So Mohammed Yunis is in Bahrain. He is talking to government officials about establishing a Grameen-like microfinance institution in Bahrain.
I think the idea itself is great. In Bahrain, around 30,000 people receive "non-productive" social assistance from the Ministry of Social Affairs. Grameen Foundation supports microfinance programs that enable the poor, mostly women, to lift themselves out of poverty and make better lives for their families. To do this, they partner with a worldwide network of microfinance institutions and offer support in the form of in the form of funding, technical assistance, training and technology-transfer. Then basically those microfinance institutions would make small loans, usually less than $200, to individuals, usually women, to establish or expand a small, self-sustaining business.
In our closest neighbor, Saudi Arabia, the concept was introduced successfully through a partnership between Grameen and PFP (Productive Families Project), a private non-profit venture established by Saudi businessman Abdul Latif Jameel. The business plan for Abdul Latif Jameel's PFP was actually developed by Grameen. The loan range was set to BD 100-500. Since its inception in 2004, the program now reached more than 7,000 women and enjoys 100% repayment. The Grameen model was slightly tweeked of course to incorporate Islamic principles (e.g. calling the interest rate "fee").
Not bad, Mr. Jameel. I won't even comment on our Bahraini business community, which is in total "la la land" when it comes to serving the community. Anyway this project has potential and can even be profitable. Microfinance banks have a return on equity range of 25-50% worldwide (interest rates on microloans are usually high between 15-35% according to Grameen). I am worried, though, about government involvement and management of this, given its historical record of turning good projects into disasters. News report indicate there is still no agreement on proper loan-size, capitalization, source of finance, interest rate, or products and services offered. I guess only then will it be clear whether or not this is a viable establishment in Bahrain. I hope this happes soon..!