NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, November 19, 2013

After apartheid ended in South Africa in 1994, the international development community quickly arrived with plans to promote the microcredit model. Proclaiming that it would rapidly bring new jobs, incomes, empowerment and dignity to the poorest black communities and townships, expectations of rapid progress ran high.

However, the microcredit medicine applied to post-apartheid South Africa has turned out to be a deadly one. It is now increasingly clear that the much-lauded market-driven microcredit model has inflicted untold damage on the South African economy and society. Concerned investors are rapidly leaving the bloated microcredit sector, with many users arguing that it is on the verge of a self-orchestrated collapse.