Emerging Tech

Social Entrepreneurship: Beyond The Hype

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Executive Summary

Private for-profit companies are playing an ever-larger role in the microcredit industry. The volatile combination of profit seeking companies, minimal competition, and vulnerable, ill-informed, ill-educated borrowers has opened up dangerous potential for exploiting the poor. Expecting microcredit organizations to exercise self-restraint and self-regulation is naively optimistic and will not work. Regulation is needed to protect the microcredit clients in three areas: transparency, interest rate ceiling, and loan recovery practices. Since Muhammad Yunus pioneered the concept of microcredit in 1976, and founded the Grameen Bank in Bangladesh, microcredit has become a major movement today.

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