The unintentional effects of microcredit schemes in developing countries:
- As of December 2011, more than 34 million Bangladeshis had accessed microcredit since 1997, when it began collecting data
- Of those 34 million, more than 26 million live under the poverty line - on less than $1.25 a day
- There are currently 20.65 million borrowers in Bangladesh
- It is estimated the sector constitutes around 3% of GDP
These lenders were originally set up to help lift people out of poverty by offering small loans to people who do not qualify for traditional banking credit, to encourage entrepreneurship and empower women.
This is why I worry when Justin Greening starts explaining why we need to stop sending aid and set up businesses instead. Venture Philanthropy may sound like a shiny new word to fix the world's problems, but let's just evaluate what excessive lending has managed to achieve in our own countries - such as the UK - where the gap between rich and poor, the haves and the have-nots, is widening year on year.
Governments have been able to slow the process, but not stop it. Taking an ideology we can't even manage ourselves into countries with people who don't have a basic level of education in order to understand or question the concepts we're pushing at them, is a really, really bad idea. In this instance, immoral.