Critics of Compartamos include Muhammad Yunus, a Bangladeshi economist who won the Nobel peace prize in 2006 for his work in popularising microfinance through the Grameen Bank. He was reportedly “shocked” by the IPO, and has argued that microfinance should be about “protecting [poor people] from the moneylenders, not creating new ones.” Another critic, Chuck Waterfield of Microfin, a provider of software to microfinance institutions, accuses Compartamos of “monopolistic exploitation of the poor”. He alleges that it is charging interest rates of over 100% a year, little different from what illegal loan sharks demand, and that it is deliberately making it difficult for poor borrowers to understand how much they are paying for their loans. He and Mr Yunus are campaigning for the microfinance industry to agree on common standards on disclosing charges to help borrowers.
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Posted by Tim at June 15, 2008 10:21 PM
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