Monday, August 11, 2008

News: Grameen Bank

My friend Ravid recently spent time interning with Grameen Bank in Bangladesh. As you may know, Grameen is a Microcredit business started by Mohammed Yunus, winner of the 2006 Nobel Peace Prize. Microcredit is the extension of small loans at low interest to poor entrepreneurs. Though it's not apparent in all the press they've received, Ravid realized Grameen isn't a social business at all - it's plain old capitalism:

"The villagers here who have taken a loan are unable to reimburse their credit, and claim to be harassed by Grameen Bank representatives. Korshed Alom, a former debt collector, was put into early retirement for having questioned the Grameen Bank’s methods: “Their technique is to scare borrowers and insult them. We tell them to sell their clothes, that they have no other choice. I’m not proud of myself, but several times, I had even been obliged to say ‘sell your children.’”" - http://www.france24.com/en/20080404-bangladesh-burden-microcredit-caring-grameen-bank-mohammed-yunnus

In my work as a headhunter for Latin American businesses at Investment Banks and LatAm funds/private equity funds, I'm coming across Microcredit a great deal as well. I believe JP Morgan recently set up a business devoted to the space in Latin America. I think it's safe to say when a firm enters a space in a market like this they believe it's a profitable endeavor. Microcredit isn't here to save the world, it's here to capitalize off of a few success stories and positive PR while letting others fall deeper into debt.

1 comment:

caughtintheweb said...

I co-sign your microcredit skepticism. It's ridonk. Another way for limousine liberals to feel better about themeselves. Check out this woman Gina Neff who has written on this stuff.

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