Nobel laureate warns against microfinance loan sharks
Investors looking to profit from microfinance are no better than loan sharks, a pioneer of the industry has claimed.
Nobel laureate Muhammad Yunus said he is concerned that investment funds are viewing microfinance as a way to make a profit.
“Poor people should not be presented as an opportunity to make money,” said the Bangladeshi economist.
“We started out with the idea of getting loan sharks out of people’s lives.
“Now microfinance institutions are getting into the loan-sharking business.
“If you’re making money out of poor people, then you’re loan-sharking.”
Yunus, who was awarded the Nobel Peace Prize in 2006 for his lifetime’s work in making financial services available to poor people, made the remarks in response to a rising trend for microfinance providers to raise funds by selling shares to investors.
Yunus is particularly critical of India-based provider SKS Microfinance, which recently announced plans to raise $250 million through an initial public offering (IPO).
Earlier this week, Yunus told Sky News that social enterprise is about “addressing problems rather than making money.”
“Conventional business is all about making money,” he said.
“[Social enterprise] is a cause-driven business where you don’t want to make any money at all.”