Does Microfinance Work?

Think Again: Microfinance – By David Roodman | Foreign Policy – Interesting article about the attractive notion today of microfinance as the antidote to poverty. These kinds of “reality checks” are important in such industries to discourage some of MF’s most avid supporters from getting carried away in the idea itself (and not in its results). Moreover, when they provide an objective validation of how such efforts are ultimately worth it, even when the idealism is stripped away, it adds more strength to proponents’ arguments.

As for a veritable debate… and a much more heated criticism vs. defense of microfinance, read the Center for Financial Inclusion‘s coverage of the Jan 30th Roodman-Bateman debate (or, better yet, watch the rather dramatic webinar recording).

MF critic Milford Bateman argues the necessity to shift resources initially piled into (the arguable failure of) microcredit instead towards investment in related, but fundamentally different, economic development tools such as credit unions and state development banks. For an example of the latter topic in practice, see this article on state bank BNDES’s contribution to Brazil’s economic development.

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One thought on “Does Microfinance Work?

  1. On a related note, this should be interesting… infoDev to Pilot Session on ICT in Post-Conflict Situations at ICTD 2012 http://www.infodev.org/en/Article.788.html “infoDev’s session will report on the earliest findings from a series of case studies that it had commissioned on the topic of ICT for Post-Conflict Reconstruction… [infoDev] aims to raise awareness for the potential of ICTs in the aftermath of conflicts and crises, as well as to identify the opportunities they provide for quicker poverty reduction and empowerment.”

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