Microcredit was a hugely hyped solution to global poverty. What happened?

Friday, January 18, 2019

By Stephanie Wykstra

For a period of time from the 1980s to the early 2000s, “microloans” were all the rage in international development.

The idea was simple enough: By giving a very small loan to someone living in a poor country, you could help them expand a small business, which would lift their family out of poverty. When they pay back the loan, the money can be cycled to more borrowers, getting more families out of poverty.

Organizations offering microcredit to poor borrowers — many living on $2 or less per day — took off in those decades. Investors and donors poured money into microcredit, hundreds of organizations offered loans, and the number of borrowers worldwide skyrocketed to 211 million by 2013.

Photo courtesy of Peter Haden.

Source: Vox (link opens in a new window)

microfinance, poverty alleviation