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Christian Microfinance: Distinctively Different? (2/5)

15 February 2011


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Hugh Sinclair - Posted: 15 Nov 2012

The gentleman from Opportunity International suggests that charging interest is biblical, but that extortionate interest rates are not. The US-based NGO "MFTransparency" publishes the actual APRs charged by MFIs in various countries at various loan sizes. I scanned the seven African MFIs that are covered by this website and within the Opportunity network. Three conclusions were alarming. First, Opportunity is generally one of the more expensive MFIs in each country compared to its peers at all loan sizes. Secondly, APRs were routinely over 100%, and in Ghana and Mozambique they reached over 150%. These countries do not suffer from hyper-inflation, and these rates are higher than their peers. Thirdly, there is very little transparency about these rates on the Opportunity International website, so donors have no immediate way to discover the actual rates and form their own conclusions as to whether these rates are acceptable.

My a priori expectation was that Christian MFIs might charge lower interest rates than their peers, avoid extortionate interest rates more carefully, and be more transparent. I was wrong on all three counts.

I would like to end with two biblical quotes, given the location of this lecture. I am not a theologian, but these piqued my interest in this complex topic:

Exodus 22:25 "If you lend money to one of my people among you who is needy, do not treat it like a business deal; charge no interest."

Ezekiel 22:12 "In you are people who accept bribes to shed blood; you take interest and make a profit from the poor. You extort unjust gain from your neighbours. And you have forgotten me, declares the Sovereign LORD."


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