Compartamos... again...

You know a story has "made it" when you see the leader in The Economist...

This week's edition of the liberal standard-bearer includes this editorial supporting Compartamos, with the key argument being that "by charging an interest rate that generates a profit, the bank can grow fast and provide many more 'micro-entrepreneurs' with the finance they need." Compartamos, of course, stands accused of making millions from its recent share listing while its impoverished loan customers groan under the weight of 80% annual interest rates.

Now many people far more qualified and experienced than I have dissected this issue properly - DefeatPoverty.com has a very thoughtful, balanced piece on the problem here. But I would like to highlight one question which arises from this particular story but which has very general implications; one which to my mind needs more research. Even if one accepts that Compartamos are fundamentally trying to do good, and not to fleece their impoverished customers to the benefit of rich shareholders, it still remains unclear whether The Economist's line of defence is really that robust. Is it honestly ok to charge such staggeringly high interest rates if the profits thus generated enable you to serve more of the poor?

On the one hand, given the huge scale of the task of financial inclusion and the still-limited money available, it seems obvious that generating profits to re-invest in expanding services is a good thing. But how much are the poor benefiting from "inclusion" if it comes with an 80% interest rate price tag?

Any research or data which might shed some light here would be very welcome.