June 1, 2008 - News

Microfinance has macro impact
It's early afternoon in the hazy Mozambican capital of Maputo and the Opportunity International bank should be "aberto" for business. But it's locked tight. The closure goes against the spirit of this Canadian-funded microfinance bank, which provides credit, insurance and services to the poor in a country where 36 per cent of residents live on less than $1 a day. But it's necessary today. Outside the Banco Oportunidade de Mocambique, rioters block the streets, hitting cars with sticks, throwing stones, lighting tire fires. Frightened tellers peer out windows; the CEO surveys the violence from the roof. Shots ring out. Everyone jumps. Armed riot police head in to tame the protest, which ignited after bus-fare increases. By the time the rioting subsides, 168 people were hurt and three killed in the violence in the capital. "It's not just about running a bank, it's running a bank in this society," says Mozambique bank director Trudi Schwartz, who's trapped inside with her employees. "Our vision is to take banking to the unbanked." Clearly, banking in the Third World isn't business as usual. Despite setbacks, microfinance, born 32 years ago, is booming, ramping up to reach a market the World Bank estimates at 600 million global poor. So far, the industry reaches less than 20 per cent, prompting for-profit banks to join the historically non-profit sector.