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Why Doesn't Microfinance Work?

working in microfinance

The Destructive Rise of Local Neoliberalism

Since its emergence in the 1970s, microfinance has risen to become one of the most high-profile policies to address poverty in developing and transition countries. It is beloved of rock stars, movie stars, royalty, high-profile politicians and ‘troubleshooting’ economists. In this provocative and controversial analysis, Milford Bateman reveals that microfinance doesn’t actually work. In fact, the case for it has been largely built on hype, on egregious half-truths and – latterly – on the Wall Street-style greed of those promoting and working in microfinance. Using a multitude of case studies, from India to Cambodia, Bolivia to Uganda, Serbia to Mexico, Bateman demonstrates that microfi nance actually constitutes a major barrier to sustainable economic and social development, and thus also to sustainable poverty reduction. As developing and transition countries attempt to repair the devastation wrought by the global financial crisis, Why Doesn’t Microfinance Work? argues forcefully that the role of microfinance in development policy urgently needs to be reconsidered.


'Microfinance has been so successfully hyped to the general public that people with no experience in development will ask me (upon finding out about my background in development): 'Oh, you must really be excited about microfinance?!' Instead of going into a 'long story,' I can now refer them to Milford Bateman's comprehensive survey and exposé of the microfinance business.

When so much of the finite aid resources are diverted into such feel-good programs with little, if any, developmental impact, then the whole fad becomes something of an anti-development trap. For some time, there has been fragmented evidence that microcredit is way over-hyped as an instrument of development, but Bateman pulls it all together and connects the microfinance fad with the underlying neoliberal themes of so much official development assistance. It's a timely, much-needed, and must-read book for anyone interested in the problems of development assistance.' - David Ellerman, author of 'Helping People Help Themselves: From the World Bank to an Alternative Philosophy of Development Assistance.'

'Microfinance has suffered too long from unthinking enthusiasm, but some negative views are beginning to make themselves heard. Bateman is the first, however, to examine microfinance critically and coherently as a whole, and to take a sceptical long term view of its social and economic effects. Few readers will agree with everything he writes, but anyone who has any connection with microfinance should read this book. It should make us all think more clearly about what we are doing.' - Malcolm Harper, Cranfield School of Management

'DO NOT READ THIS BOOK - if you wish to retain the myths attached to microfinance rather than enjoy and appreciate the best available scholarly, reasoned and readable critique.' - Ben Fine, SOAS

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