Backlash against microfinance

I welcome the news, courtesy of Duncan Green’s Oxfam blog, that there is a backlash against microfinance. He cites several papers, written from various perspectives, arguing that microfinance does not work. Among the criticisms: it has failed to reduce poverty, it has never been included in a successful national development strategy, it ignores the role of scale in economics and it has driven up interest rates.

Whatever the attractions of microfinance to individual borrowers it does not constitute a strategy for development. Indeed it is often posed as an alternative to economic growth.