Hugh Sinclair’s masterful caveat emptor presents an insider’s take on microfinance. Drawn from a decade of work in the industry, in multiple countries and organisations, Confessions of a Microfinance Heretic takes the reader beyond the superficial layer of glossy altruism and into the dark underbelly of the vaunted business of poverty-reduction. Beneath the veneer of beneficence seems camouflaged a system of ill-constructed incentives that threatens to derail a noble objective.
Presented as a chronicle of his time in the industry, Sinclair maintains an engaging tempo throughout, citing real-life recollections. He wryly, but boldly, draws the curtains off the prominently visible cosmetics to reveal a murky world of shoddy due diligence and information asymmetry, where the intended beneficiaries, the poor, figure only infrequently in discussions. Is the system the miracle cure that it is touted to be? Are ‘helicopter handouts’ better than the microfinance route? How can the culture of debt, and three-digit interest rates, help the poor become less dependent on debt? Can the system be (re)designed to adhere to its original objective? The book raises some challenging questions.
Sinclair offers a template to various stakeholders in the poverty-reduction debate, on the possible way forward for microfinance. Whether you are a potential donor/investor, a microfinance institution, a regulator, a rating agency or a borrower, Confessions is likely to offer a sobering viewpoint to the healthy skeptic.