Sunday, October 27, 2013

Microfinance and the middle class consumer

How can you link microfinance to middle classes? After all isn't microfinance so micro that its only for the poor?
Well, microfinance has often been targetted to the near-poor, either because it is the only sustainable strategy or because profits from these people will be used to cross-subsidize lending to the really poor. Not that the near poor are middle class.
But extending this logic means that that microfinance may target even the middle classes (or at least the lower middle class) in a bid to cross-subsidize the poor.
Again, some forms of microfinance may require complementary capital such as education of internet access or smart phones, which are available only to middle classes.

A case in point is micro-payments. These are very small payments, often made on the mobile telephone. The mobile payment market is estimated in trillions of dollars.

One operator who is into micro-payments (as well as much larger ones) is paypal. Check out this report on paypal on Reuters.com
 
http://www.reuters.com/article/2013/10/25/kenya-equity-paypal-idUSL5N0IF12I20131025

If paypal is interested in the middle class, surely other businesses are too. And this means that the middle classes are of interest to business, and even to big business, as consumers.

So, don't sell yourself short: you are not just taxpayers and redistributors. You also contribute because you consume. The profits made from your consumption, earned by big business, should also be used for redistribution.

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