In this blog, "Don't Put Microfinance under a Microscope!", Mr. Bai argued that although globally MF loans have reached $6.5 billion, it is a misnomer to say there is "too much microfinance" already.
Referring to a Times Online article which challenged the promise of microfinance, Mr. Bai countered that:
- Given the overall size of global credit market ($270 trillion), $6.5 billion microfinance accounts for only 0.0024%, yet it serves close to 2% of the world population for their credit needs.
- One of the main theme in the Times article is that not every MF borrower will make it. Despite the growth and popularity of MF, it is the traditional way of expansion--globalization, industrialization, urbanization--that is doing the most in creating jobs and improving life for world's poor. Mr. Bai's argument is that "every tool has its own place" in helping the poor. MF is never a "silver bullet". It helps a group that is under-represented in today's global economy. Credit is just one piece of the puzzle for many micro-businesses, albeit an important one.
My thoughts on this, as I wrote in a separate blog, is:
Wokai, as MF in China in general, is struggling to have its voice heard, due largely to an economy that is used to state intervention--those who think China is the ultimate success story of unbridled entrepreneurship don't know China at all. Even worse, such an economy--however unbalanced or exhaustive--is still doing wonders. As a result, such a development model crowds out other alternatives, such as grassroots financial self-help. I wouldn't be surprised that having heard others' success stories, even the poorest farmers in the farthest corner still pin their hopes mostly on the government.
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