Radio Nether­lands is doing a very good series on micro­cre­dit. The series tries to look at both the pros and cons of micro­cre­dit to answer who really does profit from it.

Those who are pro-microcredit say it’s the best form of aid going and helps to give small busi­ness peo­ple a way to expand their busi­nesses. How­ever, many stud­ies and sto­ries are say­ing that many bor­row­ers become depen­dent on the loans and that the credit still doesn’t address sav­ings or insurance.

As a part of their series on micro­cre­dit, Radio Nether­lands attended a con­fer­ence that fea­tured Princess Max­ima of the Nether­lands. The Princess has cham­pi­oned the cause of micro­cre­dit. We encour­age you to visit the Radio Nether­lands spe­cial series that includes many suc­cess sto­ries and some fail­ures in micro­cre­dit. Many of the videos are in Dutch.

Princess Máx­ima, who is mar­ried to Dutch Crown Prince Willem-Alexander, sounded another crit­i­cal note at the RNW meet­ing. She iden­ti­fied a grow­ing prob­lem in the world of micro­fi­nance. Money­len­ders out to make a quick profit.

“We have to note that in cer­tain mar­kets some insti­tu­tions have raised the yields, even as their oper­at­ing expenses have been com­ing down. In these cases prof­its have started to play a more impor­tant role than sustainability.”

Sur­pris­ingly crit­i­cal words from the princess. But she was not the only one to go on the offen­sive in the Peace palace. Dutch­man Klaas Mole­naar, who gives advice about micro­cre­dit all round the world, wit­nessed how things went badly wrong in Afghanistan as a result of over-enthusiasm.

“Ooh, that’s very bad. Very, very bad. I’ve seen donors com­ing in at a post con­flict sit­u­a­tion with a lot of money. That’s so in con­flict with the his­tory of micro­fi­nance. It has to grow grad­u­ally and organ­i­cally. There is no capac­ity when the donors just want to push in money.”

Al those present agreed that micro­cre­dit is an invalu­able tool. A small loan can per­ma­nently change human lives. Rik Rensen referred to a remark made by Princess Máx­ima some time ago that earn­ing a dol­lar feels bet­ter than being given a dollar.

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