Microcredit has been a disaster for the poorest in South Africa | Global Development Professionals Network | Guardian Professional

Microcredit has been a disaster for the poorest in South Africa | Global Development Professionals Network | Guardian Professional: "There was hope that for-profit microcredit institutions would dutifully stick to their allotted mission and responsibly lend to the poor. However, just as in the wider economy, where the actions of the financial institutions on Wall Street brought on a global recession, the widely-held assumption that private banks and microcredit institutions would be responsible also proved to be spectacularly wrong.

Bombarded with microloans in such a way that today they simply cannot repay even a fraction of what they owe (estimates are that 40% of the South African workforce's income is spent on repaying debt), South Africa's poor are now caught in a microdebt-trap of unimaginable proportions. Only now are people realising that the real aim of the private banks and microcredit institutions in South Africa – exactly as in the case of Wall Street's infamous sub-prime lenders – was not to help their poor clients, but to extract as much value from them in the shortest time possible before leaving the sector and moving on to other fields of business."

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