Everyone knows that microfinancing, the business of offering tiny loans to the poor, can help farmers and small business owners worldwide to eke out a living. The United Nations has embraced the concept with vigour, declaring 2005 the Year of Microcredit. Political powerhouses such as former US president Bill Clinton have created hefty microfinancing funds, and international conferences on the subject are now fashionable.
Worldwide, the microfinance business has grown at an annual rate of about 30%, with leading microfinance institutions boasting an average rate of return of about 2.5% of total assets, according to the World Bank. Loan repayment rates are also strong.