I just learned on Twitter that today is Interdependence Day, the idea being that what one person does has an effect on the entire world.
I guess we really learned that lesson during the subprime crisis and its aftermath, which is still wreaking havoc.
It is not surprising that, with the international banking community still traumatised, microcredit is experiencing a revival.
Given its high repayment rates and social character, the microfinance industry is attracting a new influx of private capital with institutional investors transforming microcredit institutions, previously run like NGOs, into more formalised entities.
Good news for the poor and in particular for women?
Not so sure.
Women’s World Banking (WWB) has been studying this phenomenon and is warning the microfinance world against the dangers of the “mission drift” this transformation is causing.
WWB has discovered that the percentage of women clients served by formalised microfinance institutions tends to decline after their transformation.
In the fourth year after transformation, the average percentage of women borrowers usually drops from 77 to 60 per cent. This is due to lenders migrating from their original mission to serve low-income clients towards generating profits for their new shareholders and maintaining high-interest rates.
Women in the developing world, who are often illiterate and own no collateral, are the most vulnerable client group.
Microfinance works. It provides communities with viable structures. The challenge of the coming years will be to make sure that it remains true to its roots. For multinationals operating in the developing world this challenge represents a unique opportunity to become involved in new type of initiative with the potential of ending poverty.
This is what Corporate Social Responsibility in the era of global interdependence is all about.
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