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The Micromagic of Microcredit
There are many thread about small loans and business start ups in these threads. This article, The Micromagic of Microcredit in the Wilson Quarterly raises interesting points and challenges some common perceptions. I didn't quite know where to put the article, but thought it might be worth some attention: Here's a snippet:
After decades of failure, the world’s aid organizations seem to think they have at last found a winning idea. The United Nations declared 2005 the “International Year of Microcredit.” Secretary-General Kofi Annan declared that providing microloans to help poor people launch small businesses recognizes that they “are the solution, not the problem. It is a way to build on their ideas, energy, and vision. It is a way to grow productive enterprises, and so allow communities to prosper.”
Many investors agree. Hundreds of millions of dollars are flowing into microfinance from international financial institutions, foundations, governments, and, most important, private investors—who increasingly see microfinance as a potentially profitable business venture. Private investment through special “microfinance investment vehicles” alone nearly doubled in 2005, from $513 million to $981 million.
On the charitable side, part of microcredit’s appeal lies in the fact that the lending institutions can fund themselves once they are launched. Pierre Omidyar, the founder of eBay, explains that you can begin by investing $60 billion in the world’s poorest people, “and then you’re done!”
But can microcredit achieve the massive changes its proponents claim? Is it the solution to poverty in the developing world, or something more modest—a way to empower the poor, particularly poor women, with some control over their lives and their assets?
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