Microfinance Practice: [MFP] Microfinance's position

Friday, September 12, 2014

[MFP] Microfinance's position - Greed is good!

I’m reaching the decision that I’m wrong on something I believe passionately about.

I believe the microfinance industry needs to stake out a clear position that we do not make excessive profits off of the poor, that we do not charge usurious rates to the poor. Others do that, and they have that choice. But to me, responsible practice means we restrain ourselves and make no more than moderate profits.

I’ve been saying that over and over for 7 years. But the industry disagrees. We still do not have a good definition of “responsible price” and we do not have any industry position on responsible profit vs. profiteering.

Last month, Compartamos became the 22nd MFI in the world to be certified as meeting the SMART principles, despite prices of 105% and profits of US$1M a day.

I made my case last week, at the Micro Credit Summit in Mexico. My views are summarized in this article by NextBillion:

http://www.nextbillion.net/blogpost.aspx?blogid=4057

I have recorded my position in this 15-minute video here:

http://www.mftransparency.org/making-markets-safe-vulnerable-good-intentions-concret-actions/

I know there are many people who share my views. But we are outvoted. (Oh there are no votes taken on these positions.)

Self-regulation has a serious risk of really being self-interested regulation. Until open debate and objective decision-making takes place, I see no change possible. But what open forum is there for debate and decision-making on these topics? I certainly haven’t seen one.

So maybe I’m wrong on all of this. But without discussion and debate, I can’t be convinced that I’m wrong.

Chuck Waterfield

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Posted by: "Chuck Waterfield" <waterfield@microfin.com>

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