micro-financing and ‘meso financing,’ not either or

Just listened to BBC World Service’s The Forum, where economist George Ayittey, if I am not mistaken, argues that what African small farmers need is not micro-financing but what he calls ‘meso financing.’ He advocates that rather than giving 1000 farmers $100 each, the $100,000 should instead be used to buy a truck to transport what the farmers produce to the market.

I have been thinking about this for a couple of years now, and I believe both micro and what professor Ayittey calls meso-financing are necessary in order to end poverty and build the middle class. By now it is clear that micro-financing has lifted many families out of poverty in the developing world, and it would be irresponsible to end it. At the same time, small loans in the amounts of $100 to $200 will not be enough to build a large middle class in an impoverished African country.

In addition to a free and good educational system (from elementary school to university level), a developing nation needs an affordable and accessible small business loan program in order to build a vibrant entrepreneurial class. Using professor Aittey’s example, a business man or woman should be able to borrow say $20,000 or $50,000 in order to buy a truck to transport farm produce to the market.  Or, in addition to lending the farmers $100 each to improve their output, why not also encourage them to create a coop and then lend the coop the amount of money needed to buy the truck?

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