Well before Mohammed Yunus established Grameen Bank in Bangladesh in 1976, low-income people had well-established financial instruments-–susu collectors, savings groups, burial societies, money lenders, money guards, money boxes-–which are still used today. When Grameen Bank started to lend to them through microcredit experiments, the world took notice. By 2005, Grameen had lent just under $5 billion USD to millions of poor and low-income consumers. Grameen’s success ignited a worldwide movement of microfinance institutions aimed at changing the lives of low-income consumer (mostly women) through microcredit. And, it also launched a wave of further financial intermediations-–savings, then insurance within financial inclusion.
Looking back, it is clear that improvements in people’s lives arising from microfinance were smaller, and reached fewer people than the financial inclusion industry had claimed or expected.