truffledog wrote: ↑Wed Apr 08, 2020 7:54 pm

pczz wrote: ↑Wed Apr 08, 2020 6:49 am
Prasac has been on the way to becoming a bank since the dinosaurs were hereso don't hold your breath.
I am sure some people do borrow to buy Iphones but generally that would be from a moneylender. Too much paperwork with microfinance. Certainly in some places thevilage chief has to sign off on the lon andhe knows who is finacially imprudent. land is not a terribly good asset most of the tie in Cambodia because it takes along time to sell. The valuaton would ususally be under 50%. The interest rates may seem high to you, but look at what you pay your creditcard forthe convenience of instant purchasing power, way more than 18% i bet. Andits all relative. Mortgages andbank loans are also more expensive in Cambodia so the difference between mcrofinanace and bank is less. As I said before most of the loans are small and shor suration . This meanstheadmin costs of setting up the loan are higher as a percentage. if you just borrow $100 theyhavedo the same work as if you borrow $5,000 and until failry recently the agents had o go round and collect the money, and that costs also. I think it is hard not to try and apply western standards if you are western, but they do work here as you wil find out when you start racking up a few years mixing with the locals

I do get your point about higher costs involved in small credits and collection of money that costs too but we are talking about microfinance and not about commercial lending at local market rates/conditions. I would like to repeat that the microfinance was originally meant to help the poor with affordable financing and not to generate huge profits for the mircofinance institutions. 18% charged is NOT a microfinance rate (following the original idea) but a commercial rate (following the principle of creating max return) for a NORMAL COMMERCIAL credit IMHO.

Generally speaking a DEDICATED Microfinance instution should be able to finance itself on the global market at reduced interets rates (there are a LOT of funds that do exactly this, Credit Suisse only has 3 billion $ lent on a philantropic base) so therefore reducing the FINAL interest rate charged to the borrowers. So if a local MIF finances itself by issuing bonds at 8.5% it is clear that:

1) it wont be able to charge low interest fees on the other end
2) it is NOT a microfinance institution by definition but a standard commercial BANK (IN THE DRESS OF A MIF) lending at local market rates and intending to maximise profits

If you take out the 5-6 % that is paid too much (in funding) that reduces the resulting interest rate by more than a third thus leaving more money in the hands of the borrowers. Nobody would argue that 1$ more in the hand of a poor cambodian farmer is worth 1000 times the dollar left in the pockets of the rich.