This post was written by Liz Blase from Wokai HQ in San Francisco
Milton Bateman, in his new book ‘Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism’ － posits several critiques of microfinance and the impact that it has had over the last 30-40 years:
“[Microfinance] provides scarce financial support to tiny businesses that don’t have a chance at getting bigger or making a difference.”
“The microfinance industry thinks there is a quick fix to development through tiny businesses, and I think that is fundamentally wrong. Sustainable development costs money and it takes time.”
“The problem with microfinance is that as much as 90%-95% of microenterprises fail over five years, and of the ones that succeed, very few become large enough to sustain a larger development agenda. We are simply not creating the businesses of tomorrow.”
We very much appreciate the critique of Bateman—open discussion about impact and methodology is critical to progress and advancement in every industry. Particularly in microfinance, such a call to action for our industry to articulate its standards of success is notable. The still nascent microfinance field has few such benchmarks at this point in its history.
However, based on our experience in the China microfinance sector, we disagree with Bateman in several of his points regarding the short and long term impacts of microfinance and want to make known the positive effects of this emerging industry in China.
Bateman’s points of view and strong call to action for the microfinance community, of which we are a member, are noteworthy and laudable in their articulation, however we must disagree with the disparagement of the short and long term effects of microfinance in the context with which we are most familiar: China. Wokai works with two field partners in rural China to redistribute contributions from individuals all around the world to entrepreneurs in Inner Mongolia and Sichuan in loans of around $500.
Microfinance is a young sector globally (particularly young in China); yet, in our experience, these questions of impact, accountability and efficiency are not without positive answers. The track record of Wokai’s borrowers shows that microfinance has had extremely positive effects—monetarily and socially—in both the long and short term.
…continued at http://wokai.org/blog/2170/
