Hello once again everyone.
So in my last blog I mentioned that I'd be talking about the dangers that money can pose in the developing world. Even if the original idea was ment with good intent.
Microcredit has become very populair, both with people in the developing world, aswell as bankers. And why wouldn't it? Instead of one big loan, the banks make a lot of very small loans and in return small business owners can invest in making their shop more profitable.
First off, a little history. Although Microcredit is increadibly old (its origins spending back to Pre-Medieval days). It became more well known roughly around the 1950's. Where it was tested in Pakistan. Unfortunately, due to an overzealous overwatch from the Pakistani gouverment, the project eventually failed and wouldn't re-emerge until 1980.
Now a days, MicroCredit is increadibly profitable for both parties. Leading to most people taking on a loan, being able to pay them back. However this wasn't always the case. Not even that long ago, Microcredit became big in India. Where mafia banks began to rise and hand out loans to people who simply couldn't pay back. Resulting in the highest suicide rise in the country ever. The influence of the mafia became so big that the gouverment urged everyone to no longer get a microcredit loan.
Even now a days, microcredit gets abused by families to force women to pay more dowry.
In the end, the greed of some caused so much suffering for others. What was originally suppose to be a tool to help the poor turned into a nightmare. Now a days, many fear microcredits, even from legitimate banks
Join me next time where we have a look at the good side of MicroCredit!
Video of the day: