Yes, Microfinance Does Work. Here’s How…

Friday, May 25, 2012

By now, anyone with an interest in microfinance or poverty alleviation has read the criticism. There are tragic crises in Andhra Pradesh, the regrettable stepping-down of Muhammad Yunus from Grameen, and provocative headlines in the media claiming to refute microcredit’s effectiveness. However, I feel strongly that if readers listen only to the white noise, they’ll do themselves and the microfinance industry a disservice and, more to the point, they’ll be misled.

It’s true that a few microfinance institutions and microlenders have behaved irresponsibly and, at times, negligently, locking already-vulnerable people into a cycle of financial dependency and over-indebtedness. But I strongly urge you not to paint all MFIs with the same brush. Most nonprofit organizations, including Opportunity International, are committed to using microfinance — microcredit in combination with a diverse portfolio of financial tools tailored to people at the base of the economic pyramid — to alleviate global poverty and build permanent financial independence. These organizations do not ignore their clients’ tenuous financial situations or trap them into a cycle of dependency that makes any economic advance unsustainable without the organization’s ongoing help. Opportunity International offers a long-term approach to microfinance that avoids over-indebtedness, and provides financial training and education, as well as safe places for clients to save and earn interest on their savings. We’re committed to sustainability, not profitability. Our clients are able to build viable businesses that grow, employ their neighbors, and strengthen their communities. In addition, 93 percent of our clients are women. Though both our male and our female clients are hardworking and responsible, we know that when women earn an income they contribute more to the nutrition, education and welfare of their children, improving life for the next generation of a community. This is not just talk; these are real results that Opportunity and other organizations have found. Here’s how we do it…

Source: Huffington Post (link opens in a new window)

microfinance, poverty alleviation