When I said opportunity, I guess I meant to create social impact. Micro finance hasn’t been all bad because it has given people without access to liquidity access to liquidity.

The problem is that these people aren’t particularly good at using the liquidity yet (according to Marc), leading to lagging social impact, especially when you factor in high interest rates, loan recipients scamming lenders by going from mfi to mif to mif and the improper incentives given to loan officers (many get paid based on the # of loans they give out rather than the repayment rate).

My thought is that if an org could get a grant to design a training model for first time loan recipients and prove that it leads to higher repayment rates and incomes, then it would have several funding options: 1) traditional donors who would simply have to be educated about micro finances short comings 2) mfi’s who have an interest in seeing higher repayment rates and 3) the loan recipients themselves (who might be willing to pay a small fee if it leads to a lower interest rate).

This group could use the same stories that MFI’s do, they’d just have to do a little donor education to help people understand that micro finance alone isn’t the answer…

The key, to hear him speak (and in a paper that I believe will be published sooner rather than later) is combining education and training with the liquidity provided by micro finance. Most micro finance institutions, however, in an effort to be self-sustaining are reluctant to provide this training (and therefore end up charging high interest rates).

That said, there might be an opportunity for an organization that specializes in helping those who receive micro loans in using them effectively to scale their support alongside micro finance institutions and make their living based on social impact.