Posted on October 28, 2009 - by boris

Micro loans cause trouble…

For years, micro loans have been promoted by everyone from Nicholas Kristof  to Oprah Winfrey  as a great way to help women in developing nations pull themselves out of poverty. The idea is simple: lend women a small amount of money to start businesses, thereby empowering them, their families, and ultimately their communities.

Yet as it grows from a small, foundation-based practice to a full-fledged industry, micro loans are under new scrutiny. Some commentators are skeptical that for-profit microfinance institutions can preserve their mission of helping the world’s poorest women get ahead. Moreover, some say that the loans themselves cause trouble, as the sudden influx of money inadvertently puts women in danger. Here are three of their biggest concerns:

The Business Is Too Big: Non-profit microfinance organizations have morphed into mega-corporations like India’s SKS, and Forbes’s Shloka Nath worries that they have forsaken their original purpose in search of a profit.

Loans Make Women Targets: At The Daily Beast, Gayle Tzemach Lemmon says female recipients of micro loans in Afghanistan are being abducted and threatened by “thugs” who want their money.

Too Corporate to Do Any Good: At Reuters, economic blogger Felix Salmon says microfinance isn’t ready to become a corporate, for-profit industry.

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Source: http://www.theatlanticwire.com/opinions/view/opinion/Macro-Problems-With-Micro-Loans-1368