Fair trade is an integral part of sustainable human development.  So, too, is microfinance.  People in developing countries need access to credit so they can have the capital to start a business or make their crafts.  Many of the artisans at Beleza got started with a microcredit loan.  Unfortunately, last week’s Economist featured an article stating, among other things, that Bangladesh would be capping the interest rate on microcredit loans at 27%.

Why is this bad?  The interest charged on the loans helps pay for training programs and the administration costs it takes for locally-employed loan officers to bike from door to door establishing new loans and checking on the lending groups.  By capping the interest, Bangladesh is effectively limiting the amount of loans available.  It’s a shame this is happening here, where it all started by the work of Dr. Mohammed Yunus.  I just finished his book, “Banker to the Poor.”

Link to the article:  http://www.economist.com/node/17522606

microcredit

New interest cap will reduce amount of loans available