Big Finance Muscles In on Microlending

by Francisco Noguera, NextBillion.net - Development Through Enterprise - Microfinance on Aug 25, 2008

By Uwe Buse

Microloans were invented to help the poorest of the poor help themselves. Now major banks and pension funds are getting into the business, as they discover that the interest paid by the poor can produce high returns. Is it aid or exploitation?

Yunus has an opinion on almost everything, and he is quick to express it. But when it comes to Shafiqual Haque Choudhury, Yunus suddenly becomes a man of few words, barely able to choke out "we'll see."Like Yunus, Shafiqual Haque Choudhury is also involved in the business of eliminating poverty. Choudhury, too, is eloquent, and clearly loves speaking to large audiences, but when he is asked about Yunus, he says, tersely: "He has his achievements."

Yunus and Choudhury both live in Dhaka, the capital of Bangladesh, a densely packed metropolis that expands farther into the surrounding countryside everyday. Both Yunus and Choudhury have built skyscrapers among the city's run-down shacks. And there is another similarity: Both manage banks. Yunus is permitted to use the word bank to refer to his organization, Grameen Bank. But for legal reasons Choudhury's organization, ASA, cannot call itself a bank. It is formally a non-governmental organization (NGO).