Headline April 5th, 2012 / Microfinance Maelstrom

''Microfinance Maelstrom'' 

Respectful dedication PM Mario Monti, Italy - PM Sheik Hasina Wajid, Bangladesh - 

Pierre Omidyar, eBay

Over 1.26 billion people still subsist on about 1.25 dollars a day, according to the World Bank. And that in a World reeling in a recession and without a meaningful perspective on the future!!? In short, a World that is growing poorer in leadership, resources and hope!

The present world and the future was not supposed to be that way. So, new approaches are critical to the future of the world. And on such approach to help the students to fight poverty, unemployment and helplessness is Microlending. But remember that this is 100billion dollar global industry with some critically emerging flaws, that need to be recast to help Students the World over.

It was around 1976, when Bangladesh economist Muhammed Yunas opened one of the first modern microcredit institutions, the Grameen Bank --- more than 3,600 similar organisations have been established since, operating in every corner of the world. By 2010 these institutions lent more than 70billion dollars to nearly 100 million people, most of them being, women --- a nine fold increase from just 11million people in 2000, according to MIX or Microfinance Information Exchange.

While funds still come from the World Bank, the E.U and the U.S, government, investments have also flooded in from venture Philanthropists like eBay founder Pierre Omidyar, who gave 100million dollars for microcredit in 2005 through his Alma mater, Tufts University. But the Alarming happening is that 'private-equity funds and investment banks like Goldman Sachs and Sequoia Capiotal have increasingly entered and involved themselves in this picture. This is bound to drastically change the very face, nature and soul of microcredit.

Expectedly, stats and figures show that by 2008 more people were borrowing from profit driven institutions than from nonprofits. Therefore, the profit parasites made loans of over 54billion, with interest markups of about 30/cent with a return on equity of over 8/cent. A typical commercial bank earns 6 percent.

This is utter, utter shame!! This is ''gouging the poor!!?'' We do stop here on this sad note! Stay on morrow for more great work from !WOW!


Goodnight and God bless!

SAM Daily Times - The Voice of the Voiceless