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Battling a Wicked Problem


Arvind Ashta

A school of thought hails microcredit as a social innovation, a messiah to enable people to help themselves out of poverty through entrepreneurship. An opposing school of thought considers microcredit as a capitalist demon ensnaring the poor in poverty and debt. The layman and the million professionals working in this industry are at a loss to make sense of the stories that circulate about microcredit. This book provides this sense-making, useful for students, professionals, investors and researchers who are attracted to this field.

Poverty is a wicked problem, akin to Hydra, the Greek mythological monster with many heads. As microcredit tries to balance multiple objectives to grapple with these multiple heads, it has needed to shift the weapons it uses. The arsenal for this battle has needed new philosophies, changing ethics, differing missions, institutional partnerships, the latest technologies and new products. These rapid innovations have differed in speed across the world, with adaptations in developed and developing countries. This book presents these with many case studies and field research.

It is clear that development initiatives, no matter how financial, cross academic disciplines. At the very least, they affect disciplines such as economics, business management, sociology, history, geography, politics, legal systems in place, as well as science, which is evolving at such a high speed. The book provides this multidisciplinary view and motivates future research and practices.

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Chapter 1. Microcredit as a Response to a Wicked Problem


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Microcredit as a Response to a Wicked Problem

A large number of introductions to microcredit start with outlining how a poor woman took a loan, invested that money by starting a prosperous business, and worked her way out of poverty. An example of such a success story is provided in box 1.1.

Box 1.1: Example of a microfinance story

Namono Lakeri, a widow and mother of five in Uganda, is one of our success stories. Namono received a WMI loan for about USD 125 (300,000 shillings) to expand her second-hand clothing business. With the extra income her business now generates, she is able to send all of her children to school. Namono even has enough money left over to enjoy little luxuries, like milk for tea, which were beyond her reach before. accessed on 25th October 2015.

Ten similar success stories are available on

The dream sold by these stories has enabled microcredit to obtain a lot of attention and funding. And while all these dreamy introductions may work out in some of the cases, do they work out in most cases? Why has microcredit had such a heady growth?

This book focuses on my research in microcredit over the last ten years, starting approximately at the same time that the Grameen Bank in Bangladesh and its founder, Muhammad Yunus, obtained the Nobel Prize...

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