Guest / Limited Access /

Microfinance may be falling victim to its own success. Since starting in the 1970s, microfinance—the practice of providing financial services, particularly small loans, to the world's poorest—has grown rapidly worldwide.

Today, experts estimate there are 665 million client accounts at more than 3,000 financial institutions. About 188 million of these accounts are in India, while 27 million accounts are in Africa. Microfinance organizations are likewise diverse, from the multibillion-dollar Grameen Bank of Bangladesh to Christian groups such as Opportunity International, based near Chicago, and Kiva.org, which matches lenders and borrowers with loans that average $382. Microlending, savings, and insurance programs have been the darling of overseas poverty-fighting agencies.

Now scandals threaten to tarnish the reputation of these programs across the board. In Andhra Pradesh, a southeastern Indian coastal state, officials say 85 borrowers killed themselves because they could not repay high-interest loans. Some of these borrowers were pressured and harassed by collection agents.

In addition, some microfinance founders are suspected of exploiting the poor for quick profit. Last year, SKS Microfinance Ltd., also based in India, raised $350 million by becoming a for-profit, publicly traded corporation. The move made a few SKS executives and early investors very wealthy, which critics say undermines the poverty-fighting purpose of such programs.

The microfinance industry has attracted larger institutions interested in a quick buck, says Susy Cheston, senior director at World Vision, which operates Vision Fund with more than 600,000 borrowers in 40 countries. Vision Fund mostly operates through non-governmental organizations, ...

Subscriber access only You have reached the end of this Article Preview

To continue reading, subscribe now. Subscribers have full digital access.

Read These NextSee Our Latest
RecommendedNancy Writebol: Ebola Is a Spiritual Battle
Subscriber Access Only Nancy Writebol: Ebola Is a Spiritual Battle
The missionary nurse who survived the deadly virus says medicine alone won't cure West Africa.
TrendingMark Driscoll Resigns from Mars Hill
Mark Driscoll Resigns from Mars Hill
"I do not want to be the source of anything that might detract from our church’s mission."
Editor's PickBless This Tackle? Not a Prayer
Bless This Tackle? Not a Prayer
Christians’ misguided fight for football devotions isn’t working.
Comments
Christianity Today
Christian Microfinance Stays on a Mission
hide thisMay May

In the Magazine

May 2011

To continue reading, subscribe now for full print and digital access.