A Critique of Microfinance
Here at Gumball Capital, we are gung-ho about microfinance and its power to alleviate poverty. We talk about it incessantly on our website, in person and promote it through the Gumball Challenge. However, we are always looking to learn more about our favorite subject.
In the Stanford Social Innovation Review (SSIR), I found an article called Microfinance Misses its Mark that had a less than sunny look at micro-lending. The author argues that microfinance is not a silver bullet to fighting poverty. While financial services are beneficial to the poor, it seems that people living above the poverty line benefit more from microfinance than the truly desolate.
The article argues that capital would be better placed in growing larger enterprises that can provide more stable employment for the poor and asks governments to live up to their responsibility to provide basic services like education and running water.
Of course they’re right, but that doesn’t take away from the fact that microfinance both empowers individuals and captures the attention of the public as a positive way to support the developing world. Check out the article here – http://www.ssireview.org/articles/entry/microfinance_misses_its_mark/
