Instead of narrowly defining microfinance in terms of increasing access for the poorest, what about increasing access for all – including the middle class? Such a strategy would hopefully mobilize a powerful supporter in the fight for access. At least that is what Raghuram Rajan believes. He also preaches the importance of decreasing transaction costs, developing credit registries, eliminating burdensome regulations, improving consumer protection and increasing competition. This would in turn hopefully stimulate the pro-poor potential of for-profit private sector players. So rather than baby the microfinance industry, perhaps we should instead create the competitive incentives for it to scale-up and achieve sustainability?
Let's not kill the microfinance movement with kindness. If we want it to become more than a fad, a temporary cause for the glitterati, it has to follow the clear and unsentimental path of adding value and making money. On that path lies the possibility of a true, and large-scale, escape from poverty.
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