Too easy to make money
"The microfinance sector was hijacked. What began as an interesting idea soon attracted the vultures. It was too easy to make money. Investors were wooed by the message and photos, but they had no way to verify what their money was being used for. The poor dreamt of building their little shop; the unscrupulous funds dreamt of discovering the next SKS or Compartamos investment opportunity. MFIs pumped out loans. Regulatory oversight of microfinance in the developing countries, and in the developed countries where the funds operate, is mostly nonexistent in practice. The sector promised that it would effectively regulate itself, given the chance. But as the Indian professor M. S. Sriram aptly observed, even before the Andhra Pradesh suicide crisis, 'Self-regulation is an oxymoron.' Cheap or free money flooded into the sector, which would inflate the bubble yet further, and the well-positioned few could then make huge personal fortunes when they eventually privatised the largest MFIs.'
"Meanwhile, advocates and funds employed sophisticated marketing techniques and PR operations that attracted naïve celebrities to the cause and built an aura around the sector that was both impenetrable and self-perpetuating: The proof that microfinance worked was simply that it was available in such vast quantities. That 200 million or so poor people had loans meant the sector had to grow bigger, to reach the rest who did not – those poor people who were cruelly denied access to capital. Some even went as far as to say this was denying them a human right – and who would dare suggest people should be denied a human right? No one had an incentive to wonder whether these 200 million had become better off, let alone wonder whether credit as a human right would actually matter to those who are denied their real fundamental human rights every day – education, water, a decent life, freedom. Anyone who dared criticise the sector was attacked and branded as disloyal to the cause. A heretic."
(pp. 216-7, 'Confessions of a Microfinance Heretic: How microlending lost its way and betrayed the poor' by Hugh Sinclair - Harper)