Is it Fair to do Business With the Poor?

This paper presents a debate between Mohammed Yunus, founder of Grameen Bank and Michael Chu, one of the visionaries behind Banco Compartamos, organized by the World Microfinance Forum, Geneva. The debate examines the role of commercialization, commercial capital and commercial investors in delivering microfinance to poor people .Chu states that there is a need to roll back poverty by reaching massive numbers, focusing on permanence, continuous efficacy and efficiency. He stresses that:

• Business is the only way to reach these goals;
• There is need to create an industry that provides above average returns;
• For the poor, commercial microfinance represents a strong industry that is profitable and fulfils their financial needs;
• MFIs do not need a special legal framework.

According to Yunus, the goal of microfinance is to help people overcome poverty. He states that:

• Microcredit organizations should focus on getting local money;
• External money involves problems such as foreign exchange risk and takes the focus away from local money, which is the real solution;
• MFIs should transform into microcredit banks that take deposits and lend them to the poor.