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.