Microcredit evolved in to microfinance which morphed in to 'financial inclusion'. What are the substantive differences between these, and is 'financial inclusion' any more likely to succeed in alleviating poverty, or does it share too many of microcredit's fundamental flaws?
Microcredit began with the noble aim of alleviating poverty through the extension of small loans to poor borrowers, predominantly women. A decade on from the 'Year of MicroCredit', the practice has not been proven to have succeeded in either enriching or empowering its borrowers. The new narrative is that 'financial inclusion' is the key to ending global poverty (Goal 8 of the SDGs, by improving livelihoods). Financial inclusion is indeed a wider concept than simple microcredit, but this panel seeks to explore what are the substantive differences between microcredit and financial inclusion. Is the change in nomenclature merely inspired by perceived political correctness, or does it go deeper? To what extent is the provision of financial inclusion dependent upon the extension of microcredit? If financial inclusion were to build in more ethical safeguards than microfinance did, would this lessen or increase its chances of better delivering on the SDGs? What specific reforms to the practice of microfinance or financial inclusion would improve either the way it functions ethically, and/or its chances of success? Would greater regulation of microfinance or financial inclusion increase or decrease its chances of better delivering on the SDGs?