Friday, April 06, 2007

Microcredit is a debt trap

Abul Barkat of the University of Dhaka says Grameen's microcredit is a debt trap and 80% of the beneficiaries are caught in it. That is, each of the women is borrowing frome one microlender to pay another and keep getting into an endless trap.
The key reason for the failure, he says, are the high interest rates — 25 to 65 per cent — and high costs of operation of the Grameen Bank model.

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