Almost all microfinance borrowers are women who utilize funds obtained to start and maintain small businesses, such as broom making. Photo: Michael Foley Photography (flickr)

Of the three main microcredit models; non-profit, commercial, and regulated full financial services, which is best equipped to help the poor?

The Clinton Global Initiative invited three heavyweights from the microfinance industry to debate this very question: Nobel prize winner and Grammeen Bank founder Muhammad Yunus, SKS Microfinance founder Vikram Akula, and Mary Ellen Iskenderian, the president and CEO of Women’s World Banking. You can listen to Planet Money's distilled version of the conversation below.

Yunus presented an argument against the profit-maximizing, commercial approach, contending that rich investors seeking profits should not be allowed to usurp capital from the interest payments of the poor. He argued:

Grameen Bank is a for-profit organization…We are not NGO, we are a bank. But ownership is the question. Grameen Bank is owned by the borrowers. So we make profit, profit goes back to them. So we protect that part. So what we are opposed to when you say profit or commercialization, it’s money of the poor going out to somebody else.

In contrast, Akula alleged that the only way to extend microcredit opportunities to as many poor people as possible is to follow a commercial model:

Women from more remote areas would often come and say ‘Can you start in our village?’ and we’d always have to say ‘No, you know, it’s grant run and so we don’t have funds,” and we’d have to turn them away and they’d walk away disappointed… I left my NGO and came up with the idea of using a highly commercial model so that you could access capital markets and go back to that [poor] woman or any poor woman anywhere in the world and say ‘Yes, you too can have an opportunity.’

The other panelist, Iskenderian, advocated extending full financial services to the world’s poor. She reasons that the poor need access to regulated, commercial institutions that provide credit but also accept deposits and protect assets. However, she acknowledges the difficulties of becoming a “microbank,” specifically that laws often prevent the formation of such institutions and that it is extremely expensive to run them.

In The Wealth of Nations, Adam Smith first articulated the notion that firms acting in self-interest and profit-maximization would unintentionally produce socially beneficial outcomes. But is it the best way to prioritize the needs of the poor? You decide.

Human trafficking is a very profitable, low risk business venture. Photo: Samuel Ronnqvist (flickr)

Modern slavery takes many forms. Free the Slaves estimates that worldwide, there are 27 million people being forced to work without pay. In a recent interview with the Boston Globe, Siddarth Kara says that human sex trafficking has become one of the most lucrative types of slavery, with much higher profit margins than those of top-performing companies like Google. Kara, a former investment banker with an MBA and a law degree, believes that the best way to fight human trafficking is to address its economic side:

Sex trafficking is probably the most profitable form of slavery the world has ever seen, in that you can acquire or transport someone for a few hundred dollars, maybe a couple thousand dollars, and generate tens of thousands, if not hundreds of thousands....That’s the essential functioning and logic of the business model: low cost and risk to transport the slave, and immense profitability on the exploitation side.

Because the sex trade involves such minimal risk, the cost to consumers has plummeted. Kara says that in some countries, sex costs the equivalent of one and a half to two hours of work — which many people can afford. If prosecution rates for traffickers were to increase, prices would go up and demand would fall. Kara also recognizes the importance of cutting off the supply of sex slaves:

The minute [you] pull someone out of a sex slave condition, [you’ve] cut off all future cash flows. In terms of a sex slave it’s 10, 15, 20, transactions a day, a week, a month, year after year. You’ve got to pull people out, care for them...and then prosecute and convict effectively. That means several things: fast track courts, judicial review, and an economic penalty regime that makes it uneconomic to be in this business. If you start to alter the landscape, then the perception by the offender is: This business doesn’t pay. Right now the perception is: Huge profit, almost no risk, I’m there. This is about money: It’s not cruelty for the sake of cruelty. I’ve met traffickers. Some of them are just mundane opportunists."

Kara estimates that his proposed reforms would cost about $400 million a year, which could be a relatively cheap solution to a major problem. To read Kara's full interview, click here.

India — a leading producer of generic medicines — has earned the title, "pharmacy of the developing world." Photo: iwishmynamewasmarsha (flickr)

Medical experts fear that clauses in the EU-India Free Trade Agreement (FTA) could leave millions of the world's most vulnerable people without access to the lifeline India presently provides: cheap, generic medicines, reports Al Jazeera.

The debate over generic drugs goes to the heart of the way medicines are produced and distributed around the world. India's pharmaceutical industry makes most of its money producing cheap generic versions of drugs patented by its Western counterparts, bypassing a system designed to ensure drug developers are rewarded with a period of exclusive sales rights for new medicines.

The patent system is supposed to incentivize the production of new treatments and ensure that research costs are recouped. But it also creates a monopoly, allowing drug companies to charge whatever they see fit for their products…

The concern is that the FTA may disallow India from continuing to sidestep this system. This could limit the capacity of India's generics industry to produce and distribute these cheap medicines, which are primarily channeled to other developing countries.

India's pro-public health laws allow multiple manufacturers to compete for India’s medicines market. According to an opinion piece written for the Bankok Post by Paul Cawthorne of Médecins Sans Frontières' campaign for essential medicines, this has driven "prices for the most-affordable drug combination down by more than 99 percent over the last decade."

That India can provide essential medicines at this price explains the fact that at least half of Africa’s five million AIDS patients already undergoing treatment use Indian-made generic drugs, says to Dr. Hans Hogerzeil, who heads the World Health Organization's essential medicines and pharmaceutical policies department.

The millions who comprise this demographic stand to loose the most, as the "data exclusivity" provision of the FTA could make cheap generics significantly less accessible. It appears that this provision will effectively copyright data collected during clinical trials in a drug’s originator country, according to the Al Jazeera article. If this occurs, Indian generic drug manufacturers will be forced to choose one of two options to gain approval for marketing their generic version of a drug: Either wait for up to 10 years until the period of exclusivity ends, or re-conduct already-completed trials. Both options would likely hike up the prices and delay the market entry of essential medicines.

The European Commission (EC) says the purpose of this clause is to protect the intellectual property rights of the patent-holding pharmaceutical companies (mostly Western and transnational). Given that the clinical trials are so costly and long-lasting, this motive is logical. But according to Al Jazeera, members of the medical community suspect that in fact, the data exclusivity clause is a masked effort to buffer the profits of these companies from the competition India’s generics industry introduces.

The EC has yet to formally release the fine print, though the FTA is expected to be finalized by the end of 2010 or early 2011, according to Intellectual Property Watch, an independent news service which focuses on intellectual property policies. The Commission is steadfast (if vague) in its claims that these agreements will not adversely affect the Indian generic drug industry:

The EU fully acknowledges India's right and capacity to manufacture and export life-saving medicines to other developing countries facing public health problems. The [intellectual property rights] provisions proposed in the EU-India FTA are not intended to weaken this.

Only when the FTA is finalized will its full impact on India's generics industry be felt, and will it become clear whether or not India will be able to maintain its vital position as the "pharmacy of the developing world."

Entrepreneurs like this New York City business owner drive job creation. Photo: Franklin Abreu (flickr)

Would easing visa requirements for immigrant entrepreneurs give the U.S. economy a much-needed boost?

A recent Wall Street Journal opinion piece suggests it might. Immigrants are almost 30 percent more likely to start a business than non-immigrants, explains the article, and new businesses account for the most jobs added to the economy every year.

“For years, academics have noted the connection between immigration, entrepreneurship, and job creation,” explains a recent Slate article. The article cites a recent report by the National Foundation for American Policy that estimates 10,000 entrepreneur visas could create 100,000 jobs.

Right now the requirements for getting an investor visa make it nearly impossible for most immigrants who want to start a business, argues the Wall Street Journal article.

The U.S. created an immigrant investor visa category (EB-5) in 1990, but steep minimum capital requirements put it out of reach for most potential recipients. The average start-up company in the U.S. begins with about $31,000. Yet to become eligible for an EB-5 visa, an individual must invest at least $500,000. It's no wonder that fewer than 3,700 people received EB-5 visas last year—including spouses and children—and most of them went to immigrant investors looking to expand existing U.S. ventures, not create new businesses.

Senators John Kerry and Richard Lugar have introduced legislation that proposes issuing a conditional green card for anyone who receives at least $250,000 from a U.S. venture capitalist, and extending permanent residence if the business does well. But The Wall Street Journal article suggests that these changes would still falls short, given that the average start-up cost to businesses are much lower than this plan outlines.

"The U.S. would do better to discard capital requirements and welcome any foreign national who can present a business plan that passes muster with the Small Business Administration," said Stuart Anderson of the National Foundation for American Policy, tells the Wall Street Journal article. "As with the EB-5 visa, the individual would receive a green card only if the business created a certain number of jobs for U.S. workers within a set period of time."

Let's hope politicians heed this advice — the economy could certainly use the jobs.

Lake Clark is a spawning destination for a portion of the largest wild sockeye salmon run in the world. Photo: NPCA Photos (Flickr)

Within Alaska’s Bristol Bay watershed lies the world's largest sockeye salmon runs — and one of North America's largest chinook (also known as king) salmon runs — nine major rivers, many ponds, and an abundance of animals. But plans to build a massive Pebble Mine could put the biodiversity of this 40,000 square mile watershed at risk, according to a recent report by National Geographic.

Bristol Bay watershed is also home to the largest deposit of gold in the world and one of the largest of copper. It's also the proposed location for the Pebble Mine. The mine would range up to two miles wide and 1,700 feet deep, with plans for an underground mine of similar scale. The minerals would be extracted by both open-pit mining and a complicated underground method. In addition the mine will require a mill, damlike impoundments, a slurry pipe, and a haul road. The article points out that likely acidic runoff from the mine would be disastrous for fish. "When a sulfur-bearing ore such as the Pebble deposit is exposed to air and water, it produces sulfuric acid, which accelerates the dissolution of copper and other minerals. The resultant metal-laden, acidic cocktail can kill fish and other organisms."

The indigenous Yupik have depended on the flora and fauna in the region for thousands of years. Some area residents worry about the long-term effects the mine will have on the natural environment and those who rely on it. National Geographic reports that "[t]wo elders, believe the threat the Pebble Mine poses to the creeks, rivers, and lakes where salmon spawn also endangers the culture the fish have sustained for centuries.”

But, other residents are singing to a different tune. Lisa Reimers, who heads the Iliamna Development Corporation, is concerned for other reasons. "Outsiders want us to go back to the old ways," she tells National Geographic, adding that "some mine opponents promote a self-serving, sentimental view that ignores what it actually takes to survive."

John Shively, CEO of the Pebble Partnership and once commissioner of the Department of Natural Resources says, "The mine would provide some 2,000 construction jobs and 800 to 1,000 operating jobs." And he hopes to see half of the operating positions go to people living around Bristol Bay. Shively reiterated to National Geographic that "the design of the mine is more environmentally sensitive then ever before."

There is no doubt the Pebble Mine could bring economic fervor to Bristol Bay. But, the gold and copper won't last forever, as the article points out. "The value of this mother lode ranges between $100 billion and $500 billion. But unlike the value of the salmon fishery year in and year out—upwards of $120 million—once these geologic riches are gone, they will never come back."

As plans for the area develop, area residents are faced with one of the toughest and most consequential decisions they will ever be forced to make.

Students in South Africa learn how to use smartphones. Photo: DI GameWorks (flickr)

The internet revolution in Africa will not be televised, but it will most likely be tweeted from a mobile device.

In fact, more young people in developing countries access the internet via mobile devices than in developed ones, explain Opera Software developers in a World News Heard Now article.

About 5.81 percent of total web browsing in Africa is done on mobile devices, compared to 4.7 percent in North America, according to figures cited by The Independent. And depending on the country, the percentage can be much higher. The Independent cites the example of Chad, where about 29 percent of all web browsing is sourced to mobile devices.

Telcom experts are expecting enormous growth in continent-wide internet access.
CEO Brian Herlihy of the African broadband company SEACOM told the Christian Science Monitor that total internet access in Africa tops out at about 15 percent -- a figure he expects to grow by 50 percent each year. And he expects IT spending to go up -- tripling to $150 billion by some estimates -- as telecoms, phonemakers and service operators wage price wars.

Whether its being texted or tweeted, the revolution has begun.

Microfinance groups like these in India are facing intense scrutiny. Photo:lecercle (flickr)

Despite long being hailed as a key player in resolving global poverty, microfinance has faced intense criticism in the past few weeks. Much of this criticism is coming from India, a country that has long been seen as a microfinance success story.

According to the Wall Street Journal, Indian policy makers who once endorsed these small scale lending programs are now encouraging people not to pay back their loans, even when they have the money to do so. Lawmakers in India are linking microfinance institutions (MFI's) to harassment cases and even a recent string of suicides by borrowers unable to repay their climbing debts. Many of the problems facing the institution come from lack of regulation— allowing borrowers to take out an unlimited number of loans with skyrocketing interest rates, sometimes as high as 100 percent the cost of the loan itself.

Often people find themselves in a debt cycle wherein they must take out loans as means to pay back previous loans. Microlending doesn't require financial counseling, which means that people often don't have the information they need to make financially sound decisions.“When you take the loan they say, ‘Don’t worry, it is easy to pay back,’" a 38-year-old farmer currently stuck in a debt cycle told the Times. She now owes five times the cost of her original loan and doesn't have the income to pay it back.

One of the biggest problems is that microfinance has grown from a non-profit to a for-profit industry. While not inherently problematic, this shift brought with it some major changes.The industry has attempted to grow too fast, says the Times, causing lenders to approve loans in cases where they perhaps should have turned them down. “They were more concerned about growth — not growth of the livelihoods and economic status of the clients, but only the institutions’ growth,” Ela Bhatt, one of India's leading social workers, told NYT reporters. Without proper regulations, some lenders were not even asking for borrowers' income before approving loans.

In response to the criticism facing them, microcredit and microlending institutes do seem willing to adjust. Many are working on establishing a plan to help borrowers struggling to make repayments. Lenders are also looking at capping their interest rates at 24 percent, but are asking for time and patience as they struggle to shift policies in light of recent problems. Whether MFI's can shift toward stronger regulations is undeniable. The question that remains is whether microlending will be able to remain a solution to, rather than an obstacle for, rural poverty.

In a place ravaged by years of war, there is something new taking place: Afghan youth propelled by a deck on four wheels and armed with an abundance of self confidence and a new pair of skate shoes.

Skateistan is a co-ed skateboard school and the group behind Kabul's first skatepark, says the school's founder, Sharna Nolan. The school engages growing numbers of urban and internally-displaced youth in Afghanistan through skateboarding, and provides them with new opportunities in cross-cultural interaction, education, and personal empowerment, according to their website. The main objective of Skateistan is to build the confidence of Afghan kids and to give them a voice, as Nolan explains in the video below. It's been amazing for Nolan to watch these youth become empowered through skateboarding.

There's nothing like watching an Afghan woman roll down a ramp for the first time and she has achieved something she never thought she would.

SKATEISTAN: TO LIVE AND SKATE KABUL from Diesel New Voices on Vimeo.

What do you get when you combine 120,000 data points measuring 200 years of income and life expectancy data for 200 countries with the creative genius of global health expert Hans Rosling? This. Watch.

At present, there are almost 7 billion people on the planet. By 2050, the UN estimates that there could be over 9 billion. How are we going to feed all these people? Simple. Take advantage of the most plentiful food on the planet — insects! In this delightfully amusing TED talk, Marcel Dicke says that munching on tasty, low-calorie bugs could be an environmentally sustainable source of food. Hungry yet?

In the early 1990s Saddam Hussein drained what biblical scholars believe to be the Garden of Eden. With the water went the people, known as the Ma’dan, and their way of life. Now, Iraqi-American hydraulic engineer Dr. Azzam Alwash and his organization Nature Iraq, are working with the Ma’dan to restore the marshes of southern Iraq, in a project Alwash calls “Eden Again." He hopes the exiled people will come back as water and wildlife return to what had been turned into a desert, according to a segment on the PBS show, Nature.

For thousands of years the Ma’dan called the marshes home. They lived on floating islands made of reeds that grew in the marshes. They caught fish, hunted birds, and kept water buffalo, says an article from Spiegel Online. Without water this life wasn’t possible and the Ma’dan people either migrated to the city or suffered in poverty.

Alwash returned to the marshes in 2003 after Hussein fled from power. He found that those that had remained in the area had already begun to dig through the man-made embankments that diverted the Tigris and Euphrates Rivers away from the marshes, he explained in a recent NPR interview. Flash forward seven years and the Ma’dan have destroyed up to 98 percent of the embankments, Alwash tells the Guardian. Their motivations more economic, than anything else.

Not because they are tree-huggers or bird-lovers, but because it's a source of economic income to them, because they can harvest reeds and sell them. They can fish and feed a family or sell them to earn extra income.

Hundreds of thousands of Ma’dan people who have been living in urban exile are now used to many aspects of modern life, Alwash explains in another article in the Guardian. They’ve become familiar with electricity, television, air-conditioning and wifi. But Alwash sees no reason why comforts such as these can’t be incorporated into the traditional Ma’dan way of life. Once services are in place Alwash anticipates a flood of “reverse migration.”

Right now, the biggest stressors to the marshes are ongoing drought and hydro-dams in Iraq's northern neighbor, Turkey. In the NPR interview Alwash explains that the drought has reduced the marshes to about 35 percent of their former size. But Alwash is confident that 75 percent of the marshes can be restored despite the drought and dams in Turkey.

When Saddam Hussein drained the marshes in the early 1990s he attempted to turn a paradise into a desert and wipe one of the oldest civilizations on earth off the face of the earth itself. He nearly succeeded. But with the help of Dr. Azzam Alwash and Nature Iraq, the Ma’dan have proved the resilient force that nature and humanity are, as a desert becomes Eden again.

Iraqi photographer Sate Al Abbasi's beautiful shots of Ma'dan people at home in the marshes can be viewed in the slideshow below.