Fair interest rates and ethical lending



© CARE/Emilie Bailey



There has been a lot written in recent months about the high interest rates charged by certain microfinance providers. Thankfully, such instances are still relatively rare. Lendwithcare only partners with those microfinance institutions (MFIs) that charge ‘fair’ interest rates, but we go further and also promote an ethical lending policy. This process starts by selecting MFIs that comply with a set of eligibility criteria. Although solid financial performance is among the requirements, paramount importance is given to a strong social development mission including targeting low-income populations who are usually excluded by commercial banks. We check at least once every six months to ensure that partner MFIs continue to meet criteria. CARE also maintains a presence on the Board of some of the MFIs to ensure that social development objectives remain at the fore in institutional decision making.

How do entrepreneurs use microfinance?



© CARE/Emilie Bailey



I am always interested to learn more about how people use microfinance. During a visit last month to the Philippines I had several opportunities to speak directly with entrepreneurs. Lendwithcare works in partnership with SEEDFINANCE, a local wholesale microfinance institution (MFI) in the Philippines. This means that it lends to other smaller MFIs. Among these are the First Consolidated Co-operative Along the Tañon Seaboard (FCCT) and Lamac Multi-Purpose Co-operative (Lamac), both of whom have entrepreneurs featured on lendwithcare. FCCT and Lamac are from the island of Cebu, which is a one hour flight southeast from the capital Manila. The island’s commercial and administrative centre is Cebu City, the oldest city in the Philippines.

Promoting responsible lending

© CARE/Helen Barnes

I listened to a very interesting and well balanced programme on BBC Radio 4 last week called ‘The Bankers and the Bottom Billion’ about microfinance in India (http://www.bbc.co.uk/programmes/b0112fz9). It illustrated the potential of microfinance in helping poor people to develop their businesses and improve the lives of their families. However, it also highlighted the problems associated with poor people taking out multiple loans and not investing the money in productive ventures. It went on to describe situations where some borrowers, who were unable to generate a return and repay their loans on time, were being chased by ‘microfinance companies’ whose main concern was making a return for their shareholders.Could this also happen to the entrepreneurs supported through lendwithcare?