Microcredit for human development

Udemy – Course Description

I am Bernard Kervyn, originally from Belgium. After completing an MBA at UCL (Université Catholique de Louvain), I began my professional journey in development by working for nine years in Bangladesh as an NGO (charity) coordinator. Later, I served as a product manager at GE Medical Systems in Paris before moving to Vietnam and Cambodia, where I have spent the majority of my life.I am the founder of Mekong Plus (an international NGO) and co-founder of three local NGOs in Vietnam and Cambodia.

I have always been passionate about one fundamental question: how can we best help people escape from extreme poverty? When I first arrived in Vietnam, more than 40% of the rural population was living in deep poverty. The situation has since improved, thanks to active government policies, an improving macroeconomic context, and the contribution of social programs. Yet millions live with less than 1 €/day.

From the beginning, I noticed that Vietnamese people were dynamic and hardworking. What they lacked was not energy or willpower, but access to capital. Having worked in Bangladesh, I was very familiar with the savings-and-credit group model, pioneered by Dr. Muhammad Yunus in the late 1970s. This approach later became famous worldwide under the name of “microcredit.” It was sometimes portrayed as the ultimate development solution—a one-size-fits-all answer to poverty. Many funding agencies promoted microcredit as the sustainable way forward. Microfinance institutions quickly spread across the globe, even to wealthy countries, and some grew to the size of commercial banks with millions of clients.

But enthusiasm was soon followed by disillusionment. Many villagers not only failed to escape poverty but actually became poorer. Some reached such despair that they developed mental health issues or even committed suicide. Families collapsed under the weight of debt. Critics accused microfinance institutions of exploiting the very people they were supposed to help, pointing out that interest rates often ranged from three to five times higher than those of traditional banks.

So is microcredit a miracle solution—or a poison? In truth, it can be either, depending on the original objectives and the way it is implemented. Much of the confusion comes from unclear goals. If the sole objective is financial sustainability—if the program must cover its costs entirely and cannot rely on subsidies—then focusing on the very poor, who need technical support and can only handle very small loans repaid in many installments, may simply not be realistic.

On the other hand, when microfinance is part of a broader social development program—what BRAC in Bangladesh calls the “CREDIT-PLUS” approach—it can be highly effective. In such cases, credit is only one tool, combined with training, technical advice, and patient support. This can provide a genuine first step out of extreme poverty.

In this course, based on a long field experience, which includes numerous concrete illustrations, I want to make one point especially clear: it is virtually impossible to pursue multiple, conflicting goals at the same time. The needs for credit are diverse, and no single approach can meet them all. Large “banks for the poor” may serve millions of clients, but they often fail to reach the most vulnerable. Helping the majority will not automatically trickle down to the very poorest.

Unfortunately, too many microfinance “experts” apply rigid rules as if they should fit every context. But a single mother with no agricultural skills needs more than just cash—she needs guidance, encouragement, and the right advice to make her first investment succeed. Technical support and patient mentoring are not luxuries; they are essential.

Another common misconception concerns moneylenders, who are almost always portrayed as ruthless exploiters. In reality, many moneylenders are themselves not rich and take significant risks. They often lose money when fragile or dishonest borrowers default. And in urgent situations—such as accidents requiring immediate hospital care—moneylenders can sometimes be the only option available, as extended family networks or community solidarity may be too slow or insufficient.

In conclusion, microcredit is simply a tool. Used with clear objectives and appropriate methods, it can be valuable, but it is neither a miracle cure nor a destructive force in itself. The real challenge is to set the goals clearly, design the system accordingly, and never forget that for the very poor, financial support alone is rarely enough.

As a sincere but humble social worker, I welcome comments and hope for exchanges between professionals. Besides this course makes it clear, once again, that poverty is no fatality, it can be easily overcome provided one uses the proper tools and, as BRAC nicely puts it: positive impact in the lives of [our] clients is our only bottom line.