08 Aug 2010

Can MFIs grow up without forgetting their roots ?

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It was recently announced the IPO of SKS, India’s largest microfinance company (by value of outstanding loans, the number of borrowers and number of branches) backed by Sequoia Capital and George Soros.

Drugstore - Muong Phang (North Vietnam), June '09

Drugstore – Muong Phang (North Vietnam), June ’09

The SKS main features are impressive : 5,3 million customers and 20.000 employees. It is the world’s fastest- growing microfinance organization and it is ranked world’s Nr 2

In its release on 26th July, Bloomberg Businessweek wrote : “Whether lenders will be able to maintain asset quality when they (SKS) scale up remains a big risk” … and later … “SKS provides loans from $22 to $260 each for women raising cows or opening a village tea stall in a nation where 828 million people live on less than $2 a day“.

The true question in microfinance is : how to keep on being very close to the poor clients … while moving to the stock market and following the pressure of the investors (and the mouting regulation) ?
In other words … how to make the global financial markets compatible with the local needs ?

The famous expression “Think global, act local” should be reversed into “Think local, act global“, shouldn’t it ?
One of my best friends told to me the following remark : “Still at high level thinking, ‘think local and act global’ would be a very spiritual view where the individuals can only think local because they are just human beings, but they would be conscious to be an element of a larger group (collective) and then take care to act global“.

He definitely puts the finger on something everybody has forgotten.

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