Big Business Side of Microfinance is Overly Skewed By New York Times

In Wednesday’s New York Times article “Banks Making Big Profits From Tiny Loans,” Neil MacFarquhar discusses the shift of microfinance from a main focus on providing capital to those on the bottom of the development latter to business businesses using microcredit for large profits. However, he fails to address the major positive effects of microfinance on millions of the poor previously stuck in the poverty trap. At the United Nations, Muhammad Yunus said “We created microcredit to fight the loan sharks; we didn’t create microcredit to encourage new loan sharks. Microcredit should be seen as an opportunity to help people get out of poverty in a business way, but not as an opportunity to make money out of poor people.”

Despite these criticisms, MacFarquhar asserts that even with high interest rates, microcredit continues to ease the blow of poverty. Because of conflicting interests between the least developed societies and big business seeking large economic gains, the journalist asserts that microfinance shouldn’t be viewed as “saving the world.”

I believe that it is idealistic and unsustainable to conceive that microfinance can save the world overnight. There are far too many complexities for this to happen. However, by giving the impoverished a chance to manage finances that were previously unavailable, there is a sustainable facilitation of growth over generations. Additionally, the backlash against big businesses’ motives to solely reap profits have encouraged greater transparency within the industry and have even spurred government intervention internationally.

In conclusion, business history is a repeated cycle of taking advantage of perceived profit opportunities. Microfinance is no different. Criticism of excessive interest rates have led to increased transparency measures and government intervention. In turn, this knowledge and awareness of business traps are beginning to penetrate into impoverished villages and educate the poor to the motives of certain MFIs. Along with any business cycles, there will be booms and busts. At least with these rising criticisms, the poor still have opportunities for growth and knowledge of others’ profit motives.

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