News and Commentary

How to Win Friends and Influence People (For Microfinance)

Lindsay and I spent Saturday evening with new friends; a colleague from the Federal Defenders office where Lindsay is interning invited us to join them for a Seattle-style barbecue (veggie burgers and organic microbrews). For a good portion of the evening I was discussing international development with Kate and Maya, who are both studying law at the University of Washington. As expected, the conversation turned to microfinance. Kate, a law student and intern at the Defenders office, had become familiar with microfinance through Kiva, when her sister gave her a gift certificate for the site. She did quite a bit of reading on the site and about Kiva partners, and left with serious concerns about the microfinance model. “Why do these organizations charge interest on money that I lending? Why not just give the money to the community to administer themselves? Is microfinance just another Western development model bound to make the poor even more indebted to the rich?”

Kate raises excellent questions, many of which demonstrate her inclination toward bottom up development and her general suspicion of Western intervention in developing economies. I shared with her about my experience with microfinance; my belief that it is simply a means to other development goals, that it is not a panacea but just one tool in the development toolbox. I also shared my reservations about microfinance; that for every microfinance institution that is helping to end poverty, there is one without social performance goals that may be doing exactly what Kate fears.

I realized, while speaking with Kate and Maya that no matter how eloquent I spoke about the benefits of good microfinance, I simply could not effectively convey its worth. This morning I found a link from Dave Schappel to an excellent primer on microfinance from Unitus. Wish I’d had it on Saturday night!

© 2009 SeaMo: Connecting the Microfinance Community.