What impact investors can learn from microfinance

Mal Warwick Posted by Mal Warwick, writer.

Mal Warwick is an ex-Peace Corps volunteer (Ecuador 1965–69) turned entrepreneur and impact investor who has championed social and environmental responsibility in the business community nationwide for more than two decades.

What impact investors can learn from microfinance

Women conduct accounting of microloan payments in India. Microcredit is only a way of reducing some of the stress of poverty, not of eliminating it. Photo by: Peter Haden / CC BY

Here is part 1 of an article co-authored by Mal Warwick, Paul Polak, and microfinance expert Paul DiLeo.

What has microfinance achieved for the world’s poor?

Estimates vary widely, but 300 million people are estimated to be direct beneficiaries of the microcredit movement, and more than $68 billion may be currently invested in the industry, according to a 2010 estimate from the Consultative Group to Assist the Poor, a unit of the World Bank.

From one perspective, microfinance is the model that makes the case for impact investing: billions in capital mobilized from private investors to scale up delivery of beneficial products and services that reach hundreds of millions of poor people around the world. But having scaled successfully, questions arise: What has all this money bought for so many people? Has the incidence of poverty measurably declined? Can it be said that these hundreds of millions of individuals and their families have lifted themselves out of poverty on the basis of the microloans they have received?

Continue reading . . .

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