Recently, I heard another person derisively refer to microfinance as “just a Band Aid.” My initial thought was frustration at how people can be so dismissive of palliative measures, as if some panacea will only come if the incrementalists stop acting. My second thought was, “What do these people have against the Band Aid.”
According to that most esteemed source Wikipedia, “The Band Aid was invented in 1920 by Earle Dickson, an employee of Johnson and Johnson, for his wife Josephine who was always cutting and burning herself while cooking.’’ Generically known as an adhesive bandage its function is to “protect the wound, e.g. from friction damage and dirt. Thus, the healing process of the body is less disturbed. Often they have antiseptic abilities. Some can even speed healing and minimize scarring.”
I don’t think an analogy of the benefits of microfinance and the Band Aid is much a stretch. Just as the Band Aid allows for wounds to heal more safely, so to does microfinance allow people to better deal with misfortune by giving them the ability to borrow against future income. Just as the Band Aid minimizes scarring, quality microfinance can minimize the damage of an income shortfall by allowing people to stay out of the more onerous debt that often results from borrowing from moneylenders.
And of course, it is true that like the Band Aid is not the cause of healing, microfinance is unlikely to be a driver of growth or the cause of the end of poverty. Yet this limitation is no reason for ridicule. It is important that we recognize that microfinance is only part of a solution to the problems of poverty and inequality and that there is nothing wrong with being “just” a part.
This entry was written by YRT on behalf of Dan Kopf.
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