Microfinance - Making a Difference
This week I am delighted to be in New York attending the WWB Microfinance and Capital Markets Conference.
For those of us who normally spend our time on corporate lending and workouts, microfinance offers a rare opportunity to use our skills to improve the lives of people who are truly in need. Micro loans have helped thousands of families around the world to build up small enterprises, move out of poverty, and be able to afford food, education and healthcare for their children. Because these loans have a remarkably low default rate (often less than 2%), the funds provided to a microfinance institution are returned to be loaned out again and again -- to help even more people.
Many institutions that make loans to the poor are backed by loans or other types of investments from other entities -- from commercial banks and financial institutions, microfinance investors, donors, and others. Tomorrow I will be speaking on a panel of commercial lenders and microfinance institutions, discussing the issues that arise when a microfinance institution defaults on a loan. As you can imagine, workouts in this context are quite different from those we usually see in corporate America. There are some interesting lessons we can learn from this; I'll have more to say on this topic in my next post.
