MICROCAPITAL STORY: Bill Gates Cites Microfinance as He Urges Businesses to Help the Poor

Ina Fried of CNET reports that Microsoft chairman Bill Gates gave two speeches in Miami on April 4, in which he promoted the importance of businesses being involved in serving the poor and participating in partnerships with the government and non-governmental organizations (NGOs).

In remarks to the Government Leaders Forum (transcript), Gates stressed the role of microfinance as a model of “creative capitalism.” This means that businesses see their mission as more than merely responding to market demand — over and on top of this, they seek to fulfill the ever-persistent need to help the poor. In this framework, microfinance is “creative capitalism” practiced by financial institutions. Besides microfinance, other examples could include the food industry developing micronutrients or drug companies focusing on treatment of diseases prevalent among the poor.

Additionally, Gates said about microfinance that “the idea of how they create loans for the poorest is part of it,” but that there should be an emphasis on making savings and insurance products available to them as well.

He added that new technologies need to be continuously introduced into the sector to help lower transaction costs and, as a result, interest rates.

Earlier in the day, Gates was at the Inter-American Development Bank (IDB), a multilateral development bank, discussing with officials the importance of strategic partnerships between governments, NGOs, and corporations. He also was optimistic in the face of skepticism expressed by some business leaders regarding his “creative capitalism” concept.

“As we have examples of success, we can overcome that [skepticism],” Gates said.

MicroCapital has reported on the activities of the software magnate’s Bill and Melinda Gates Foundation on numerous occasions, including a USD 34 million grant to International Labour Organization last December; the naming of its microfinance head last April; and a USD 15.4 million grant to Opportunity International, a USD 24 million grant to the Consultative Group to Assist the Poor, and USD 29 million in grants and loans to ProCredit microfinance banks last February.

By Stephen Son

Additional Resources:

CNET: “Gates: Businesses need to embrace the poor”

Microsoft: Bill Gates: Government Leaders Forum Americas 2008

MicroCapital.org article, December 17, 2007: “The Gates Foundation Makes USD 34 Million Grant to the International Labour Organization to Set Up Microinsurance Initiative”

MicroCapital.org article, April 13, 2007: “Gates Foundation Names Robert Peck Christen of the Boulder Institute of Microfinance as Head of Microfinance Team”

MicroCapital.org article, February 22, 2007: “The Gates Foundation distributes 15.4 million to Opportunity International”

MicroCapital.org article, February 6, 2007: “The Gates Foundation Accelerates by Lending and Giving $29 Million to ProCredit Microfinance Banks in Angola, Democratic Republic of Congo (DRC), Ghana, Mozambique, and Sierra Leone”

MicroCapital.org article, February 1, 2007: “Gates Foundation Grants USD 24mn Over 5 Years to Consultative Group to Assist the Poor (CGAP) to Promote Microfinance Technology”