dgrightfield

Why Cable and WiMax Shouldn't Mix

CLWR is has actually been EBITDA positive within a few months in every market it's entered. The penetration rates achieved in their existing markets provides lots of reason for optimism that this technology can take hold.

Certainly lots of dollars at play, but not nearly as gloomy a scenario as you paint.

What the Heck is Citi Doing?

The accusations made in this blog about the microfinance industry and micro-lending are irresponsible and often wrong:

1) You can't compare sub-prime loans to micro-lending. There are well-established business practices put in place to ensure repayment, such as group lending and village banking.

2) You say these loans are not secured by collateral. Collateral is simply not needed in micro-finance. Borrowers typically guarantee the loans of others in their village or in their banking group. If one person defaults, the rest of the group is responsible for repayment. No further loans are dispursed until the defaulted loan is paid in full, minimizing the opportunity for mass default and minimizing risk to the lender.

3) You mention that the repayment rates are often high (yay for you, you got one right!) but that the evidence is flimsy. Talk to the folks at CGAP, ACCION International or Women's World Banking. Look up the public filings of Compartamos (bank in Mexico). Read Prof. Yunus' research. Evidence of incredibly high repayment rates abounds, these are often 97%++. The reason, again, is often in the way the loans are structured.

I could go on and on. Please check your facts first before comparing sub-prime loans to microfinance lending. These entrepreneurs DON'T need "aid" as you suggest, they need working capital, extremely small amounts of working capital that they'll be able to re-pay.

As for Citigroup, they have been a long-time supporter of microfinance globally, using it as a way to break into emerging economies. Their troubles are based on extraordinarily bad bets in the US market. Further dependence upon foreign sources of income in a responsible way is a great thing for Citigroup, its shareholders, and the micro-entrepreneurs in these economies.