Contributed by Sean-Paul Kelley
This really is an important story that deserves wider coverage. Microlending is very profitable. In the past those profits have always been plowed back into the local community to be used to lift even more people out of poverty. But that may be changing:
Scott Jagow: There’s a big conference in Europe today on microfinancing. That’s when you give people, usually women, in developing countries very small loans to help them run a business. It might be something as simple as selling crafts on the street. But some of the world’s largest banks are attending this conference. They want to get into microfinancing. Michaela Walsh founded Women’s World Banking back in 1975. I asked her why the big banks want a piece of this.
Michaela Walsh: It can be a very profitable business. It is more labor-intensive than say commercial credit. Our role is to make sure that microfinance doesn’t become consumer credit.
Is there a possibility that big banks will come in a depersonalize what has been one of the world most successful ways of alleviating poverty and empowering women? Yes:
Michaela Walsh: Personally, I have always had a concern that small loans that are given in a local community, whether it’s rural or urban, and when paid back there needs to be some kind of a guarantee that those profits and those benefits are reinvested in that local community and not just computerized and centralized in a capital city or in a global network. Recently Harvard University and two other universities did a study saying that because the large banking institutions have the capacity to get out more loans, that we ought to put more and more money into the big institutions. My concern about that is we need to make sure those loans are not consumer loans and that they are going to be shared with local women’s institutions to ensure that woman are making the decisions about how to run microfinance in the most effective way to serve the largest number of clients.
The big banks will turn it into a credit issue and then have even more wage slaves, globally too!