Last Thursday at the World Economic Forum in Davos, Switzerland, Bill Gates pushed for a shift towards creative capitalism. The term asks for the use of market forces in bridging the broadening rift between the world’s best off and worst off, and may someday dream of a glorious rise in the buzzword ranks. Gates is distressed to see that advances in technology, health care and education vastly sidestep the poor, and in that way make it more likely that they and their children will remain poor. While corporate social responsibility develops as a standard, and titans like Mr. Gates tout a refinement of economic assumptions - no matter the contradictions that may or may not arise in the free software realm, development tools will collect momentum. Among this stash sits microfinance.
We as humans develop and depend on a range of complex social relationships no matter our context, but it’s obvious that certain populations and therefore networks have remained isolated from one another. In the rural extremities or urban depths of any country for example, loan sharks, relatives, friends and neighbors are always involved in the transfer of resources, specifically in the form of money. Such transfers are generally considered informal markets and it remains true that the majority of world’s population is limited to their workings. This means two things; first, that these individuals are not benefiting from the stability of a formal banking system and second, that the formal banking system is in turn failing to benefit from their business. The barriers that most commonly block the entry of these workers include prerequisites for collateral, lack of a credit history and high interest rates. Thankfully, new credit and savings models have been developed in the microfinance sphere that have managed to break this isolation.
The Bill and Melinda Gates Foundation, among many others, has already expanded its funding activities to include microfinance, and over the course of the next decade, it’s clear that financial markets overall will rapidly evolve in response to the field’s breakthroughs. Here’s your golden opportunity, you creative capitalists you.