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Microfinance is No Longer Social Entrepreneurship
Posted by: douglasfeltham | December 2, 2010 | Leave a Comment
Over the last few years micro-finance has spread all over the world, as more and more people set up these small loans to try and help the poor in developing countries start their own businesses. Yet with them being bigger and bigger in India the question I was thinking was whether or not they really count as Social Entrepreneurship anymore. As recently discussed in The Economist the state of Bangladesh in India has been forced to put in a cap of 27% on the annual interest rate on micro-credit loans, because so many company were charging over this rate. As was discussed in Class 20 a Social Entrepreneurial enterprise is concerned not only with making money, but also alleviating some sort of social harm as well. These new generations of micro-credit firms however seem to be charging sky high rates in an attempt to fuel growth, making them effectively become regular lending services instead of the Social Entrepreneurs. They are no longer focused on giving the poor the start up funding they need to lift themselves from poverty, but instead focused on how to maximize profits, even is some can’t pay back the high rates.
