Microfinance at the tipping point?
by Vinay Gupta • April 6, 2008 • The Global Picture • 0 Comments
“Microfinance started in the 1970s with a focus on using this breakthrough to help end poverty,” said Sam Daley-Harris, director of the Microcredit Summit Campaign, a nonprofit endeavor that promotes microfinance for families earning less than $1 a day. “Now it is in great danger of being how well the investors and the microfinance institutions are doing and not about ending poverty.” He said the situation posed the danger of “mission drift.”
Mr. Danel and Mr. Labarthe say microfinance will help more poor people by tapping the boundless pool of investor capital rather than the limited pool of donor money.
“It’s marvelous to have one creditor but it’s marvelous to have one million creditors,” Mr. Labarthe said, “and that’s where we really start to change the face of opportunity.”
Compartamos (“let’s share” in Spanish) expects to reach one million borrowers this year. Its profits are healthy, some $80 million last year, and its portfolio has grown to almost $400 million. Since it went public nearly a year ago, return on equity has been more than 40 percent.
