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The problem with micro finance is that it’s not scalable. It takes effort and energy to setup in a certain location, and then will take the same effort and ene
by addicted 6y ago
The problem with micro finance is that it’s not scalable.
It takes effort and energy to setup in a certain location, and then will take the same effort and energy to setup in another location (minus some minuscule efficiencies), because what’s key in micro finance is understanding the needs of each individual community and catering to that.
If micro finance was scaleable, that would imply the same strategies would be broadly profitable across a range of communities. But at that point there is no need for micro finance. Regular banking entities could, and would, have stepped in and made money.
- Someone 6y agoNot being scalable is much less of a problem when you want to make a living and help people than when you want to make lots and lots of money. Because of that and because labor is cheap in most places where micro-finance makes sense, I would think not being scalable isn’t a huge problem for micro-financing.
- sukilot 6y agoScalability isn't the issue. It's just not profitable. Microlending is a money loser overall. Dirt farming just isn't very profitable on the scale of a wealthy investor in a developed country. It only works because the lenders think of it as gifts that are partially refunded, not investments.