David Korten: Microcredit: The Good, the Bad, and the Ugly

[marmar]

from YES! Magazine:




Microcredit: 
The Good, the Bad, and the Ugly
Unraveling the confusion behind microcredit: how some models help alleviate poverty, while others exploit the poor to make the rich richer.

by David Korten
posted Jan 19, 2011


For more than twenty years, microcredit has been widely heralded as the remedy for world poverty. Recent news stories, however, have sullied microcredit’s glowing reputation with reports on scandals, exorbitant compensation to managers, skyrocketing interest rates, and aggressive marketing schemes.

Once praised as a universal panacea, microlenders are now being widely attacked as predatory loan sharks. In December 2010, Sheik Hasina Wazed, the prime minister of Bangladesh and former microcredit advocate, accused microcredit programs of “sucking blood from the poor in the name of poverty alleviation.”

What happened?

It turns out there are two very different models of microcredit. As Muhammad Yunus, winner of the 2006 Nobel Prize, pointed out in his January 15, 2011 New York Times op-ed, one type of microcredit program is designed to serve the poor; another to maximize financial returns to program managers and Wall Street investors. ...........(more)

The complete piece is at: http://www.yesmagazine.org/blogs/david-korten/microcredit-the-good-the-bad-and-the-ugly

[OneGrassRoot]

1. Excellent info. Thanks. K&R :) n/t

[bemildred]

2. I always thought that was a stupid idea, and meant to make a profit somehow.

If you want to help the poor, YOU GIVE THEM MONEY, you don't give them debt.

[groovedaddy]

4. In any of these models, there is debt involved. It's the interest that's charged that makes the

difference. The Grameen Bank does charge interest but it's very, very low. Then there are the bloodsuckers!

[niyad]

3. k and r--thank you for this info