Microloan Interest Rates in Impact Investing

From Triple Pundit

For those of us who follow microfinance news closely (I’m not the only one out there who gets “microfinance” Google alerts, right?) it’s been hard to see some of the trash talking about the industry in mainstream media in the last couple of years. Critics point to greed via excessive interest rates imposed on the poor, and inappropriate money collection methods by some MFIs, questioning whether microfinance is even effective. Andhra Pradesh and Grameen Bank have been in the news so much, they’re practically household names these days.

The negative publicity could certainly give a brand new, wide-eyed impact investor pause. But I’m beginning to realize that the bad publicity feeds an important system of checks and balances, helping expose harmful practices for the benefit of the entire microfinance industry.

Also, what I’ve learned so far from talking to experts in microfinance is that there are bad apples here, as in every other industry; nothing about microfinance is black and white; and poverty alleviation is exceptionally complicated.

One person I recently had the privilege of talking to is Sharlene Brown, National Director of Oikocredit USA, the issuer of my Fonkoze security on MicroPlace. (Fonkoze is Haiti’s largest microfinance institution.) I wanted to find out directly from her about Oikocredit’s due diligence process in selecting MFIs, the interest rates their MFIs are allowed to charge, and what kind of impact she’s seen.


Leave a Reply

Your email address will not be published.

Current ye@r *