Grameen Foundation


‘Accidental’ advocate helped bring ‘Bonsai People’ film to Seattle | 

The filmmaker

Holly Mosher filming for 'Bonsai People.'

By Jaclyn Schiff, special correspondent

When Seattle resident Fortunato Vega walked into Starbucks one Saturday about three years ago, he didn’t expect to leave with anything more than his morning coffee.

Instead he walked out with a free ticket for an event with Muhammad Yunus, the well-known Bangladeshi economist. A friend had an extra spot at the event and called to see if Vega was interested.

The serendipity didn’t end there. Vega hung around after the event and nabbed about a half-hour of face time with Yunus whose ride was running late.

The experience made quite an impression on Vega, a financial advisor to tech entrepreneurs who says he had “no background” in microfinancing.

“It has to do with the type of people who need money to make money,” he says when describing why he’s become a passionate supporter of microcredit. “I’m a big fan of that versus donating to the United Way and leave it at that. I’d rather give money to someone to make sure they have a shot.”

‘Bonsai People’

Since meeting Yunus, he’s helped organize several events for the microfinance community in Seattle.

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Smart phones for poor farmers | 

Grameen Foundation, Heather Thorne

Simon Obwoya, Ugandan knowledge worker

Part of the reason many farming communities in Africa are poor is because they lack ready access to valuable information — about market price fluctuations, improved seed types or planting techniques and opportunities for farmers to collaborate with each other to sell in bulk.

So lots of folks are looking at the revolution in information technology (e.g., cell phones) to solve this problem, and other problems. Using cell phones to augment health services in poor communities is perhaps the biggest boom area right now, often dubbed mHealth.

(NOTE: I will for this report ignore recent goofiness about cell phones and cancer. See my post yesterday and this NPR backgrounder if you’re still interested in that story.)

Most of these cell-phones-for-the-poor projects are based on using cheap, low-end cell phones, for obvious reasons. These people are poor.

So the idea that a farmer in Uganda who makes $1-2 a day could benefit from an Android smart phone just sounded ridiculous – like another one of those pet projects a Western donor forces on some poor community whether it really fits their needs or not.

“We didn’t start out planning to use them,” said Heather Thorne Matthews of Seattle’s Grameen Foundation Technology Center.

Because, yeah, it sounded absurd. But as it turned out, Thorne said, the smart phone proved to be more financially self-sustaining than a dumb phone. Continue reading

Four answers to the question: Does microfinance work? | 

That, in a nutshell, was the question posed to a panel of microfinance experts at a Seattle forum earlier this week, sponsored by Global Washington and aimed at examining “The global implications of India’s microcredit crisis.”

The answer: Yes and no. Of course.

It’s actually an important, if impudent sounding, question given that microfinance has long been heralded as the most powerful weapon in the fight against poverty. It’s especially interesting in Seattle because this community is one of the leading international hubs of the anti-poverty scheme.

Tom Paulson

From left, Rick Beckett of Global Partnerships, Chris Wolff with Accion Int’l, Peter Bladin of the Grameen Foundation, David Roodman and moderator Steve Davis

I think it’s fair to say microfinance is no longer regarded without question as a panacea for poverty. In fact, as I have written ad nauseum, it is in something of a crisis. Continue reading

Has India jinxed microfinance? | 

Flickr, prolix6x

Indian woman cooking rice

The anti-poverty scheme known as microfinance is in crisis, or maybe several crises.

The political sacking of Muhammad Yunus as head of the pioneering Grameen Bank, allegations of loan-shark profiteering by some microfinanciers and suicides of poor people caught in “debt traps” have led to a drumbeat of negative media stories about microfinance.

The drumbeat is loudest in India where the crisis is most intense. But it has reverberated worldwide, including in Seattle. Continue reading

Five reasons why microfinance is in crisis – and why it matters | 

Flickr, TW Collins

The popular anti-poverty scheme of providing small loans and other financial services to poor people, generally known as microfinance, is in crisis.

“In one sense, you could say it’s a coming of age,” says Alex Counts, CEO at the Grameen Foundation, a leading non-profit microfinance organization with offices in Seattle and Washington D.C.. “Controversy often comes along with growing in size and impact.”

You could also say microfinance is actually suffering from several different crises: An external appearance of a crisis based on a damaged public image; a related, but slightly different, internal “identity crisis” and, at least according to one leading observer, a cash crisis in reverse — too much money.

Here are five reasons for the crisis:

  1. Microfinance has grown rapidly, from a simple anti-poverty program into a major player in the financial industry.
  2. Some now view microfinance primarily as an investment opportunity, with reducing poverty as either a secondary goal or not really the goal at all.
  3. Microfinance is a multi-headed creature with no agreed-upon strategy or approach.
  4. There is no consensus on how to measure “social performance” — for donors to tell the difference between a program focused on poverty reduction from one focused on maximizing profit.
  5. The evidence that microfinance does bring people out of poverty is mixed. Some say it has helped millions of poor people, mostly women. Others say it hasn’t and is, in fact, a debt trap for the poor.

All of these points, and most of the arguments, tend to circle back to the pioneer of microfinance, or microcredit, the Nobel Peace Prize-winning Bangladeshi economist Muhammad Yunus.

Tom Paulson

Muhammad Yunus visits with fans Seattle Town Hall May 2010

Yunus used to be golden, uniformly regarded as almost the patron saint of the anti-poverty movement. He still is seen as such by many of his supporters.

But Yunus is also in a bit of trouble these days, fighting off a push by politicians in Bangladesh to force him out of the Grameen Bank (his pioneering microfinance organization). The push comes after a film-maker’s allegations of corruption and the increasingly popular refrain among critics that these microloans hurt rather than help the poor — even driving some debtors to suicide.

Many in the microfinance industry see the power struggle in Bangladesh as more of a political sideshow, unjustified but more importantly unrelated to the real challenges facing the field. Continue reading

Microfinance flap keeps getting weirder | 

World Economic Forum

Muhammad Yunus

There is a crisis in the anti-poverty scheme microfinance, centered in India but reverberating globally.

I posted on the local implications of this mess in October, before it exploded in India but back when there were signs of trouble. I’ve tried to keep up as it has gotten more intense and weirder by the moment.

In the latest (even weirder) turn of events, the Nobel Peace Prize-winning pioneer of microfinance, Muhammad Yunus, has been accused of embezzling funds based upon allegations made by a Norwegian documentary filmmaker who has taken a critical look at the whole microcredit movement. Continue reading

Microfinance, subprime loans and baseball | 

Flickr, TW Collins

Is Microfinance the New Subprime?

That’s the provocative title of a new article in the Harvard Business Review by financial journalist Barbara Kiviat and New York University economist (and author of Portfolios of the Poor) Jonathan Morduch.

The subtext of the question is the implication that, like those sub-prime mortgage loans in the U.S. that turned out to be a catastrophic house of cards, some approaches to microfinance are starting to also look like another way for financial whizzes to make money off poor people.

I’ve been posting for the past few weeks on this increasingly heated debate surrounding “profit-maximizing” microfinance and the resulting turmoil in the field. It’s a debate that many organizations in Seattle, where microfinance is big, are watching keenly. Continue reading

Microfinance backlash: Identity crisis, evolution or greedy mission creep? | 

Seattle is big on microfinance, but what is it?

The short answer is that microfinance is a set of financial services such as small loans for the poor aimed at helping people get themselves out of poverty.

Sounds fairly straightforward, right? In reality, there’s a fight for the soul of microfinance going on and some of that battle has been playing out here at home.

There has been an explosion of “profit-maximizing” microfinance organizations lately which some say threatens to undermine the credibility of this anti-poverty scheme — if not its fundamental social purpose. But the proponents of profit-driven, commercial microfinance say it is the only way to really grow these services, to reach the many millions more in need of help.

Flickr, TW Collins

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