Nobel Peace Winner Slams Poverty Profiteering

Nobel Peace Prize winner Muhammad Yunus, parent of the modern global microfinance movement which he launched in Bangladesh some 30 years ago, is condemning for-profit, predatory microfinance lenders. He calls them a "breed of loan sharks."

His January 15, 2011 New York Times opinion piece Sacrificing Microcredit for Megaprofits slams Compartamos (Mexico) and SKS (India) -- two recent and controversial microfinance IPOs which returned handsome profits to investors as "a terrible wrong turn for microfinance." He decries "people eager to take advantage of the vulnerable" and, bowing to the reality of investor avarice, calls for stricter governmental regulation.

With almost biblical scorn, Yunus implicitly casts market fundamentalists out of the temple of microfinance. In his world of poverty reduction, they have no place and don't even earn a dismissive side comment. He wants profits capped and the poor protected.

Harsh stuff. Read more in my Huffington Post blog Microfinance Leaders Debate Future.

Here are two data points Yunus overlooked:

One, most microfinance programs today are NON-profits. They meet and exceed his expectations, although they are often starved for funds because international economic development agencies, foundations and private markets shun them because they are usually smaller and often unable to achieve the economies of scale that impress funders.

Two, other than touting the Grameen model (as he well should), he neglects to acknowledge the market-for-social-good folks that are successfully harnessing greed to do good. Nonprofit Global Partnerships is a great example.

In Honduras, a savings-and-credit cooperative backed by Global Partnerships serves very poor women with financial and non-financial services, including training on specific trade skills (how to run a bakery, for example) and access to basic health services. This is just one example of 27 Global Partnership microcredit programs serving 900,000 rural poor through Latin America.

With its Social Investment Fund 2010 (just closed, you missed out, so get on the mailing list for the next one!), Global Partnerships has stepped up to answer in good deeds the microfinance misdeeds which Yunus decries.

Doing well by doing good. Blended returns. Social return on investment. Triple bottom line. Investing in the bottom of the economic pyramid. Now add Global Partnerships.