Advice for Paul Wolfowitz

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There's no shortage of advice for new World Bank President Paul Wolfowitz, who began work today. A symposium at Foreign Policy has the advantage of being brief.

Jacques Attali, one of the contributors, likes microfinance:

Clearly recognized today as the only efficient way to fight poverty, microfinancing provides poor people with badly needed access to credit. Typically, poor people have no property and, hence, no collateral. Without collateral, they have no means to secure a loan. So the entrepreneurial ability and ambition of poor people is blocked by their lack of access to credit. Microfinancing unleashes that entrepreneurial ambition by offering small loans—normally in the hundreds of dollars—as start-up capital at normal interest rates.

Hard to object too strongly to providing capital to those who need it, but of course poor people often do have property. What they lack is:
a) Formal title;
b) Efficient ways to transfer that title, so that once property title is formalised it stays formalised;
c) Effective collateral laws to allow property to be used to secure a loan.

No complaints about microfinance, but it is not the only way to get credit to the poor - let's see collateral reform too.

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