The worldwide median for microfinance borrower interest rates was 30.9% in 2005.  Holy cow!  That’s a lot more than you and I would pay if we went down to our local bank and took out a loan (unless “your local bank” is code for your maxed-out credit card).  So what is going on here?  

Microfinance has sometimes been critiqued for charging high interest rates to really poor people.  One counter-argument is, “well, look at the only other options poor folks have – informal money lenders who can charge up to 100% per month.  At least it’s better than that!” 

I say, “not good enough!”  People should have access to the most competitive rate possible, regardless of their wealth.   So the question then is, “are microfinance institutions charging their customers the best rates possible?”

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