious about helping the poorest of the poor, they should stop investing in microfinance and start supporting large, labour-intensive industries.”
Eric Thurman, co-author of A Billion Bootstraps: Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty, disagrees. Mr Thurman suggests that microcredit is not a panacea that can solve every problem in the world but, he, argues, “it is a proven intervention that works well in many ways and significantly outperforms most ‘top down’ antipoverty efforts.” Mr Thurman’s greatest concern is that currently microcredit is only available to five or ten per cent of the people who could benefit from it. Mr Thurman hopes to see the movement grow.
Is microfinance a boon or a bane? Can the sector help cure poverty? Mr Karnani and Mr Thurman will answer your questions in a live online debate on Friday July 27 from 2-3pm BST. Post a question now to ask@ft.com or use the online submissions form below.
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