As it turns out, IU Professor Mike Tiller has a twin. His name is Chuck Waterfield and he is one of the speakers at DGDW. While they don’t look exactly alike, Mr. Waterfield’s mannerisms, presentation style, and unmistakable enthusiasm for teaching were spot on.
Mr. Waterfield was one of the panelists in a discussion entitled “Social Responsibility v Sustainable Margins: What are appropriate interest rates for microfinance?” During the panel discussion, Mr. Waterfield, founder of MicroFinance Transparency, and two other microfinance experts Javier Fernandez-Cueto (Compartamos Banco) and Michael Steidl (Founder, Micro Service Consult GmbH), tackled some of the toughest questions in microfinance. The panel focused on addressing the industry’s notoriously sky-high interest rates and general lack of pricing transparency.
Most microloans are given out at interest rates of around 50%. To the general public, this number sounds outrageous—how can we really be helping the poor if we’re charging them so much for access to funds? The panel went through a careful explanation of this happens. The short version is that most of the costs associated with providing a loan are fixed. So, if the loan amount is smaller, a higher percentage of that loan is necessary to cover those costs. Through a few more examples and explanations, the panel argued that most recipients of business-related microfinance loans see high enough returns on their business to afford high these high interest rates, making them both necessary and possible.
This panel discussion was fascinating and offered a perspective of microfinance I hadn’t seen before—that of microfinance’s orginiators. We were privileged to hear about the industry (and its future) from experts who have worked in the field longer than the term “microfinance”.
Melissa Frye, Junior, Majors: BEPP and Finance
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