Microfinance: Boon or bane?

Microfinance is quickly becoming a popular corner of the capital markets as more investment banks and wealthy philanthropists such as George Soros and eBay co-founder Pierre Omidyar see the business of providing small loans to low-income individuals in poor countries as potentially profitable as well as a powerful tool for development.

Prof Aneel Karnani of the University of Michigan argues that ”despite the hoopla over microfinance, it doesn’t cure poverty. If societies are serious about helping the poorest of the poor, they should stop investing in microfinance and start supporting large, labour-intensive industries.”

Eric Thurman, co-author of A Billion Bootstraps: Microcredit, Barefoot Banking, and the Business Solution for Ending Poverty, disagrees. Mr Thurman suggests that microcredit is not a panacea that can solve every problem in the world but, he, argues, “it is a proven intervention that works well in many ways and significantly outperforms most ‘top down’ antipoverty efforts.” Mr Thurman’s greatest concern is that currently microcredit is only available to 5 or 10 per cent of the people who could benefit from it. Mr Thurman hopes to see the movement grow.

Can the sector help cure poverty? Prof Karnani and Mr Thurman answer your questions below.

Prof Karnani, is this really a question of either/or as it seems that microfinance can certainly provide security to a niche of people that the risk in larger business ventures may not? Mr Thurman, is it the case that, whether one agrees or not, the burden of proof for the microfinance movement is research documentation of the “non-tangible” benefits (such as the psychosocial benefits of self-empowerment) that microfinance ventures can bring in addition to the potential for individual security?
Wm. Scott Pappert, USA

Prof Aneel Karnani: You are right: it is not literally an either/or question. But, there are limited resources. Governments (especially in developing countries) have limited political capital and governance capabilities. NGOs have limited financial capital, human resources and energies. That is true for all businesses also.

There is a useful but small role for microcredit. Providing employment in large-scale labour intensive enterprises will have a much bigger impact on reducing poverty. All organisations (government, businesses and NGOs) have to allocate their limited resources in a way to maximise their impact. I am arguing for a greater emphasis on generating employment and increasing labour productivity, and lesser emphasis on microenterprises.

Eric Thurman: If Prof Karnani truly believes what he just said, it would be very satisfying. This is the first time he has said he believes in microcredit at all. He has been extreme in his wholesale dismissal of the value of microcredit.

He is making a powerful assertion here that macro economic development is vastly superior to microenterprise development. Where is the proof?

Prof Aneel Karnani: There is no developed country that has developed on the basis of microenterprises. All developed countries have larger enterprises (which, as I have emphasised, includes small and medium sized enterprises). Scale economies play a critical role in increasing productivity, which is the foundation of economic development.

Eric Thurman: You do a very good job of articulating top-down development. I wish every poor country would maximise any capacity they have for that. What I cannot imagine is why you oppose simultaneous support for bottom-up development.

You once again in your reply have asserted that the issue is the overall development of the country. You and I have our eyes on different prizes. I am concerned about the population. I am far more interested in the number of individuals who move from eating one meal a day to three than I am the overall macro stats of a nation.

Prof Aneel Karnani: It is a fallacy to pose this as a choice between top-down and bottom-up development. That is a valid way to contrast market driven approach with a state driven approach (communism in the extreme version). I certainly do not favour communism or even a socialist state driven economy such as India till the recent reforms.

Our discussion is about the choice of different market approaches, or different bottom-up approaches: emphasise microenterprises or somewhat large enterprises (still bottom-up and market driven). Larger enterprises have critical advantages in scale economies, utilising specialised skills and modern management approaches – all of which lead to greater productivity and wealth generation.

Eric Thurman: I am not the one advocating a choice between the two. I strongly support all forms of development that improve the lives of poor people. Until other interventions meet need, microfinance is absolutely essential for millions of families who have no other means to advance themselves.

Prof Aneel Karnani: Yes, I am advocating a choice between two different market driven approaches (between two different bottom-up approaches). It is a fallacy to believe there are no choices and we can do “all of the above”. In a world of limited resources, we always face choices. It is not an either/or choice. It is a choice of what fraction of resources go into different approaches. As I have argued earlier, we shift the emphasis and resource allocation away from microenterprises towards larger enterprises (including small and medium size).

What is sorely lacking in most developing countries is “mesofinance”, which targets enterprises well above the micro level but below the large (by global standards) level – the so called SME segment.

The question goes to Prof Aneel Karnani: I disagree with your argument. Being employed by large organisations keeps the income of low income people low forever. They will afford only the basic needs such as feeding and clothing and they will be dependants on somebody else’s business. Access to financial services can lead them to build their own assets and to grow and to be independent. I don’t mean that all microfinance clients are doing business successfully, but more than 50 per cent are doing successfully. What is the main reason to support the large-scale labour intensive industries in order to alleviate poverty? How will it help the poor?
Sandag Nergui, Mongolia

Prof Aneel Karnani: Large organisations do, in fact, pay good wages. In all developed countries, by far the majority of people work for wages in a business owned by someone else, and only a small minority are self-employed. ”Large organisations” in this context includes what is traditionally called small, medium and large enterprises. Microenterprises typically do not have any employees, or employ less than a few (say, three) people.

How high are the wages that large organisations pay depends on labour productivity. One way to increase labour productivity is to create business that are large enough that they can exploit economies of scale, deploy specialised assets, and use modern business processes to generate value for both their owners and employees. The typical microenterprise has no paid staff; most of these businesses have very few assets as well. With low skills, little capital and no scale economies, these businesses operate in arenas with low entry barriers and too much competition; they have low productivity and lead to meager earnings that cannot lift their owners out of poverty.

Rather than lending $200 to 500 women so that each can buy a sowing machine and set up a microenterprise manufacturing garments, it is much better to lend $100,000 to an entrepreneur with managerial capabilities and business acumen and help her to set up a garment manufacturing business employing 500 people.

We should not romanticise entrepreneurship and self-employment. Most clients of microcredit would gladly accept a job on reasonable wages if offered the choice.

Eric Thurman: Sandag, you make excellent points. Prof Karnani, you charge that someone is being overly romantic about self-employment. How can you say that when you are being overly romantic about the benefits of factory jobs? You seem not to acknowledge that where they do exist in the developing world they are often sweat shops

Professor, you say, “Most clients of microcredit would gladly accept a job on reasonable wages if offered the choice.” You have a burden of proof here. Do you merely imagine this? My experience of meeting thousands of microborrowers in person is different. These people are excited about gaining control of their financial destinies.

Support for self-employment is absolutely essential. Citibank, one of the largest financial institutions in the world, estimates that more than 80 per cent of all wealth-building businesses in the developing world are microenterprises. Microfinance is vital and needs to grow to serve many more people.

Prof Aneel Karnani: In developed countries with easy access to capital and excellent infrastructure, 90 per cent of people choose to be employees rather entrepreneurs. The simple fact is that most people (rich or poor, in developed or developing countries) do not have the vision, skills and drive to be really entrepreneurs. We need to cater to this majority and not romanticise the poor as entrepreneurs.

Countries that have significantly reduced poverty in the last few decades, especially China, have done so through employment and not through microenterprises.

“Sweatshops” have to be seen from a local perspective. Jobs in a sweatshop should be compared to other jobs and self-employment in that country (and not to jobs in a developed country). And, we should try to improve the employment conditions in “sweatshops”. The best mechanism for that is competitive markets. There is also a role for the government in implementing appropriate regulation (e.g. safety standards) and labour unions.

Eric Thurman: Prof you say “90 per cent of people choose to be employees rather entrepreneurs.” Can you prove that? Your argument is unsubstantiated.

Further, the overwhelming evidence is that most poor people depend on self-employment whether you call them entrepreneurs or not. The Economist reported that nearly 60 per cent of non-agricultural employment in Latin America and 67 per cent in Africa is in the informal sector. In India, nine out of 10 workers are in the informal sector, contributing 60 per cent of net domestic product and 70 per cent of income. Informal businesses are typically the only viable employment options for the poor. The one positive aspect of this type of business is that all workers can be self-employed provided they are smart enough, work hard, have inventory and a market, and keep their prices competitive. Microcredit to support them is vital!

Prof Aneel Karnani: In a country such as the US, no one is forced to be an employee. With well developed capital markets, almost anyone can start a business with debt or equity capital. That is what free markets are all about. Yet, 90 per cent of the labour force in the US chooses to be employee rather than entrepreneur.

It is true that a much larger fraction of the labour force is self-employed in less developed countries. That is precisely the problem. Economic development is always accompanied by an increasing preponderance of employment and decreasing role of self-employment. This is empirically true in all developed countries, and well documented in the field of development economics.

I run a charity in the UK called Five Talents. We support microfinance organisations in low-income countries. They provide business training and small loans to the active poor. I am excited by the growth of microfinance, but concerned that growing commercialisation will mean more middle-classes taking loans rather than the poor - for the simple reason that credit officers on the ground find it easier to recover loans from established micro-businesses than those at the lower level. Is this concern shared by the panel? In Five Talents view - we are keen to stick to our mission of helping the active poor to start or expand a small business. We instruct and monitor our loans officers to target this group, while appreciating a mixed loan portfolio is important for sustainability.
Tom Sanderson, Purley, Surrey, UK

Eric Thurman: There are real controversies in the microfinance movement such as the one you mention. Unfortunately, Prof Karnani is arguing points that almost no one else finds to be valid issues.

Your point needs serious reflection to assure that as microfinance becomes more commercial that it does not suffer from mission drift and leave the objective of advancing the lives of poor people behind. It is a challenge and needs further serious reflection. This is a good subject for a future debate!

Prof Aneel Karnani: It is true that I am in a minority arguing against microcredit, but I am far from alone. There has been too much hype about microcredit, and this has led to allocating too many resources (financial, political and human) to microcredit which could be better utilised in other ways.

There is growing criticism of microcredit in both academic and public literature. Even Time magazine (16 April 2007) and Newsweek magazine (9 April 2007) have run stories about this growing scepticism with microcredit.

Eric Thurman: Scrutiny is good. Just make certain that the tests applied are valid. In the end, the question that must be answered is whether the lives of poor people improve. By that measure, microfinance is a fantastic tool. Where it fails in application, it needs to be criticised and corrected. This is not the same, however, as your comments that there is simply “too much hype.” Let’s grapple with the specifics that will make it even better. Condemning in general as you do is not helpful.

This is more than an academic discussion. There are life and death implications when we discourage support for any intervention that is making a difference. Every day, 30,000 to 40,000 people die untimely deaths from the effects of poverty and poverty-related disease. The number one killer in the world isn’t war or natural disasters. It is deep, chronic poverty. If support pulls back from microfinance for unfounded reasons, it will cause dreadful harm. People’s lives are literally at stake.

Prof Aneel Karnani: This is hype: you assert that microcredit is a “fantastic tool”. Yet, in a book over 200 pages long you provide no (not just little, but no) empirical evidence to support this assertion.

We agree that this not an academic (in the sense “irrelevant”) discussion. It is very real and critical. Poverty is a major challenge for the world. How we allocate our limited resources to solve this problem matters a lot. We should allocate the resources so as to maximise the likely impact. This requires logical, data based, research based analysis – “academic” in the positive sense of the word.

We should not be swayed by a few heart-warming anecdotes of microentrepreneurs, nor by emotional appeal based on the magnitude of the problem (‘the problem is so big, let us do just anything’), nor by unsupported assertions and hype.

Eric Thurman: Plenty of stats exist to go with the heart-warming stories. Space does not permit me to cite them all, but I have given a site where nearly 100 full studies are available. Touching on a few examples:

In Indonesia, clients of BRI increased their income 112 per cent.

A study of several institutions in Ghana documented borrowers doubling their incomes.

A four-year study of BRAC clients in Bangladesh show family assets also grew by 112 per cent.

These were studies compiled by CGAP at the World Bank. There is ample evidence that confirms the benefits of microfinance.

For Mr Thurman. I would like to ask you on which criteria you judge the success of microfinance schemes. In The Impact of Group Lending in Northeast Thailand (published in Journal of Development Economics, Vol. 60 (1999) : pp 105-141), Coleman produces evidence to suggest that evaluations of microfinance schemes are based on group lending which do not take into account either self-selection of beneficiaries or non-random programme placement. This entails substantial problems. Once taking these into account, Coleman finds little evidence that microfinance schemes are successful in the areas he studied. Microfinance based on group lending is designed to reduce the monitoring costs for lenders effectively to zero, by relying on group members to self-monitor. Would you care to respond to criticism that the very mechanisms which make the micro credit model so popular among NGOs and donors, such as the social sanction aspect of overcoming information and enforcement problems and thus making small loans available, work so as to exclude the most disadvantaged persons? After all, the poorest of the poor are likely to be those least likely to be selected into groups which qualify for lending.
Ben Magahy, London School of Economics

Eric Thurman: The criteria for judging success of any microfinance scheme is a single word: progress. If the borrower does not advance, improving her/his life, then it is not successful. It is fair to challenge any microlending program that looks after its interests at the cost of the borrowers’ interests. I strongly advocate that results must first be measured at the borrower level. That is the definition of success. Any program that is not improving the lives of borrowers deserves strong criticism.

Prof Aneel Karnani: I agree that the real test of microcredit is improving the economic welfare of the borrower. Unfortunately, the empirical evidence on the impact of microcredit is mixed at best and does not support a positive conclusion. In a long book on microcredit, Mr Thurman provides no empirical evidence (besides a few anecdotes) to support a positive conclusion.

Eric Thurman: You are correct that we should make our decisions based on the empirical evidence. It can be found in “A Billion Bootstraps” and as I have mentioned elsewhere in this debate, approximately one hundred serious independent studies that can be found here.

Why do I feel that Prof Karnani is missing the point here? His “alternate” scenarios imply an either/or situation, and anyway both are quite flawed: not every woman will buy a sewing machine - it would be foolish to the extreme if they did; and savvy entrepreneurs do not grow on trees! Entrepreneurship in a culture with limited entrepreneurship - like Ireland was when I started my career - is something that needs to be nurtured in every way that is possible. Microfinance on its own can never solve the poverty problem. That’s hardly good reason to dismiss it. It is a project that is nurturing entrepreneurship in ways that make a real difference to ordinary people’s lives, in ways that so many “loftier” aid initiatives fail to do. Let this extraordinary microfinance experiment continue!
Frank McMullan, Dublin, Ireland

Eric Thurman: You are absolutely right, Frank, and everyone I know in the microcredit industry would agree. It is not an either-or situation, but both-and. If Prof Karnani can create good jobs for poor people by establishing factories, do it! This does not obviate the vital need for microfinance. Microfinance is one tool in an arsenal to fight poverty…and I believe it is the best tool so far.

Prof Aneel Karnani: I have responded to some of these points in the last few answers. It is not an either/or issue. But, in a world of limited resources there are trade-offs. I think the returns from micro-credit do not justify the resources (financial, political, human) being devoted to it. There are better uses of limited resources to achieve the goal of poverty reduction.

The alternative to microcredit is not “loftier aid initiatives’. I propose emphasising creation of employment at reasonable wages in larger enterprises (this includes what is traditionally called small and medium enterprises) in labour intensive sectors. We should also emphasise ways to increase labour productivity, and the government must play a critical role here by providing public services such as basic education, public health, sanitation, and infrastructure.

How can Prof Karnani believe that labour intensive industries are the answer to poverty? I have run an MFI in Africa with substantial outreach. I believe that it was not perfect but it supported a lot of income generating activities that improved the lives of many people. The idea of resources being put into large industries presupposes that 1) such activity will be in a country that needs the resulting product or is in a geographical or quota position to export the output; 2) the resulting urban drift would not be a problem. Think again?
Tony Storrow, UK

Prof Aneel Karnani: It is axiomatic that the solution to poverty must lie in labour intensive industries. In poor countries, labour is relatively cheaper than capital. Skills are also in short supply. Most poor countries can not develop only on the basis of natural resources and raw materials. So, poor countries should emphasise labour intensive industries, and relatively de-emphasise capital intensive, skill intensive industries.

As an example, India has mistakenly emphasised capital intensive and skill intensive industries, and job creation and poverty reduction has not kept pace with the overall growth of the Indian economy.

I agree that we need to create well functioning markets into which the poor can sell their output and capture fair value. This requires both domestic and international market access. The rich countries should liberalise imports from poor countries.

Urban drift is a problem. But, it is possible to develop labour intensive industries and get geographic dispersion of economic development. We need sensible policies on developing infrastructure which will encourage this dispersion.

Eric Thurman: Axiomatic? Really? Who says? We have a basic disagreement. The Prof is articulate, but where are the data? I have wondered since reading his article in the Stanford Social Innovation Review whether he could substantiate his assertions. The evidence is missing.

Microfinance has been famously successful in Bangladesh. Can it be as successful in other places? Is the success there mainly because of a cultural dimension, or is it mainly organisational?
Ben, Laos

Prof Aneel Karnani: I don’t think it is true that microfinance has been “famously successful in Bangladesh”. There has certainly been a large amount of microfinance activity in Bangladesh (and some other countries such as Bolivia). But, Bangladesh is still a very poor country and there has not been much poverty reduction in Bangladesh. Whereas, China and Vietnam have reduced poverty significantly and there has been very little of microfinance activity in these countries. Even in Bangladesh, there has been recent growth of larger enterprises in the garment manufacturing sector.

Eric Thurman: This negative comment here about the benefits of microcredit is mild compared to others Prof Karnani has published elsewhere. He is such a nay-sayer about microfinance that he advocates that we “stop investing in microfinance.” He refuses to recognise what everyone from the Nobel Prize Committee to the United Nations recognised when they declared 2005 the Year of Microcredit.

Ben, I agree with you that microfinance is successful all over the world. I think the power of it is that it fuels the powerful desires found in people everywhere to advance themselves and provide for their families given a chance. By the way, garment manufacturing in the developing world is highly suspect. It is one of the greatest exploiters of the poor.

The key figure in this discussion may not necessarily be increased disposable income and/or investment opportunities. In order to bring people out of poverty, we must seek to increase net wealth. Are there any data that can provide us with some insight on the net wealth of individuals that participate in microfinance programs?

Eric Thurman: The most important issue in microfinance, as the question suggests, is the change in the net worth of a poor person. Because of the growing appreciation of this, the industry has in recent years chosen a different term of art, moving from talking only about microcredit/loans to microfinance. Microfinance covers a whole range of financial services that enhance the net worth of the poor including micro-insurance to protect their few assets in times of personal crisis to micro-savings and other services.

Yes, many resources exist where you can check the data and research. Our book, “A Billion Bootstraps” contains extensive appendices. Further, someone has gone to the trouble of organizing a place on the web where you can access nearly one hundred different formal research projects about the impact of microfinance. That can be found at: http://www.grameenfoundation.org/pubdownload/~pubid=29

The “Grameen Microfinance” usually involves some model of communitarism. By this I mean that borrowers usually have to organise within their communities and work together under some kind of common property scheme, at least in Bangladesh. I wonder if this may be a weakness, because it may discourage innovators and entrepreneurs within the communities and they may be prompted to leave the micro credit scheme if they perceive their share in the common benefit is unfair or less that what they can achieve individually - bringing down the income generation and credit quality of the borrowing community as a whole.
Orlando Guedez Calderin, Madrid

Eric Thurman: Microlending programs operate with a variety of styles. Solidarity groups, the most common name for group lending schemes, are most common with smaller loans and more vulnerable populations. You refer to this as “Grameen Microfinance” and Grameen is a well-respected leader, but certainly not the only operator of such programs. Thousands of programs exist, each with adaptations to fit their local situations. In general, the unity of the group provides mutual support. In some places the groups are then organised into groups of groups which can function like a cooperative. In the Philippines I have seen borrowers who manufacture products sell to others who run small convenience stores. I recall meeting a woman who packaged small containers of laundry bleach as her business. She arranged with a taxi driver in another group to distribute the product to sari-sari convenience stores. Several members in other groups ran the stores.

Most of the time group lending is ideal for poor communities, especially in places where distrust and corruption are widespread. Solidarity groups model openness. All loans are distributed and payments collected in full view of all the members. Written records are available for scrutiny. It can form a new ethical base for interpersonal relationships. People who provide the funding for these loans consider this good social return on investment.

Group lending is extremely popular in Asia and Africa. It can be found frequently in Latin America. In Central and Eastern Europe, however, where I led establishment of several microcredit programs, contexts were enough different that a high percentage of the loans there are made to individuals, but with cross-guarantees from others in the community. In Poland and Ukraine, for instance, loans are to individuals but in a guarantee pool with three participants.

Also, as one moves up in loan size, it is common to move from lending groups to individual loans. This can be progressive with small loans in a group enabling someone to get established using credit to increase their income. Then, individual loans enable them to move up in scale. Ultimately, some go still further into the formal banking system and larger commercial loans. It is evidence of success when a borrower graduates from one level to the next or graduates out because she has enough retained assets that she no longer needs to borrow.

Orlando’s concern about whether a rigid group lending model might inhibit innovation is valid. Good microcredit programs often have more than one lending product and can serve a variety of needs. I strongly agree that no one should take a loan unless it benefits them. Generally, that is the case.

Prof Karnani, in your scenario about 500 women receiving individual loans for sewing machines versus one woman receiving a larger loan to set up a manufacturing plant, you have rightly described the advantages which economies of scale can produce. However, you have disregarded the distributional issues at hand. First, how is the one woman who will receive and administer the loan chosen? Does she have a powerful family or political connections? And second, even if the overall group of women is more productive, how will the profits of this production be distributed? Sweatshops are infamous for the great disparity present between workers’ wages and final retail prices. Is there not a role for micro credit to play in both the selection of top entrepreneurial talent that may be hidden at the bottom of the pyramid, and in giving workers better access to the profits of their labour?
Sarah Donovan, London

Prof Aneel Karnani: I agree that there are significant distributional issues. First, we need well functioning competitive markets. This will help ensure that labor earns a “fair” return. So, we need to try to reduce entry barriers to setting up businesses; this includes reducing regulatory barriers, which often lead to corruption. Second, we need some regulatory safeguards for labour, such as unions and safety standards. Third, the government has a critical role in helping increase labor productivity by providing basic services such as public education and infrastructure.

It is a good idea to uncover the hidden entrepreneurial talent at the bottom of the pyramid. But, the amount of microcredit activity is way too much to be justified on these grounds. There are also other sources of capital for the “hidden poor entrepreneur”: loans from friends and relatives and informal capital markets.

The wages in sweatshops should not be compared to retail prices nor to wages in developed countries, but rather to wages in alternative employment (including self-employment) in the developing country.

Micro credit works with “loan-able” and “bank-able” people. It excludes grantable category e.g. aged, handicapped etc., Having worked as a practitioner for over 20 years, I strongly feel that the success of micro credit depends on the vibrancy of the financial sector in a given country. Now to my question: Can you outline ingredients for successful implementation of microfinance programs – at country level; institutional level; borrower level; community level?
Rajan Samuel, Singapore

Eric Thurman: Rajan is parsing the issue well. There are important differences between those who are “loan-able” and those who are “bank-able.” Also, deciding what type of intervention works best to lift people from poverty depends on what economic stratum they are at. Phil Smith and I discuss this in much more detail in our book “A Billion Bootstraps.” Here is a brief overview of the concepts.

If you look at wealth as a pyramid, those at the very bottom are ill, near death, severely disabled, etc. Such people are not economically active. They need and should receive humanitarian aid to sustain their lives. Moving up one layer, there are people who for a variety of reasons can improve themselves but are not yet ready for credit. Micro-grants and other interventions may be the best way to advance them. The organisation Technoserve comes to mind as one that uses that model. Another interesting group is CAUSE Canada that established financial literacy projects among communities that were exclusively barter previously and needed to learn how to use money before moving on to borrowing and business development.

You hit on a key reason for microfinance when you made a distinction between bankable and loanable. Historically, banks have only extended credit to people who have net worth to offer as collateral. Microfinance extends credit that is character-based. So a person with only the will and skill to have a business can also access working capital. This is vital because in the world’s poorest nations where the majority of the people operate within the informal sector of the economy. They depend on self-employment for survival. In countries like the Democratic Republic of Congo, only one person in thousands has a bank account. Microfinance gives them a chance to access financial services and begin working their way up the economic pyramid.

Finally, you ask whether these issues are best understood when viewed through a filter that looks at nations, industries, communities, etc? This is where Prof Karnini and I probably disagree. He seems to like looking at broad national statistics and forming opinions from those. I lean in the direction that I sense you are suggesting by your question. Formulate the intervention and measure success as close to the individual as possible. It is the old principle of whether poverty is solved best from the top down with large scale projects or bottom up by embracing the ingenuity and determination of the poor people themselves.

When will we see micro credit in the developed world? Is it an alternative to welfare?
John McDonald, Maryland

Prof Aneel Karnani: Microcredit is not a good way to deal with relative poverty and unemployment in developed countries. An entrepreneur is a person of vision and creativity who converts a new idea into a successful innovation, into a new business model. Most people, and certainly most poor people, are not entrepreneurs in this sense of the word. We need other economic and social programs to deal with poverty in developed countries, such as welfare reform, retraining, relocation assistance, vocational education, etc.


Prof Aneel Karnani: Microfinance misses its mark

Eric Thurman: Extract from A Billion Bootstraps (pdf)

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