Loan Ranger

Thursday, September 22, 2011

On a hot summer day in Manaus, Brazil, Diana Taylor, the former banking superintendent of New York and longtime companion of Mayor Michael R. Bloomberg, was strolling through a slum. A city of about two million in the middle of the Amazon, Manaus is where the Boston-based microfinance group Acción International started an ambitious lending operation in February, and Taylor, who is chairwoman of the group’s board, had flown down with a delegation of staff and investors to observe how the experiment was coming along on the ground. Nearly six feet tall, thin and wearing large, round sunglasses, khaki pants and leather driving moccasins that had the kind of distressed effect only years of wear can produce, Taylor did not blend in.

But as pedestrians paused to stare, she neither reveled in the attention nor was fazed by it, instead noting details of the storefronts she passed: whether they had adequate signage, say, or were advantageously located in front of a bus stop. After two blocks, having passed four businesses bearing stickers with Acción’s logo – indications that the owners had taken out loans – Taylor stopped in front of a cellphone supply kiosk. “These are really smart,” she said, pointing to a sticker in the shop’s window. “We should have them everywhere!”

With some 30 affiliates in 23 countries, Acción is among the biggest organizations that do microlending – that is, make small loans to the poor as an antipoverty strategy. It is also one of the oldest; this year is the group’s 50th anniversary. But in the large and varied constellation of microfinance groups, it is most known for developing and promoting a profit-making approach to the work. The commercial model worries factions of the microfinance world that find a for-profit drive at odds with a mission to lift the poor out of poverty. It does not worry Taylor, who, despite a mild distaste for the limelight – and increasing scrutiny of all microlending – is quietly emerging as one of its most influential proponents.

“The hope is that we can test it here and really prove that it can be done,” Taylor said. We were in a van on our way to visit more clients, “microentrepreneurs” in the parlance, across town. “Then we can attract more capital.” So far, she seemed pleased. There were Acción billboards at key intersections, a truck with a sound system affixed to its roof blasting an Acción ad, and, in one outdoor market, an Acción jingle playing over a loudspeaker. Of the dozen or so clients she had met with – fruit vendors, seamstresses, seafood sellers – most said they hoped to take out another loan.

Source: The New York Times (link opens in a new window)