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Also take a look at the work of the SMART campaign, an effort on the part of the microfinance industry to create principles of consumer protection: . Finally, take a look at a new global initiative called Truelift, which aims to restore the pro-poor objective of microfinance. Full disclosure: I have recently joined the board of Truelift. Poverty Capitalism? Is the microfinance industry an example of poverty capitalism, or the efforts to integrate the world’s bottom billion into global capitalism and to create markets in services for the poor? And is poverty capitalism a predatory capitalism or is it what Bill Gates claims it to be: creative capitalism?
3Key elements of Microfinance PLUS: I borrow the phrase Microfinance PLUS from Fazle Abed, the founder of BRAC, the world’s largest development NGO. Along with the Grameen Bank and ASA, BRAC is the main provider of microfinance in Bangladesh. These institutions are being credited for having achieved what is called the “Bangladesh paradox” - significant drops in poverty and considerable improvements in human development in a country that until recently was seen to be a development failure. It is important to note that these are “homegrown” institutions that enjoy a “space of relative autonomy.” While they rely to some extent on “soft loans” (either from donors or from the Government of Bangladesh), they are not shaped by donor fads and fashions. They also face sharp critique from Bangladesh’s press and academics. BRAC itself fosters internal critique and debate through its Research & Evaluation Division. Finally, while separate from the state, these institutions put pressure on the state to provide better services to the poor. BRAC calls this “proof of concept.”Although the Bangladesh institutions bill their work as microfinance, my research shows that they are better understood as pro-poor service delivery institutions, i.e.