6 ms·

How Can I Invest in Microfinance? Part 2: My Zidisha Experience

41 points by jkurnia 13y ago

jkurnia 13y ago
I'm Julia, the founder of Zidisha. I'd be happy to respond to comments and questions.
- nmrm 13y ago
  The author concludes that he made a very modest profit, which only counts as a net loss if a one-time fee to Paypal is counted. Is there a way to put money into a Zidisha account without paying processing fees? What's the cheapest way to put money into a Zidisha account? On the lender's end, I think about microfinance more as a "renewable donation" than as an "investment". So, it would be nice if 100% of the donation went to the operation of the charitable organization or the charitable act itself. edit: less ambiguous question.
  - jkurnia 13y ago
    We don't currently offer a way to put small amounts into a Zidisha account without paying credit card / PayPal fees. That said, most of our lenders recycle their funds over multiple loans, rather than cashing out immediately when they are repaid. When the 3.5% transaction fee is spread out over many loans, the cost per loan becomes less significant.
    - chrisduesing 13y ago
      Have you looked in to Balanced Payments? They enable ACH transactions at 1% + $.30 capped at $5.
      - joshstrange 13y ago
        I've used Balanced Payments before but they didn't have the $5 cap. I can confirm they now offer it but do you know when that started? My googling hasn't turned up any blog posts, currently going through all of their posts.
        chrisduesing 13y ago
        I can't say when they started, but we've been using it for our marketplace for a little over 6 months and it has been capped the whole time.
        joshstrange 13y ago
        Thanks! I looked through their blog archives but didn't see anything.
      - jkurnia 13y ago
        We haven't investigated Balanced Payments specifically - thanks for the tip! We did experiment with offering ACH payments via a different service (Check Gateway) a couple years ago. We discontinued that, because the automated address and other verification checks required for online ACH authorizations blocked many legitimate payers, such that it cost more in declined payment fees and hassle for our lenders than it saved in transaction cost. Also, almost half of our lenders are outside the US.
    - mfheretic 13y ago
      Correct, I failed to mention this in my original post. My fee was $35 (3.5% of $1000), and my total bids have been $1818 over the period, so this equates to about 2% overall. Unsure if I have to pay this 3.5% to get the funds out again. Have you thought of speaking to PayPal to see if they would waive this fee as they did with Kiva? They seem fairly sympathetic to microfinance, and this is an innovate model. However, they may perceive you as a competitor to Kiva, particularly as they now have Kiva Zip, and I imagine Kiva themselves would prefer to retain exclusivity in this waiver of trasnaction fees. No harm in asking. Post their response here!
      - jkurnia 13y ago
        We do not charge any fee for withdrawals - we cover that cost ourselves so that lenders may withdraw their full balance at any time. We did request free payment processing for Zidisha, and have also asked Kiva to request the same deal for Zidisha. Two years ago we even had an online petition for PayPal to waive fees for Zidisha loans - https://www.change.org/en-AU/petitions/paypal-stop-charging-fees-on-zidisha-org-microloans https://www.change.org/en-AU/petitions/paypal-stop-charging-.... Thus far, our applications for free or heavily discounted payment processing have been turned down, and we continue to seek more cost-effective options.
    - pbreit 13y ago
      Funding a lending account should migrate over time to bank transfers. PayPal offers such a method with just a $0.50 fee.
  - mfheretic 13y ago
    I would only need to raise my average APR by about 0.2% to cover the PayPal fee. Interestingly Kiva gets around this: "Kiva is the first organization that PayPal has supported by providing free payment processing. This support saves Kiva up to one million dollars each year, which helps us to keep our operational expenses low and send 100% of your loan contributions to the field." The CEO of Kiva is formerly from PayPal. This is a serious advantage to Kiva, and disadvantage to Zidisha. I have no idea if there is an alternative way of uploading funds to Zidisha without incurring these fees. Regarding my profit motive, I don't see these platforms as an effective means to profit. I seek to break-even. By seeking to break-even this permits side-by-side comparisen. It creates a level playing field to compare, and from this, one can modify the break-even criteria to measure the impact. For example, on MyC4, if I see a loan is fully-funded at 12.2%, but the interest ceiling is 12%, I have a simple Excel tool that tells me how much I need to bid at 5%, or 0%, in order to displace enough of the highest-cost bidders in order to faciliate the loan. So, I might do a modest loan of only $25, at a very low or zero interest rate, but as a result of this a loan for $500 which may not have otherwise been disbursed is able to be disbursed. I consider this a good use of my funds. Also, by constantly displacing the highest bidders, at the margin this may frustrate them by constantly having their bids removed at the last minute, and persuade them to lower the rates they charge - who knows if this is effective or not, but this is one strategy I use. But, overall I seek to break-even on all these platforms. This is not entirely altruistic. I also have a one-year fixed-term deposit at a regulated microfinance bank that I know very well, which yields 8% APR and suffers no forex risk. My funds are also used for lending to microfinance clients, only I don't know precisely which ones. My logic is that this generates a relatively risk-free return (the credit risk is with the bank itself, not the individual clients), and means that if I break-even, or take a few hits on my P2P lending, then in the long-run this all cancels out, and I might cover inflation hopefully. Such fixed-term deposits might be considered an alternative mechanism for microfinance lending, but it is relatively undiscovered in the mainstream retail sector, also invovles transaction costs, and requires more paperwork to set up. And of course, it doesn't harness the feeling (imaginary or otherwise) of P2P lending.
    - notahacker 13y ago
      Do you mind sharing the name of the microfinance bank you deposit at?
briholt 13y ago
I am invested in microfinance and want to invest more, but there's a constant news stream of problems with the providers and I'd really like to know who I should invest with. This article references a few complaints about Kiva's lack of transparency. Two weeks ago there was an HN article on Zidisha's lack of transparancy [0]. Zidisha's website lists their repayment rate at 74.31% [1], which seems very low compared to other providers which report 90%+. This author likes MyC4, but they appear to focus on European investors (given the Euro currency symbol). If anyone has any solid suggestions on who I should invest with, I'd love to hear them. [0] https://news.ycombinator.com/item?id=7546394 https://news.ycombinator.com/item?id=7546394 [1] https://www.zidisha.org/index.php?p=43 https://www.zidisha.org/index.php?p=43
- mfheretic 13y ago
  I saw the HN article questioning Zidisha - Modern Microcredit I think. My experience has differed from that author's impression, and I have tried to be as transparent as possible to explain with hard data why. But I cannot explain HOW this difference in experiences with Zidisha occurs. My concerns with Kiva are more far-reaching, but no point going over that now. I receive many emails asking precisely this question, which prompted me to embark on an overview of the sector, explain the options available (there are more than you might think!), and to examine the individual players in each option. Ultimately you need to decide what you actually seek to achieve, and which model you prefer. Do you need to use a P2P at all, for example? What about simply opening a savings account in a regulated microfinance bank and leaving your funds there, potentially earning a small interest rate? Your funds will be used for the same purpose, lending to microfinance clients, but you won't know which? And if you prefer the P2P mechanism, as far as I can see the key questions are: lend or donate? Lend at interest or interest-free? Lend via an MFI or directly? Once you answer these questions you will have narrowed your search down significantly, and can then do a more detailed analysis of the options available. I think you should think about these questions, and be aware of the options, before you try to select who you should invest with. You are right that MyC4 is euro denominated. However, I had a quick look at their FAQ: https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST Seems to be available to everyone.
- jkurnia 13y ago
orware 13y ago
I remember back at UC Berkeley I went to a little informational session about a company called Prosper...looks like they're still around :-): http://www.prosper.com/ http://www.prosper.com/ If I remember correctly, the lady presenting was with eBay while Meg Whitman was there and at the time (back in 2006) this was a new venture she had become involved with. Seemed pretty neat back then.
- jkurnia 13y ago
  Prosper was one of many inspirations for Zidisha. The attorney that led Prosper's legalization deal with the SEC advises Zidisha pro bono.
BobbyH 13y ago
mfheretic, you're counting "active loans" as cash in the bank, but I think you have some active loans that are likely to default and cause losses... This is the account I looked at: https://www.zidisha.org/microfinance/profile/Jessica.html https://www.zidisha.org/microfinance/profile/Jessica.html That account gave a 20% loan to Hellen Festo, made 40 loans, etc., as you mentioned in your blog post. I took a look at the first ten active loans listed on that profile. Four loans in particular are way behind on payments. If those loans default, you'd be out $160. On $1,000 in principal, that would represent a loss of 16%, instead of breaking even. That's more in line with Zidisha's write-off rate of 18.65%: https://www.zidisha.org/index.php?p=43 https://www.zidisha.org/index.php?p=43
- mfheretic 13y ago
  Completely accurate, which is why I state "I am basing this entire analysis on a number of large assumptions. Firstly, that my current outstanding loans will be repaid with the same reliability as my completed loans", and a number of other assumptions in addition. Nor do I know the extent to which previous loans, which may now be 100% repaid, may have dipped into default and subsequently recovered, which also incur a marginal cost in terms of opportunity cost of capital etc. My analysis is very much "cash based", which is limited, but this is the data I have available. A quick look through some of the 100% repaid loans suggests that at certain points in the cycle these were also overdue. Perhaps I could obtain the individual repayments versus due dates for each loan and work this out with greater accuracy, but I haven't bothered so far. To what extent are my current loans likely to default at the 18.65% rate you suggest? I have no idea. To what extent did my previous loans default to this extent? I have no idea. This is why I simply take a bird's eye perspective and look at net cash flows. However, as you accurately imply, for me to genuinely do this with precision I should wait until all current loans have been repaid, which either means I have idle funds on the platform, or I have to complicate the analysis by considering my average outstanding balance, which I have assumed for simplicity is $1000, which it has been to date roughly. However, are you considering the gross interest income I will earn on the loans that don't default over the forthcoming period? This will partially offset some of the defaults, I can't say with precision to what extent. I count only principal outstanding, not interest income due. So, to some extent this will lessen the impact of possible defaults. Finally, I have done a couple of new bids since my cut-off date of April 6th when I downloaded the data, so the numbers might not add up 100%. Oh, and Jessica is my wife, she started on Zidisha first, before I took over! At the end of the day I am hesistant to say resolutely that Zidisha is a break-even venture. It has been so far, but subject to certain assumptions which I hope I have stated clearly. 18 months is a decent trial-period, but it's not a perfect analysis. And if I do subsequently lose a few percent on $1000 that is tolerable. Would I put $10.000 on the platform? No. And comments warning that Zidisha needs to tighten delinquency are completely accurate, and to an extent I am gambling on their ability to do just that - progress seems good so far (in 2014). What intrigues me is the innovation in the business model. It is disruptive. It is a first-mover in this space. Does that mean the model is perfectly refined and cannot be improved? I doubt it, and I look forward to seeing how they develop. But I think it is worth giving them a chance, which is what I have done (to a modest extent), and waiting to see what happens. I will update my blog periodically when more data comes in.
nrub 13y ago
Serious question here. Is microfinance a good thing? What do we know about how it affects the borrowers? Most of the things I have read have been from a lenders perspective. About profit, and investment. Is that really the goal?
- mfheretic 13y ago
  It's the most serious question of all. The evidence is extremely mixed. I love David Roodman's Time Magazine quote for its brevity: "On current evidence, the best estimate of the average impact of microcredit on the poverty of clients is zero" http://content.time.com/time/world/article/0,8599,2103831,00.html http://content.time.com/time/world/article/0,8599,2103831,00... Needless to say the debate rages on. The Zidisha discussion detracts from this central point, but on valid grounds. To some extent the shortfalls of microfinance may be due to the high interest rates charged, the restrictive loan conditions, the profit motivation, the aggressive intermediating MFIs etc., some of which Zidisha addresses. However, if you read the work of Milford Bateman, for example, he raises more fundamental questions about microfinance. In the P2P space profit is not really an option, and in Zidisha's case it is debatable whether one can even break-even. But look at the higher levels, the profits accumulating to Accion in the IPO of Compartamos; the millions made in the IPO of SKS, or at some of the microfinance investment funds - these are the big boys, and at that level yes, there are vast profits to be made. Motivation is a hard thing to prove, but you are right to suggest that profit has come to play an unhealthy role in the debate. The sector is extremely opaque, transparency is rare, there are rampant conflicts of interest and ill-aligned incentives. It is largely unregulated in practice, despite endless window-dressing to the contrary. And when some new start-up promotes microloans for poor people to connect their houses to the drinking water supply, as sensible and this might superficially seem, isn't this a public good that the government should provide? Reading the standard microfinance mantra one could be forgiven for concluding that all the world's problems can be solved with loans, and that profit maximisation is the best structure to arrange this. We are familiar with the theory, but the evidence is sorely lacking.

41 points by jkurnia 13y ago

jkurnia 13y ago

I'm Julia, the founder of Zidisha. I'd be happy to respond to comments and questions.

nmrm 13y ago
The author concludes that he made a very modest profit, which only counts as a net loss if a one-time fee to Paypal is counted. Is there a way to put money into a Zidisha account without paying processing fees? What's the cheapest way to put money into a Zidisha account? On the lender's end, I think about microfinance more as a "renewable donation" than as an "investment". So, it would be nice if 100% of the donation went to the operation of the charitable organization or the charitable act itself. edit: less ambiguous question.
- jkurnia 13y ago
  We don't currently offer a way to put small amounts into a Zidisha account without paying credit card / PayPal fees. That said, most of our lenders recycle their funds over multiple loans, rather than cashing out immediately when they are repaid. When the 3.5% transaction fee is spread out over many loans, the cost per loan becomes less significant.
  - chrisduesing 13y ago
    Have you looked in to Balanced Payments? They enable ACH transactions at 1% + $.30 capped at $5.
    - joshstrange 13y ago
      I've used Balanced Payments before but they didn't have the $5 cap. I can confirm they now offer it but do you know when that started? My googling hasn't turned up any blog posts, currently going through all of their posts.
      - chrisduesing 13y ago
        I can't say when they started, but we've been using it for our marketplace for a little over 6 months and it has been capped the whole time.
        joshstrange 13y ago
        Thanks! I looked through their blog archives but didn't see anything.
    - jkurnia 13y ago
      We haven't investigated Balanced Payments specifically - thanks for the tip! We did experiment with offering ACH payments via a different service (Check Gateway) a couple years ago. We discontinued that, because the automated address and other verification checks required for online ACH authorizations blocked many legitimate payers, such that it cost more in declined payment fees and hassle for our lenders than it saved in transaction cost. Also, almost half of our lenders are outside the US.
  - mfheretic 13y ago
    Correct, I failed to mention this in my original post. My fee was $35 (3.5% of $1000), and my total bids have been $1818 over the period, so this equates to about 2% overall. Unsure if I have to pay this 3.5% to get the funds out again. Have you thought of speaking to PayPal to see if they would waive this fee as they did with Kiva? They seem fairly sympathetic to microfinance, and this is an innovate model. However, they may perceive you as a competitor to Kiva, particularly as they now have Kiva Zip, and I imagine Kiva themselves would prefer to retain exclusivity in this waiver of trasnaction fees. No harm in asking. Post their response here!
    - jkurnia 13y ago
      We do not charge any fee for withdrawals - we cover that cost ourselves so that lenders may withdraw their full balance at any time. We did request free payment processing for Zidisha, and have also asked Kiva to request the same deal for Zidisha. Two years ago we even had an online petition for PayPal to waive fees for Zidisha loans - https://www.change.org/en-AU/petitions/paypal-stop-charging-fees-on-zidisha-org-microloans https://www.change.org/en-AU/petitions/paypal-stop-charging-.... Thus far, our applications for free or heavily discounted payment processing have been turned down, and we continue to seek more cost-effective options.
  - pbreit 13y ago
    Funding a lending account should migrate over time to bank transfers. PayPal offers such a method with just a $0.50 fee.
- mfheretic 13y ago
  I would only need to raise my average APR by about 0.2% to cover the PayPal fee. Interestingly Kiva gets around this: "Kiva is the first organization that PayPal has supported by providing free payment processing. This support saves Kiva up to one million dollars each year, which helps us to keep our operational expenses low and send 100% of your loan contributions to the field." The CEO of Kiva is formerly from PayPal. This is a serious advantage to Kiva, and disadvantage to Zidisha. I have no idea if there is an alternative way of uploading funds to Zidisha without incurring these fees. Regarding my profit motive, I don't see these platforms as an effective means to profit. I seek to break-even. By seeking to break-even this permits side-by-side comparisen. It creates a level playing field to compare, and from this, one can modify the break-even criteria to measure the impact. For example, on MyC4, if I see a loan is fully-funded at 12.2%, but the interest ceiling is 12%, I have a simple Excel tool that tells me how much I need to bid at 5%, or 0%, in order to displace enough of the highest-cost bidders in order to faciliate the loan. So, I might do a modest loan of only $25, at a very low or zero interest rate, but as a result of this a loan for $500 which may not have otherwise been disbursed is able to be disbursed. I consider this a good use of my funds. Also, by constantly displacing the highest bidders, at the margin this may frustrate them by constantly having their bids removed at the last minute, and persuade them to lower the rates they charge - who knows if this is effective or not, but this is one strategy I use. But, overall I seek to break-even on all these platforms. This is not entirely altruistic. I also have a one-year fixed-term deposit at a regulated microfinance bank that I know very well, which yields 8% APR and suffers no forex risk. My funds are also used for lending to microfinance clients, only I don't know precisely which ones. My logic is that this generates a relatively risk-free return (the credit risk is with the bank itself, not the individual clients), and means that if I break-even, or take a few hits on my P2P lending, then in the long-run this all cancels out, and I might cover inflation hopefully. Such fixed-term deposits might be considered an alternative mechanism for microfinance lending, but it is relatively undiscovered in the mainstream retail sector, also invovles transaction costs, and requires more paperwork to set up. And of course, it doesn't harness the feeling (imaginary or otherwise) of P2P lending.
  - notahacker 13y ago
    Do you mind sharing the name of the microfinance bank you deposit at?

briholt 13y ago

I am invested in microfinance and want to invest more, but there's a constant news stream of problems with the providers and I'd really like to know who I should invest with. This article references a few complaints about Kiva's lack of transparency. Two weeks ago there was an HN article on Zidisha's lack of transparancy [0]. Zidisha's website lists their repayment rate at 74.31% [1], which seems very low compared to other providers which report 90%+. This author likes MyC4, but they appear to focus on European investors (given the Euro currency symbol). If anyone has any solid suggestions on who I should invest with, I'd love to hear them. [0] https://news.ycombinator.com/item?id=7546394 https://news.ycombinator.com/item?id=7546394 [1] https://www.zidisha.org/index.php?p=43 https://www.zidisha.org/index.php?p=43

mfheretic 13y ago
I saw the HN article questioning Zidisha - Modern Microcredit I think. My experience has differed from that author's impression, and I have tried to be as transparent as possible to explain with hard data why. But I cannot explain HOW this difference in experiences with Zidisha occurs. My concerns with Kiva are more far-reaching, but no point going over that now. I receive many emails asking precisely this question, which prompted me to embark on an overview of the sector, explain the options available (there are more than you might think!), and to examine the individual players in each option. Ultimately you need to decide what you actually seek to achieve, and which model you prefer. Do you need to use a P2P at all, for example? What about simply opening a savings account in a regulated microfinance bank and leaving your funds there, potentially earning a small interest rate? Your funds will be used for the same purpose, lending to microfinance clients, but you won't know which? And if you prefer the P2P mechanism, as far as I can see the key questions are: lend or donate? Lend at interest or interest-free? Lend via an MFI or directly? Once you answer these questions you will have narrowed your search down significantly, and can then do a more detailed analysis of the options available. I think you should think about these questions, and be aware of the options, before you try to select who you should invest with. You are right that MyC4 is euro denominated. However, I had a quick look at their FAQ: https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST https://www.myc4.com/About/MAIN_FAQ#WHO_CAN_INVEST Seems to be available to everyone.
jkurnia 13y ago

orware 13y ago

I remember back at UC Berkeley I went to a little informational session about a company called Prosper...looks like they're still around :-): http://www.prosper.com/ http://www.prosper.com/ If I remember correctly, the lady presenting was with eBay while Meg Whitman was there and at the time (back in 2006) this was a new venture she had become involved with. Seemed pretty neat back then.

jkurnia 13y ago
Prosper was one of many inspirations for Zidisha. The attorney that led Prosper's legalization deal with the SEC advises Zidisha pro bono.

BobbyH 13y ago

mfheretic, you're counting "active loans" as cash in the bank, but I think you have some active loans that are likely to default and cause losses... This is the account I looked at: https://www.zidisha.org/microfinance/profile/Jessica.html https://www.zidisha.org/microfinance/profile/Jessica.html That account gave a 20% loan to Hellen Festo, made 40 loans, etc., as you mentioned in your blog post. I took a look at the first ten active loans listed on that profile. Four loans in particular are way behind on payments. If those loans default, you'd be out $160. On $1,000 in principal, that would represent a loss of 16%, instead of breaking even. That's more in line with Zidisha's write-off rate of 18.65%: https://www.zidisha.org/index.php?p=43 https://www.zidisha.org/index.php?p=43

mfheretic 13y ago
Completely accurate, which is why I state "I am basing this entire analysis on a number of large assumptions. Firstly, that my current outstanding loans will be repaid with the same reliability as my completed loans", and a number of other assumptions in addition. Nor do I know the extent to which previous loans, which may now be 100% repaid, may have dipped into default and subsequently recovered, which also incur a marginal cost in terms of opportunity cost of capital etc. My analysis is very much "cash based", which is limited, but this is the data I have available. A quick look through some of the 100% repaid loans suggests that at certain points in the cycle these were also overdue. Perhaps I could obtain the individual repayments versus due dates for each loan and work this out with greater accuracy, but I haven't bothered so far. To what extent are my current loans likely to default at the 18.65% rate you suggest? I have no idea. To what extent did my previous loans default to this extent? I have no idea. This is why I simply take a bird's eye perspective and look at net cash flows. However, as you accurately imply, for me to genuinely do this with precision I should wait until all current loans have been repaid, which either means I have idle funds on the platform, or I have to complicate the analysis by considering my average outstanding balance, which I have assumed for simplicity is $1000, which it has been to date roughly. However, are you considering the gross interest income I will earn on the loans that don't default over the forthcoming period? This will partially offset some of the defaults, I can't say with precision to what extent. I count only principal outstanding, not interest income due. So, to some extent this will lessen the impact of possible defaults. Finally, I have done a couple of new bids since my cut-off date of April 6th when I downloaded the data, so the numbers might not add up 100%. Oh, and Jessica is my wife, she started on Zidisha first, before I took over! At the end of the day I am hesistant to say resolutely that Zidisha is a break-even venture. It has been so far, but subject to certain assumptions which I hope I have stated clearly. 18 months is a decent trial-period, but it's not a perfect analysis. And if I do subsequently lose a few percent on $1000 that is tolerable. Would I put $10.000 on the platform? No. And comments warning that Zidisha needs to tighten delinquency are completely accurate, and to an extent I am gambling on their ability to do just that - progress seems good so far (in 2014). What intrigues me is the innovation in the business model. It is disruptive. It is a first-mover in this space. Does that mean the model is perfectly refined and cannot be improved? I doubt it, and I look forward to seeing how they develop. But I think it is worth giving them a chance, which is what I have done (to a modest extent), and waiting to see what happens. I will update my blog periodically when more data comes in.

nrub 13y ago

Serious question here. Is microfinance a good thing? What do we know about how it affects the borrowers? Most of the things I have read have been from a lenders perspective. About profit, and investment. Is that really the goal?

mfheretic 13y ago
It's the most serious question of all. The evidence is extremely mixed. I love David Roodman's Time Magazine quote for its brevity: "On current evidence, the best estimate of the average impact of microcredit on the poverty of clients is zero" http://content.time.com/time/world/article/0,8599,2103831,00.html http://content.time.com/time/world/article/0,8599,2103831,00... Needless to say the debate rages on. The Zidisha discussion detracts from this central point, but on valid grounds. To some extent the shortfalls of microfinance may be due to the high interest rates charged, the restrictive loan conditions, the profit motivation, the aggressive intermediating MFIs etc., some of which Zidisha addresses. However, if you read the work of Milford Bateman, for example, he raises more fundamental questions about microfinance. In the P2P space profit is not really an option, and in Zidisha's case it is debatable whether one can even break-even. But look at the higher levels, the profits accumulating to Accion in the IPO of Compartamos; the millions made in the IPO of SKS, or at some of the microfinance investment funds - these are the big boys, and at that level yes, there are vast profits to be made. Motivation is a hard thing to prove, but you are right to suggest that profit has come to play an unhealthy role in the debate. The sector is extremely opaque, transparency is rare, there are rampant conflicts of interest and ill-aligned incentives. It is largely unregulated in practice, despite endless window-dressing to the contrary. And when some new start-up promotes microloans for poor people to connect their houses to the drinking water supply, as sensible and this might superficially seem, isn't this a public good that the government should provide? Reading the standard microfinance mantra one could be forgiven for concluding that all the world's problems can be solved with loans, and that profit maximisation is the best structure to arrange this. We are familiar with the theory, but the evidence is sorely lacking.