A recent comment on our "Pushing the Boundaries of Microcredit" blog posting launched us on a bit of a mission to tap into the debate on microfinance as a business model.
Reacting to musings about the pros and cons of extending global legitimacy to microfinance through the mechanism of a Nobel Peace Prize, our commentator wrote: "I think there is a huge danger that microcredit will now become even more than before the pet of philantropists. While grants are needed to start a microcredit institution, these institutions should be profitable soon thereafter."
Full disclosure: the comment came from IFC's former Chief Economist Guy Pfeffermann. It turns out though, he is not alone, within the circles of development economics, to have raised the issue. The Center for Global Development posted a Q&A with one of the authors of its paper "Microfinance as Business", who said: "
In studying microfinance from a business perspective, my co-author Uzma Qureshi and I are asking questions that most overlook. How do Grameen and other large microfinance institutions cover their costs, scale up, attract private capital?"
Clearly a debate to be followed, amid the excitement and hope of a world-class Prize for what is a world-class innovation.