Imagine a poor woman in Africa who wants to buy a cow. She can improve her family’s health and nutrition, and she can sell milk, too. Let’s say a cow costs $100. Before the microloan program, it was very difficult to achieve that goal. She would have to save nearly $200 before she could buy the cow. She has very little income, and something always comes up. Now,imagine that same woman gets a microloan. She has a cow, which is a source of cash from which to make payments. The interest rate may be high, but it’s a possible interest rate.

This is exactly why Mohammed Yundus won the Nobel prize in 2006. His program of microloans to poor people the banks turned away has changed so many lives.

Yes, Miss N’Beke, I will ensure that nothing happens to your money, for 30% of it…

I know that third world countries don’t have insured bank policies, but this just seems like such a waste of capital.

I don’t see how microloans tie in? Do these susu people make microloans, or is this just something else that they do in the third world? I’m reminded tangentially of the Jim Carrey movie, “Yes Man” where he starts loaning to everyone and many of the microloans pay off well… but that’s a tangent.

I never really understood why banks pay us to keep our money there until I took an economics class and learned that we have vast stores of pretend money zipping around our system. That was a shock to my mental system! I guess ever since then I’ve subconsciously been waiting for the bottom to fall out of the system. But I guess when you think about it, as other people said, they are charging you through account fees for the privelege of taking most of your money and loaning it out at high interest rates. Still better than under your mattress :)

You are not paying to get your money back. You are paying for the convenience of getting your money back from the ATM. If you don’t want to pay the fee, then go to the friendly teller at the bank and get it there.

2 to 3 percent interest? Where?

It is automatic for Americans to look down upon places like Africa. But really Americans are busy buying the hype about America, and not bothering to wonder why people in such places are very happy and stress-free. There are trade-offs everywhere you go. There is a high price to pay for living in America.

Good article, really puts safety in perspective. I don’t think our society could function the way it does now if our choices were returns of -30% or -100%.

-30% is a logical decision if robbery is common and police is ineffective or downright corrupt.
It’s easy to forget how fortunate we are, we don’t have to make these kinds of choices.

The Economist is a great news source, right-leaning, but rather centrist by American standards.