Microfinance or Debt Trap? What the Poor Don't Know
Date Written: 2018-02-26
Year Published: 2018
Resource Type: Article
Cx Number: CX22136
Qazi's article outlines how poorly designed microfinance initiatives harm rather than help low income borrowers.
Microfinance has come under increasing scrutiny in recent months. Stories of astronomical interest rates driving the poor deeper into poverty, compounded by tales of malicious moneylenders intimidating borrowers to the point of suicide, have recently come to light in the international press, exposing fundamental flaws in the design of institutional for-profit microfinance... While it can stabilise livelihoods, broaden choices, provide start-up funds for productive investment, help poor people to smooth consumption flows and send children to school, [microfinance] can also lead to indebtedness and increased exclusion unless programmes are well designed.