Nobel Peace Prize

Yesterday, Muhammad Yunus was awarded the prestigious Nobel Peace Prize for his work in starting up the Grameen Bank of Bangladesh and for being the founding father of Microcredit. As I have been interested in this area of development for quite some time, it gives me great pleasure to see the world embrace and be educated about the economic development tools used to provide the poor access to financial services. Not only did the concept arise from the developing world but it goes to show that the developing world is better at solving their own problems and have great ideas even for the powering nations to use.

News article on Muhammad Yunus winning the Nobel Peace Prize:
http://business.guardian.co.uk/story/0,,1922390,00.html

You may have noticed that I mentioned the term microfinance. This is an umbrella term for all the different kinds of financial products that can be offered to the poor such as savings, credit, insurance and enterprise development. I am fascinated by this. Coming from a business background, I have often wondered how I can merge my academic studies with serving others (esp the most needy and poor). Now I have an opportunity to learn and really get involve!

With MEDA, the area of focus for me is in microenterprise development, providing business services for small households to small medium-sized enterprises. It is literally providing consulting services to those in the form of agri. skills training, upgrading of technology and strengthening the value chain so they can build up their businesses. Of course as with most businesses, starting up and being success is not an easy task. Especially in a society used to a soviet-style of management, developing a business mentality and making changes is a slow step by step process. To top it off, the country is still recovering from the civil war in the 1990s so poverty is rampant; hence corruption and informal markets strive in this type of environment.

I came across a blog that discusses microfinance with a critical eye. http://www.owen.org/blog/386 .

Interesting points:
-Other well-known philanthropists have also jumped on the bandwagon such as Bill and Melinda Gates and Michael Dell who made considerable donations to microfinance organizations in the States
-MFIs need to minimize efficiency cost and aim to be sustainable (similar to other banking institutions)
-Donors and philanthropists should look at investing in microcapital (www.microcaptial.org) funds which serve to give a boost to potential entrepreneurs in developing countries instead of just providing grants or loans.
-There is a huge debate on whether microfinance should be operated similar to any other business environment in order to be sustainable and successful. This forces MFIs to focus on the groups that have the best potential to succeed which implies that the poorest of the poor (aka the weakest and the least effective) will be left out of the equation. IS the role of microfinance to be a sustainable institution for the poor or to be providers of capital for the poorest of the poor (who have no means of accessing capital) using whichever means possible?

ps. I've discovered how great audio books are! I finished listening to "the Devil wears Prada" and am now embarking on a non-fiction book called "Collapse" by Jared Diamond which analyzes why civilizations have failed and how this impacts our world today.

Bye