Mike On Purpose

Finding purpose in the twenty-first century

The dangers of microcredit

Posted by mikeonpurpose on December 31, 2010


I found an interesting article with the provocative title “Suicides in India Revealing How Men Made a Mess of Microcredit”.  It turns out that many impoverished recipients of microcredit loans in India have become so saddled with debt that they have been driven to kill themselves:

As India struggles to provide decent education, health care and jobs to millions still locked in poverty, microlending — the loaning of small sums to the world’s neediest people to help them earn a living — has taken a perverse turn.

Microcredit has become “Walmartized” by unrestrained selling of cheap products to the poor, says Malcolm Harper, chairman of ratings company Micro-Credit Ratings International Ltd. in Gurgaon, India.

“Selling debt is like selling drugs,” says Harper, 75, the author of more than 20 books on microfinance and other topics. “Selling debt to illiterate women in Andhra Pradesh, you’ve got to be a lot more responsible.”

When a charitable project becomes sullied by naked  profiteering, the results are, unfortunately, foreseeable, especially when such profiteering is directed at a society’s most vulnerable segment.

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