Big Finance meets Microfinance

The UN year of Microfinance started today [1]. About a year ago I read the autobiography of Muhammad Yunus, founder of the Grameen Bank and actually initiator of the principles of Microfinance [2].

In 1974, Professor Muhammad Yunus, a Bangladeshi economist from Chittagong University, led his students on a field trip to a poor village. They interviewed a woman who made bamboo stools, and learnt that she had to borrow the equivalent of 15p to buy raw bamboo for each stool made. After repaying the middleman, sometimes at rates as high as 10% a week, she was left with a penny profit margin. Had she been able to borrow at more advantageous rates, she would have been able to amass an economic cushion and raise herself above subsistence level.

Worth a read, I would say.

[1] http://www.admin.ch/cp/d/419cb2bd_1@fwsrvg.html
[2] http://www.grameen-info.org/book/index.htm

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