Microcredit and Microfinance

Given enabling environments for social entrepreneurship, both individuals and institutions will have similar incentives (beyond their social motivation) to innovate, explore, pursue and develop solutions, goods and services for their local communities and global markets.

I recently watched Muhammad Yunus full of joy, sharing his story and advocating for his ideas during his Nobel Lecture of December 10, 2006, at the Oslo City Hall, Norway. I was deeply inspired and connected to his values and believe. I would like to contribute my 2 cents in promoting his lecture in this post.

Why business models are critical to innovation in emerging economies – From social entrepreneurship to building an idea or a business – Part 1

Emerging economies represent new challenges for ideas and businesses, which is why new social entrepreneurship opportunities are now the Petri-dish for what is emerging. Some examples exist of great reference;

From a recent Fortune magazine that I read that most companies in S&P have been rated as risky. This represents a huge challenge for companies as new emerging economies such as India, China or other countries mean new business models which have to be sustainable and scalable and I do not think that there are in most text books or case studies of today.

There is story from hyderabad how MFIs are swindling poor farmers money. According to Mumbai Mirror, a few of them have been closed for exorbitan interest charges - 35% compared to 15% commercial rate.

I am happy that microfinance is the buzzword in many high places. By many, it is believed to be the magical bullet that will eradicate poverty to extinction. It is aim is to avail capital in the hands of the world's poor in getting out of poverty. Will it work if somebody went around dishing money to whoever was dimmed poor?

When I was a venture capitalist, I was often asked what it would take to create a venture capital industry in Mexico or Indonesia or just about anywhere outside of Silicon Valley. There were often many very good reasons why it couldn't or hadn't happen - deal flow, amount of money that needed to be invested, cost of managing a fund, a service provider ecosystem, etc.

It was interesting to note how the poor can work hard against all odds.

I came across the story about an Afghan woman - Shakila - who through her influence and strong believe in work hard, influenced several others to join hands in changing their lives. This goes along to confirm the fact the poor are poor not by choice but by circumstance and, given a choice, they will do all they can to get out of it.

This link gives a very good account of the world of micro-finance:
How Microfinance Works.