Microfinance searches its soul

The microfinance model is evolving rapidly and needs regulation, but it must not lose sight of its original purpose of helping the poor, insist industry leaders.
Microfinance has to strike a balance between helping the poor and being a business that aims to make sky-high returns
Microfinance has to strike a balance between helping the poor and being a business that aims to make sky-high returns

The microfinance industry has been under siege recently.  Earlier this year, Muhammad Yunus, founder of Grameen Bank in Bangladesh and recipient of the Noble Peace Prize in 2006, was ejected from the bank’s leadership as part of what has been portrayed as a long-standing feud with the country’s prime minister Sheikh Hasina Wajed.

A Norwegian documentary accused Grameen, the prototype for other micro lenders, of alleged business irregularities during the 1990s, specifically of shifting funds provided by a Norwegian aid agency from one legal entity to another for tax purposes.

More generally the industry has been criticised for usurious lending, encouraging over-indebtedness through multi-loans and...

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