Over recent months, I've watched with some disappointment as criticism of microcredit schemes has mounted and the awful pendulum of popularity has swung away from what was, until recently, the 'big thing' in charity and development. For those who have put their hearts and souls into developing microcredit for the poor, this must be a most dispiriting time.
These two articles appeared in the New York Times during January; and a simple online search reveals other such criticisms appearing from time to time over the past year.
Microcredit pioneer faces an enquiry...
Microlenders, honored with nobel, are struggling
Just a few years ago, the Grameen Bank and similar schemes around the world were the darling of development. Now, it seems, they are not. Social enterprises have taken their place.
How has this happened? Was microcredit really a bad idea all along?
My own take on this - and others may have different insights - is that microcredit went from being a good, concrete practice to a romanticised notion that could never live up to its ideal. Yunus, arguably the 'father' of microcredit, never saw his scheme as being the one and only solution to world poverty, but eventually this became the common perception of it. Even within Blue Dragon, over several years I received many emails from people and some big organisations asking us if we were interested in starting microcredit programs. As much as I like microcredit, it has never been a significant part of our work, although we've certainly given loans and helped families set up their own businesses.
The problem seems to be, though, that too many people came to think that microcredit was the answer to everything. And when they came to see that it wasn't, they believed it had failed. They were judging microcredit against imaginary criteria.
And now, to use the cliche, the baby is being thrown out with the bathwater.
Donor attention has turned to social enterprises.
Again, social enterprises are great; but they are not the answer to everything. Those involved in forming this new field have never claimed that they could end all poverty. They help certain types of people in specific instances, and they can do an excellent job at providing training and employment.
I fear, though, that perception is now shifting into that same fairytale view that clouded microcredit schemes. Countless institutional donors will only fund the creation of social enterprises, to the exclusion of everything else. People are again seeing them as being a cure-all; an excellent idea is in danger of becoming a short lived fad. When the media starts noticing that social enterprises are imperfect, will they turn on them, too, and condemn them as failures?