Micro-loans – the bestseller among development tools is under fire
“Microfinance, not a quick escape from poverty, studies show” – When I came across this article published recently in various media talking about the limited effect of micro-loans, I got angry – and at the same time I was more than surprised that we really need to do scientific studies to find out these results and publish them as ‘big’ news: “There is now evidence that the average person who takes a microloan does not see much change at all”. Wow, that’s really an unexpected outcome.
I wondered if during all these years when micro-loans where given (by the way more than 25 years) we really did not realize that micro-loans are not not the all-in-one remedy. Did we need really modern studies to understand this? To understand that micro-loans are not the all-in-one solution against poverty … ? How blind are we?
Where we are or better where have we been all the time with our thoughts, activities and intelligence to believe that a one-in-all development activity can really solve holistic problems? Have we never realized that poverty has a lot of causes and has to do also with education, nutrition, healthcare access, cultural effects, demographics, migrations to the big cities, missing infrastructures and many more big issues? Did we never realize that microloans – be it offered to individuals, be it community-based loans – are not enough to end poverty, but just a part in the fight against poverty?
Don’t get me wrong. Microfinance and micro-loans can lead to change. It can support poor people to cover some needs and to learn about financial dependencies. To develop also personal and community roles and rules. But:
The business instinct is always stronger
With the idea of microfinance, microcredits, micro-loans and micro insurances came also the business instinct and many players used it to promote themselves. Which is ok. Everyone wants to get a win in what he/she does. But it is ok, unless we do not stop to add more effort to make poverty end. If we really want to fight poverty. It is ok unless we do not use the ‘wonder of micro-loans’ as the bestseller against poverty. Unless we do really try to fight poverty. An attitude which, definetly, often gets lost. It is not about them, the poor, it is too often about us.
So, it is the bestseller attitude that drives me angry. We have been using development ideas and support tools again to promote ourselves and get the best out of it – and now studies are conducted to find out…
This is the real pity and a poverty of minds (of those who feel as developers) we should start fighting against.
Microfinance not a quick escape from poverty