Microfinance misses its mark

Marion sent me this:
I knew I had read something about the warm and fuzzy feeling people get about supporting microfinancing and how it may not be the silver bullet claimed.  This wasn’t the exact article but is interesting…..
Excerpt:

Microcredit is the newest silver bullet for alleviating poverty. Wealthy philanthropists such as financier George Soros and eBay co-founder Pierre Omidyar are pledging hundreds of millions of dollars to the microcredit movement. Global commercial banks, such as Citigroup Inc. and Deutsche Bank AG, are establishing microfinance funds. Even people with just a few dollars to spare are going to microcredit Web sites and, with a click of the mouse, lending money to rice farmers in Ecuador and auto mechanics in Togo.

Wealthy philanthropists, banks, and online donors aren’t the only ones fascinated with microcredit. The United Nations designated 2005 as the International Year of Microcredit, explaining on its Web site that microentrepreneurs can use their small loans to “grow thriving business and, in turn, provide for their families, leading to strong and flourishing local economies.” The Nobel Committee awarded the 2006 Nobel Peace Prize to Muhammad Yunus and Grameen Bank, declaring that microcredit is “an ever more important instrument in the fight against poverty.”

2 thoughts on “Microfinance misses its mark”

  1. Missing messing in with you on Mondays…… and not likely to be able to again for many months….. but wanted to add a reminder that the ‘Guarantee’ Form of Banking, initiated by Grameen, https://en.wikipedia.org/wiki/Grameen_Bank, as an alternative to Collateral Based Lending ; i.e. originally 10 or 50 folks signed a guarantee to pay back a loan from Grameen himself, was and in many cases is still the only way someone with no assets can buy a cow or chickens etc. in order to go into business. The records of the testimonies at first NGO Forum for Women, in Beijing, which I attended in 1995, still ring in my thrilled capitalist head. Corruptions and distortions of this original innovation in a banking system do need to be dealt with, but shouldn’t overshadow that primary ‘enabler’.

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