Originally published: May 1, 2008
Source: The Globalist
Microfinance institutions around the world - the tiny banks that make micro-loans to the developing world’s working poor - face a significant challenge in even the best current global economic scenario. A political tide threatens them that could reverse much of the progress against poverty they have made over the past decade.
The reason is that the twin crises of world food price inflation and the U.S. sub-prime mortgage meltdown may be joined at the hip. And as a result, the developing world’s working poor could well channel their anger toward some of the new links with global capital markets that seemed so beneficial to them until now.
Not only would microfinance institutions be the primary victims of an angry reaction against a financial system that is now delivering unaffordable grain bills alongside credit. In many cases, they are also the only institutions positioned to help productive people avoid calamity as food prices wreck their budgets.
BlueOrchard risk manager David Apgar examines the effects this may have on microfinance institutions - and explores what microlenders can do to mitigate the crises.
Read original article: Microfinance and the Food Crisis (The Globalist)