The baby with the bath water will be thrown

To pay a small sum of money to a poor so it releases its creative potential, developing its own activity and thus his situation of poverty is an idea both simple and challenging. When it is also promoted by institutions such as the World Bank, supported by foundations of large companies, rented by number of personalities from the politico-médiatique sphere, and crowned by the award of a Nobel Prize for peace, this idea tends to become "the" solution to get out of poverty.

Since a few months, the financial crisis refer on the microfinance of new expectations. Multiple malfunctions of the markets and the dangers of speculation appear at the big day. Paid by the greed and deliberate opacity, this "bad" finance is stigmatized and made responsible for the ruin of millions of severely indebted households. By contrast, microfinance would be "good" finance: a solidarity finance at the service of the poor, whose principles of operation proximity, transparency to rehabilitate the original meaning of the finance: give confidence and make link.

This speech has the great merit of give us reason to hope in a world increasingly cynical and uncertain. But the reality is less idyllic field. Microfinance is not "good" or "bad": it all depends on how it is implemented. In a context of increasing financialization, the excluded commercial banks need financial services and in particular the poor. They need credit, but savings, insurance and transfer of funds also. They need to develop or strengthen income-generating activities. But they need also and especially to protect themselves against the risks of the existence and smooth spending and irregular and unpredictable resources. Advocate for a better financial inclusion and the goal of microfinance is here is therefore perfectly legitimate. On the other hand, rely on the only microcredit to the poor in their misery is a gross and dangerous error. And think that apply to the poor is, by nature, a sign of solidarity is also deceptive.

In many regions of the world, competition between microfinance institutions and increasing profitability pressures translate into a commercial aggression less and less compatible with goals of solidarity. Poorly used, microfinance can then generate situations of over-indebtedness. It is already the case in several regions of the world, for example, Bolivia, India, in Bangladesh, the Philippines, Benin or, more recently, in the Morocco. Seduced by now easy access to credit, in addition to poor households simply excluded commercial banks do more hesitate to go into debt. But it is often better to feed, health care, educate their children, finance a marriage or... to repay a former credit. And much more rarely to create or develop their work tool.

For several years, practitioners of microfinance and researchers alert stakeholders of the sector (civil society organizations, donors and of more and more banks) on the limits of the microcredit tool and its rapid and uncontrolled growth risks. Despite these repeated warnings, is still a blind belief in the benefits of microcredit. In refusing the debate about this "bubble" of the debt of the poor, focusing on the sustainability of microfinance organizations over the families of borrowers, it delays the measures to be taken to avoid the collapse of the system. A few recent events show that this risk is imminent: the difficulties of refunds recurrent of the Grameen Bank, the suicides of borrowers in South India, the President of the Moroccan microfinance Federation alerts, timid warnings Nobel Laureate Yunus himself, or even the controversy raised by 100 per cent interest rates year claimed by some and the opacity of their calculation.

It is urgent to regulate the sector and to combat the frantic pursuit of profitability. It is also urgent to recognize and to continue the efforts made in recent decades by some microfinance organizations to diversify their services (savings, insurance and transfer of funds for migrants are equally if not more necessary than microcredit), adapted to the needs of families and the territories and insert it into a comprehensive strategy of socio-economic integration and local development, in a Word to make microfinance a lever of solidarity. Finally, it is imperative to return to a more realistic view: microfinance is a necessary tool, on condition that he be handled with caution by development professionals and not only financial. The bursting of the "bubble" can only lead to an almost general rejection. The baby with the bath water will be thrown.