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Microfinance – Can it become a profit making business?

Most of you know Grameen’s story and how it pioneered the idea of microfinance starting from the poorest areas of Bangladesh and extending to other parts of the world, including the US.

 Given its success, microfinance has attracted over time the attention of ‘for-profit’ lenders. The question I would like to pose here is: can a successful social business be scaled up through for-profit ventures? To get the discussion started, here’s a BBC World report titled ‘Microfinance for profit’. It appeared on BBC World’ Business Daily program on Wednesday June 8, 2011.

 Enjoy the listening and looking forward to your reactions!

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  • DPGray
    By DPGray

    I think the answer is yes. There are many community and faith based credit unions who are doing this now. The Microfinance community does not have this long track record as does US credit unions. The Occupy movement asked us to move money from main stream banks to local credit unions. The next step would be to make these credit unions comply more in line with 7 principles of a social business. See article about success of credit unions @ http://tinyurl.com/7zk52b7.

  • Michele (@michele)
    By Michele (@michele)

    Thanks Gianni for this thread and DPGray for the interesting link.

    I'm sure we'll experience lots of new ventures and cooperation between regular and social businesses worldwide and here at SBW we'll help!

    Cheers

  • Jeff Mowatt
    By Jeff Mowatt

    I'm with Yunius on the issue of profit. Our position is creating profit for a social purpose not profiting from it.

    Before I set up our UK organisation, my colleague and founder had sourced a microfinance bank in Russia which was based on the loan circle approach pioneered by Grameen. It became known as the Tomsk Microfinance Bank and FINCA were to manage the bank. It was this model that subsequently became the standard at the Russian Microfinance Center.   

    Moving on to Crimea, with a proposal to deploy social enterprise against the risk of terrorism in a peaceful Muslim community, he describes the concept of a Community Funding Enterprise which will collaborate with a microfinance bank and create mutual benefit for both.

    Creating Shared Value in Ukraine

      .      

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