Microfinance Practice: Re: [MFP] Microfinance's position

Thanks Chuck, agreed, about greed. I was in correspondence earlier today about RoI for a new MFI in East Africa; 36% was felt to be excessive, I disagreed, but would have jibbed at 60%. It's about context, in part, but here in India MFIs get by very well with rates well under 30%, so the 80% people are surely over the top.

RoI is not the only variable, many others are more important, place, speed, simplicity, information needs, particularly to very poor people taking very small loans, vide 2000% p.a. + for payday lenders in USA and UK, but it does matter.

I don't think 'we' (whoever we are) can say 'anything over x% is greedy', or that 'caps' are a good thing, and competition does play a useful role, but MF is big business now, it's grown up and become 'sustainable' (i.e. profitable) as we all hoped it would.

What 'we' say matters less and less, all these certificates of niceness and so on are good guides for social investors, but the horse is out of the stable, we have no option but to let it run, and to tut-tut or add cautions on the side.

Malcolm--------------------------------------------
On Fri, 12/9/14, 'Chuck Waterfield' waterfield@microfin.com [MicrofinancePractice] <MicrofinancePractice@yahoogroups.com> wrote:

Subject: [MFP] Microfinance's position - Greed is good!
To: microfinancepractice@yahoogroups.com
Date: Friday, 12 September, 2014, 18:14

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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