More competition is needed in the telecoms market in Mexico.
Telecoms in Mexico | Slim’s pickings | Economist.com
Showing posts with label Mexico. Show all posts
Showing posts with label Mexico. Show all posts
Monday, July 28, 2008
Tuesday, July 01, 2008
comScore Releases Top Latin America Web Rankings for April 2008
More interesting data on Internet useage in LatAm
comScore Releases Top Latin America Web Rankings for April 2008
comScore Releases Top Latin America Web Rankings for April 2008
Wednesday, June 04, 2008
Monday, June 02, 2008
When Shakira Calls, Even the Shy Appear - New York Times
The rise of PPP-- new private, public and pop-star partnerships in LatAm.
When Shakira Calls, Even the Shy Appear - New York Times
When Shakira Calls, Even the Shy Appear - New York Times
Friday, April 04, 2008
For good and for profit
An article in the NYT talks about the controversy surrounding Compartamos, a publicly traded for-profit microlender in Mexico. I don’t know anything about Compartamos, so I won’t defend them directly. But I will take on the criticism that they are making too much profit off the backs of their clients, who are poor micro-borrowers.
But Compartamos’s decision to go public last April became a flashpoint in what had been a genteel debate over how microfinance could tap into the financial markets’ vast resources. The initial public offering gets special mention at every microfinance conference, and has been condemned by Mr. Yunus, the Nobel laureate.
Alex Counts, president of the Washington-based Grameen Foundation said Compartamos’s poor clients “were generating the profits but they were excluded from them.”
They key point in my opinion is made here in the story:
After Compartamos became a for-profit company in 2000, costs fell as efficiencies increased, but the bank kept interest rates high. On average, customers pay an annual interest rate of almost 90 percent, which includes 15 percent in government tax. In much of the world, microfinance interest rates range from 25 to 45 percent. But in Mexico, high costs, inefficiency and limited competition keep interest rates much higher. Compartamos’s rates are only a few percentage points higher than Pro Mujer’s, for example.
Simply put, in their quest to become profitable, Compartamos has become a highly efficient lender. As other microlenders were non-profit and not as efficient, Compartamos could afford to offer essentially the same market rates as the other lenders and pocket some money for themselves and their shareholders.
If Compartamos can offer essentially the same service as other banks, then it is hard to see how they are taking advantage of their customers. Sure, rates are high (90%?!?!?!?!...geez!), but all microlenders are offering similar rates.
The answer here is not to discourage for-profit microlender, but to encourage it! Hopefully others will see Camportamos’ success and seek to replicate it. This will bring more for-profit players into the market and in their quest to compete, they will begin to offer loans at lower rates.
After Success, Problems for Microfinancing in Mexico
But Compartamos’s decision to go public last April became a flashpoint in what had been a genteel debate over how microfinance could tap into the financial markets’ vast resources. The initial public offering gets special mention at every microfinance conference, and has been condemned by Mr. Yunus, the Nobel laureate.
Alex Counts, president of the Washington-based Grameen Foundation said Compartamos’s poor clients “were generating the profits but they were excluded from them.”
They key point in my opinion is made here in the story:
After Compartamos became a for-profit company in 2000, costs fell as efficiencies increased, but the bank kept interest rates high. On average, customers pay an annual interest rate of almost 90 percent, which includes 15 percent in government tax. In much of the world, microfinance interest rates range from 25 to 45 percent. But in Mexico, high costs, inefficiency and limited competition keep interest rates much higher. Compartamos’s rates are only a few percentage points higher than Pro Mujer’s, for example.
Simply put, in their quest to become profitable, Compartamos has become a highly efficient lender. As other microlenders were non-profit and not as efficient, Compartamos could afford to offer essentially the same market rates as the other lenders and pocket some money for themselves and their shareholders.
If Compartamos can offer essentially the same service as other banks, then it is hard to see how they are taking advantage of their customers. Sure, rates are high (90%?!?!?!?!...geez!), but all microlenders are offering similar rates.
The answer here is not to discourage for-profit microlender, but to encourage it! Hopefully others will see Camportamos’ success and seek to replicate it. This will bring more for-profit players into the market and in their quest to compete, they will begin to offer loans at lower rates.
After Success, Problems for Microfinancing in Mexico
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