P4-6. Numerous banks and venture capitalists have established for-profit microfinance companies to provide small loans to villagers in India and in numerous African nations. Yet some critics have argued it is immoral to profit from the poverty of these impoverished peoples. Do you agree? Should microfinance be limited to not for profit organizations like Grameen Bank? The lack of a well-functioning credit market is often a hindrance to rural villagers and farmers in developing countries. Living from harvest to harvest, the rural poor are vulnerable to the vagaries of the weather. When the previous harvest fails, far too often rural farmers are forced to borrow sums to plant the next crop at extortionate interest rates that keep them indebted to the money lenders.

To break this cycle of poverty, a new form of lending to the poor has emerged: microfinance. Microfinance institutions typically focus on making small loans—typically from $25 to $200—to rural entrepreneurs to begin or expand a small business. Microfinance lenders oftentimes provide other services to the rural villagers they serve, including offering savings accounts, life insurance, and basic health care