StartUp Journal reported on May 16th that Micro Lending is moving from the realm of philanthropy to a purely profit driven status in developing nations.
These loans - typically under $100 and for items like a water buffalo for plowing or milk sales, bicycle for transportation, or bundle of clothing to be resold are so the loan recipient can work, usually in a small family business.
Typically, micro loans sponsored by charities like FiveTalents.org at zero interest.
Now the people charging you up to 30% on your credit cards want to start scalping the poorest of the poor world wide because there are so many of them.
Intrigued by India’s red-hot economy and potential market of more than a billion consumers, financial giants such as Citigroup Inc., ABN Amro Holding NV and HSBC Holdings PLC have already provided millions of dollars for SKS to lend out. SKS, in turn, says it has notched up healthy profits for the past three years.
“This can work driven only by greed,” says Mr. Akula, a one-time McKinsey & Co. consultant who was born in India and grew up in Schenectady, N.Y. “That’s the magic of it.”
It’s a radical idea in a field that has typically focused more on social goals such as the empowerment of rural women than on profits. Microloans can be a useful tool for alleviating poverty in developing countries where the poor — who usually don’t have access to credit — use them to start small but profitable businesses. The approach, pioneered in the 1970s by firms like Grameen Bank in Bangladesh, has since spread all over the world. As many as 10,000 microlending institutions now serve more than 100 million small borrowers. India, where more than 300 million people live on less than $1 a day, is an especially important laboratory for microlending.
I wonder what interest rates these predatory lenders from the US are charging the poorest of the poor?
I think i”ll stick with groups like Five Talents!
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