Opinion | Microfinance was supposed to save Asia’s poor. Why has it failed to live up to its promise?
Summary
Microfinance was once seen as a powerful tool to lift Asia’s poor out of poverty, but decades of experience suggest credit alone has not delivered the promised economic independence. High interest rates, debt juggling, and weak investment opportunities have left many households still financially vulnerable.
Key Points
- Microfinance was designed to give low-income households small loans to start businesses and escape poverty, but the expected transformation has not materialized.
- Many borrowers use microloans for urgent needs such as medical bills, school fees, food, or repaying other debt rather than productive investment.
- High interest rates and multiple overlapping loans can deepen vulnerability instead of building wealth.
- The article argues that poverty reduction requires skills, infrastructure, digital connectivity, market access, and stable jobs, not just access to credit.
