"If you keep looking at microfinance from the point of view of idealism, it'll never work," says the director of an investment company. "But you can't see poor people as a paying concern," counters the lecturer in microfinance. The two experts clashed head on during a debate at Radio Netherlands Worldwide. The question: has microfinance become too much like big business?

Investor Marc Wesseling thinks there's no chance of microfinance becoming big business in its present form. "If commercial organisations can't make a profit from microfinance, it will never draw the big money. You've got to persuade companies to invest. Business is business. For a businessman, development in a particular area is never the main aim."

Lecturer in microfinance Klaas Molenaar (looking at Mr Wesseling in disbelief and shaking his head): “Companies shouldn’t just look at business opportunities. Commercial organisations also have social responsibilities,” he says. He believes you shouldn’t divide development and commerce into two opposing camps. “It’s not ‘either or’, it can also be ‘both and’. As long as you keep an eye on the balance. If you’re motivated by profit, as a lending organisation you have to get something back.”

Fair finance
Faisel Rahman, founder of a microcredit organisation in London, nods in agreement. “Microfinance can be successful if we find a balance between commerce, sustainable development and fair finance. We have to put the focus back on the people this is about.”

At the moment the effect of microfinance is being hugely overestimated, says Mr Rahman. “It seems like microfinance is supposed to be the solution to everything, whether it’s the AIDS problem or unemployment.” Mr Molenaar adds, “We even think we can use it to solve the economic crisis in Europe, when the idea of microfinance is only to provide poor people with access to financial services.”

“Microfinance seems so wonderful,” says Mr Wesseling. “Companies like to show they’re involved in it.” But he says the sector can also attract the wrong sorts of investors. “In Africa I see organisations that call themselves microfinance companies but which only supply consumer credit to civil servants. The loans are mainly to buy expensive products. It’s clearly an abuse of the term microfinance.”

Faisel Rahman interrupts him. “People with jobs can also be excluded from financial services. If you grant them a loan, it’s also a kind of microfinance.”

Big Mercedes
Back to the question of whether idealism has made way for big business. Chair Vanessa Mock raises the point that there are also entrepreneurs who started small using microcredit, but who are now almost millionaires. Or microcredit organisations that also seem to put their money into ostentation. An earlier RNW video showed how the cars outside a microfinance organisation in Ghana are all big Mercedes.

Asked what car he drives, Faisel Rahman laughs. “I don’t have a car, I ride a bike,” he answers.