Microcredit is losing its halo in many developing countries.
Microcredit was once extolled by world leaders like Bill Clinton and Tony Blair, as a powerful tool that could help eliminate poverty, through loans as small as $50 to cowherds, basket weavers and other poor people for starting or expanding businesses. But now microloans have met with political hostility in Bangladesh, India, Nicaragua and other developing countries.
In December, the prime minister of Bangladesh,Sheik Hasina Wazed— who had championed microloans alongside Mr. Clinton at talks in Washington in 1997, while Mr. Clinton was president — turned her back on them. She said microlenders were “sucking blood from the poor in the name of poverty alleviation,” and she ordered an investigation into Grameen Bank, which had pioneered microcredit and which, along with its founder, was awarded the Nobel Peace Prize in 2006.