Does Microcredit Really Help Poor People?

January, 2010     Richard Rosenberg

Ever since microcredit first began to capture public attention 25 years ago, the usual story line has been that it is a tool of extraordinary power to lift poor people--especially women--out of poverty, by funding their microenterprises and raising their incomes. This picture has been buttressed by hundreds of inspiring stories of microentrepreneurs who used tiny loans to start or expand their businesses, and experienced remarkable gains not only in income and consumption but also in health, education, and social enpowerment. But how well do these individual anecdotes represent the general experience of the hundreds of millions who have gotten microloans and other microfinance services? Is microcredit--or microfinance more generally--being oversold?