The Microcredit movement is the world's most successful effort at eliminating poverty. That's because it focuses on creating wealth. New businesses in villages and poor urban areas provide products and services to people who previously had none available. The Grameen approach, lending to several groups of several individuals, uses a CAS concept, economic self-organization, to succeed. This fortuitous discovery has shown that people everywhere can create wealth just as soon as they get access to seed capital -- provided other people also have access to seed capital at the same time so that one owner's client is another owner's customer. You get an instant economic web, as SFI's Stuart Kauffman calls them.

Microcredit works, and its financial returns finance its own growth. The movement, though, has the same limitations of any lending institution. Microcredit cannot bet safely on innovative products, services, or processes because credit participates only in the downside. Trying out an innovation works only within a diversified portfolio that lets the financier participate in the upside of the successes: in a word, equity. Judiciously applied, microequity could raise the financial returns for the microfinancing movement, and turn village entrepreneurs into instant millionaires as they show other village entrepreneurs around the world how to make and sell the innovative products and services that made their business such a success in their own home villages.

Look for posts of my columns here that describe the micro-merchant-bank in greater detail. Write me if you like the idea.

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