The misleading metrics of microcredit Microcredit, often viewed
as vital for low-income groups, is experiencing financial and
social sustainability problems. Is the preference for and
dominance of financial metrics over social metrics eroding
instead of underpinning the sustainability of the industry?
Microcredit – the distribution of small loans to low-income
sections of society — is one of the more fashionable tools to
appear on the international development scene in recent years.
It featured in the G8 summit, Toronto 2004; and 2005 was even
the ‘Year of Microcredit’. But microcredit is currently in the
news for all the wrong reasons. Muhammad Yunus, Nobel Peace
Prize winner and founder of Grameen Bank, is alleged to have
made unauthorised transfers of donor funds. In Andhra Pradesh,
India, borrowers are refusing to repay their loans; others are
reportedly committing suicide due to an inability to repay;
while microfinance institutions (MFIs) are being accused of
unethical practices. Although existing blogs