Where Angels Prey

Where Angels Prey is a novel by Ramesh S Arunachalam. Please refer to www.whereangelsprey.com for more information

Saturday, July 14, 2012

Why Blame the MFIs alone?

Ramesh S Arunachalam

Microfinance investment vehicles control huge capital and by virtue of that they are often able to channelize cross-border flows significantly. These and related institutions should come under proper regulation, reporting and disclosure requirements

I recently read a book, Confessions of a Microfinance Heretic: How Microlending Lost Its Way And Betrayed the Poor” by Hugh Sinclair, (2012) published by Berrett-Koehler Publishers, Inc.

The book was a very interesting read but the claims made by the author jolted me. Among several other things, the author Sinclair claims that reputed institutions like Grameen Foundation, microfinance investment vehicles (MIVs) such as Triple Jump (TJ) which manages several funds (on behalf of ASN Novib, Calvert Foundation, etc) and big global banks like Standard Chartered, Deutsche and Citi—invested in LAPO, a Nigerian MFI—despite knowing that LAPO was: a) involved in (illegal) intermediation of client savings; and b) charging phenomenally high rate of interests (over 100%).

No comments:

Post a Comment