Why microfinance fails

Jason Hickel, fellow at the London School of Economics, tells Stefania Palma, Asia editor of The Banker, what the limitations of microfinance are and why, contrary to popular belief, it can be ineffective, if not harmful.

[yashnigam]

Let’s be real, it’s because the people who micro finance targets are in no position to run a business, even a very simple one. The idea that a person from a third world village can keep track of balance sheets or income statements to know if their business is profitable is kind of ridiculous.

[ninesofreliability]

Education along with money will solve many failures

[teuvwyn]

Not only loaned money is not micro-financing. It's the lack of support, you have to give the proper support system and lack of utilization, then you will be able to impact the micro financing.

[MA-vwpl]

Banking can be a casino to the financially illiterate. They are guaranteed to lose. Microbanking is just a microcasino. Same results

[mustangmike]

In order to open a successful business you have first plan a good strategy and make a complete market study, and all that costs money, otherwise you will open a random business (coffee shop, pizza restaurant, grocery store) and never find a target customer. I learned that when I opened my travel agency (with no money and no planning) and after 1 year i had to close because there was no travelers (there was too much offer and to enough demand). Not everyone are business people and not all business are successful (probably just 20% are in the real world). What Poor people really need is a steady job and good education, not loans for opening an unsuccessful business.

[ConsZachy]

I like the thought on why it fails but I believed this was from the lenders side but seems more for the borrower. Where I live, microlenders are almost a last resort because of the "infinite interest rate".

[florianberger]

so how do you explain Grameen bank and it‘s many copies around the world? Have you even red Banker to the poor?

[ndenkuesson]

So what's the alternative for providing financial services to the poor?

Some economists suggest cash transfer s.

[yttean]

solving global poverty summaries in one phrase, solving the basic unfairness of global economy @ 7.50min. Also, why don't these researchers go and study how China solves the poverty problem, the problem is the Western ego.

[goldnutter]

How it is being talked about back then...

What I wanna ask about MF world.. how short a period can be borrowed for at some stupid APY that is actually such a small debt because seconds or subsecond ? is this specialized area in SWIFT gpi public info anywhere yet ? when is TMP and how do self sovereign types like me who spent all my retirement on assets thanks to AU giving it to us under the situation

[sohailalmani]

I'm worker of microfinance foundation in Pakistani
Any one job for my self in other countries