Has Microfinance’s Potential Been Overblown?

Since Muhammad Yunus received the Nobel Peace Prize for pioneering microfinance, which provides very small loans to poor people, the popularity of the practice has surged, with many commercial banks adopting it.

But that may not be entirely a good thing, writes Paul Caulfield on his blog about corporate-social responsibility.

During a recent public forum in Britain to discuss the new book, What’s Wrong with Microfinance?, Mr. Caulfield, who oversaw a microfinance program in Angola, found the lack of critical thinking about antipoverty efforts disturbing.

“It is as if MF [microfinance] is the silver bullet and we don’t have to think of a solution to the problem of poverty anymore. If she were here today, Marie Antoinette may well have said, ‘Let them have credit,’” he writes.

“I am left with the sad impression that the biggest thing wrong with microfinance is to voice any criticism of it,” he writes.

Has microfinance been overly hyped? Is the growing number of for-profit banks providing microloans a positive development for the world’s needy people? Click on the comments link below this post to share your thoughts.