Microfinance Practice: Re: [MFP] Call for Expressions of Interest

Sadly, none of this should surprise us. It is all the "logical" strategy that can be developed by a person getting average grades in an MBA program from an average MBA school. Let someone else do the costs of screening, then steal their best clients. Low costs, fast profits. Nothing innovative. It's just not the sort of thing microfinance would stoop to do in the olden days.

It may be considered unseemly and distasteful, but it's very profitable. And those making the profit grow the fastest, become the biggest, and then just keep getting bigger. They use their power to then carve out oligopolisitc conditions, and life is easy for them.

The problems for many of us are then:

* How do we compete with them? (We're not coming even close at the present)

* How we avoid the client damage they are doing bleeding over to our client base? (We're not doing this, either)

* How do we avoid getting wrapped up in the negative media publicizing the nasty things they are doing (I'm talking to you, Milford :) )

* At what point do we say "Let's work with some other area of development and move away from this dangerous microfinance stuff"? (If you haven't noticed, the exodus is picking up speed)

Chuck Waterfield

Recent microfinance emigrant

On Apr 8, 2016, at 10:54 AM, 'Meyer, Richard' meyer.19@osu.edu [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com> wrote:

And the words persuade and big enough are the most problematic. Dick

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com]
Sent: Friday, April 8, 2016 10:13 AM
To: MicrofinancePractice@yahoogroups.com
Subject: RE: [MFP] Re: Call for Expressions of Interest - Innovations for Poverty Action

The sting is in the conditional in your last sentence Paul.

From: MicrofinancePractice@yahoogroups.com [mailto:MicrofinancePractice@yahoogroups.com]
Sent: 08 April 2016 14:18
To: MicrofinancePractice@yahoogroups.com
Subject: [MFP] Re: Call for Expressions of Interest - Innovations for Poverty Action

How about that? I just read Jeff's remark that "in Guatemala where Compartamos is now working they are attempting to recruit savings group promoters pay them a lot more and give the ex-promotoras a bonus if they deliver their groups to Compartamos."

I recently ran into a similar phenomenon in Kenya, where Equity Bank is paying some VSLA promoters a reported 100 Kshs - about a buck - for each SG member they bring in to open an account. Kind of flattering to the Savings Groups, to think that the members are experienced and serious and reliable, and will be good bank clients. That's what I would do if I were a banker: look for SG members as clients. They have credit and savings discipline and assets which I might be able to acquire if I can persuade them to take loans that are just big enough.

Paul Rippey

www.Savings-Revolution.org

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Posted by: Chuck Waterfield <chuck.waterfield@gmail.com>

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