2009: The Year Microfinance Died
Raderstrong, J.

If microfinance was born in 1976 with Muhammad Yunus' US$27 loan, 2009 was the year it died. Ok, not really, but it did catch a lot of flak. Once heralded by some as a ‘silver bullet’ to end poverty, this year people got real about what microfinance is and isn't and owned up to the limitations.

This reality check was fueled mostly by the release of several studies on microfinance, which used randomized controlled trials for the first time to measure microfinance's impact on its clients. The results were not so hot; with no study illustrating the transformative change people expected.

Then, not shortly after these studies were released, Kiva took a fall from grace (at least in the blogosphere), admitting that its microfinance loans did not actually create a ‘person to person’ connection. Since then, GiveWell, a powerhouse of a charity evaluator, has unrelentingly pounded against the microfinance ivory tower and recently discouraged people from donating to Kiva and other US microfinance charities, including the Noble-Peace-Prize affiliated Grameen Foundation.

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