Promoting microfinance

I commend you for your article featuring Arka Mukherjee *95 and his microfinance venture (feature, April 2). Microfinance has been the darling of development economists for the past few years, and it well deserves the increasing recognition. I suspect that you might come across more Prince-tonians who have been involved in this movement in one way or another. I have been on the board of ACCIÓN International since 1985, when the initiative was still in its infancy. Now ACCIÓN’s affiliates in Latin America, Africa, India, China, and indeed, the United States have a portfolio of over $3 billion and some 3.5 million clients (see ACCION.org on the Web). Historically, the payback ratio exceeds 97 percent. Two-thirds of the borrowers are women.

Of course, as Mr. Mukherjee says, that is still a small fraction of the potential, which is why we feel that the microfinance institutions benefit by becoming regulated banks so they can take deposits and tap into financial markets. The need far exceeds the capacity of philanthropy alone, and, efficiently run, these institutions can be profitable enough to capitalize the necessary expansion. There are, in fact, many institutions now in this field, not the least of which is Grameen Bank, serving millions in Bangladesh alone, as well as Bank Rakyat Indonesia, serving millions in that country.