Critiques of Microcredit: Difference between revisions
New page: ---- == Microcredit Movement: The Downside == The microcredit movement has been successful in reaching out loans to millions of poor people worldwide and directly helping in the allevia... |
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== Microcredit Movement: The Downside == | '''== Microcredit Movement: The Downside ==''' | ||
The microcredit movement has been successful in reaching out loans to millions of poor people worldwide and directly helping in the alleviation of poverty to some extent. According to Newsweek, April 9, 2007 issue article titled "The microcredit backlash," so far about 500 million poor worldwide have reportedly benefitted form some $6 billion in microloans and is expected by aficionados to increase up to $300 billions. The United Nations declared the year 2005 as the year of microcredit and last year Muhammad Yunus, the founder of Grameen Bank received the Nobel Peace prize. Yunus predicts that " one day, our grandchildren will go to museums to see what poverty was like." | The microcredit movement has been successful in reaching out loans to millions of poor people worldwide and directly helping in the alleviation of poverty to some extent. According to Newsweek, April 9, 2007 issue article titled "The microcredit backlash," so far about 500 million poor worldwide have reportedly benefitted form some $6 billion in microloans and is expected by aficionados to increase up to $300 billions. The United Nations declared the year 2005 as the year of microcredit and last year Muhammad Yunus, the founder of Grameen Bank received the Nobel Peace prize. Yunus predicts that " one day, our grandchildren will go to museums to see what poverty was like." | ||
However, as some critics have observed, microcredit is far from being a succesful | However, as some critics have observed, microcredit is far from being a succesful instrument to eradicate world poverty. | ||
'''Sustainibility:-''' | |||
In Guatemela, it is estimated that only 300 out of nearly 25,000 microlenders have reached financial sustainibility. | |||
'''Poverty lending: a bad social policy, a bad development and a bad business:-''' | |||
Thomas Dichter, an international aid expert who spent decades working with microfinance concludes that while some borrowers never get off the debt treadmill others use their credit on consumer goods.So microcredit rarely serves the poor. | |||
Small credit is not a tool for the underclass to leverage its way out of want through enterprise. Skeptics say that most small business get started not from small amount of money borrowed from the bank but through personal savings and raising cash among family and friends. Richard Posner, a US circuit court judge and economic historian is unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit. Alex Counts, director of the Grameen Foundation, which is incharge of replicating the Bangladesh based Grameen Bank around the world, reports that only a tenth of the world's 7 million clients are true entrepreneurs who started out by borrowing $100 are now borrowing $10,000 to $20,000 whereas the rest are just making their ends meet. He says," In developing countries, where there are few jobs and no safety nets, your alternatives are to work for yourself or starve," "Not everyone is an entrepeneur but everyone is a survivor." | |||
Revision as of 05:06, 16 April 2007
== Microcredit Movement: The Downside ==
The microcredit movement has been successful in reaching out loans to millions of poor people worldwide and directly helping in the alleviation of poverty to some extent. According to Newsweek, April 9, 2007 issue article titled "The microcredit backlash," so far about 500 million poor worldwide have reportedly benefitted form some $6 billion in microloans and is expected by aficionados to increase up to $300 billions. The United Nations declared the year 2005 as the year of microcredit and last year Muhammad Yunus, the founder of Grameen Bank received the Nobel Peace prize. Yunus predicts that " one day, our grandchildren will go to museums to see what poverty was like."
However, as some critics have observed, microcredit is far from being a succesful instrument to eradicate world poverty.
Sustainibility:- In Guatemela, it is estimated that only 300 out of nearly 25,000 microlenders have reached financial sustainibility.
Poverty lending: a bad social policy, a bad development and a bad business:- Thomas Dichter, an international aid expert who spent decades working with microfinance concludes that while some borrowers never get off the debt treadmill others use their credit on consumer goods.So microcredit rarely serves the poor.
Small credit is not a tool for the underclass to leverage its way out of want through enterprise. Skeptics say that most small business get started not from small amount of money borrowed from the bank but through personal savings and raising cash among family and friends. Richard Posner, a US circuit court judge and economic historian is unaware of any historical examples of nations that climbed out of poverty on the backs of small entrepreneurs financed by credit. Alex Counts, director of the Grameen Foundation, which is incharge of replicating the Bangladesh based Grameen Bank around the world, reports that only a tenth of the world's 7 million clients are true entrepreneurs who started out by borrowing $100 are now borrowing $10,000 to $20,000 whereas the rest are just making their ends meet. He says," In developing countries, where there are few jobs and no safety nets, your alternatives are to work for yourself or starve," "Not everyone is an entrepeneur but everyone is a survivor."
