This is the true story of a young IESE Business School grad who joined the burgeoning microfinance industry in the early 2000s with the intention of doing good in the world. Over the course of the following decade, he would discover vast global networks of corruption, cover-ups, and countless betrayals of the poor in what had grown into a $70 billion sector. His attempts at exposing wrongdoing would result in death threats, aggressive and personal retaliations, and legal action -- after all, the first rule of microfinance is don’t criticize microfinance. These are his true confessions.
Hugh Sinclair traveled to several continents while working for numerous banks, agencies, and institutions and saw microfinance from the ground up. He soon realized that the heart-warming stories presented on sites like Kiva and Grameen Foundation were anything but commonplace in microfinance sectors. When his efforts to bring his findings to senior executives were thwarted, Sinclair became an anonymous source for The New York Times, providing information for a story that covered a wide scope of microfinance misdeeds.
But such reports only scratch the surface. In this book, Sinclair reveals the devastating dark side of this feel-good industry: rampant corruption, exorbitant interest rates, and microloans leading to fraud, child labor, prostitution, and even suicide. Much of the book centers on the scandal Sinclair uncovered involving the Nigerian nonprofit LAPO and its dealings with industry darlings Kiva, Grameen Foundation and Triple Jump. However, other key players such as Deutsche Bank, Citibank, SKS, ACCION, Grameen Bank, Blue Orchard, Calvert Foundation, and Compartamos make appearances. There are many people who do not want this story told – some of them have already intimated as much in no uncertain terms to the author.
Sinclair doesn’t just criticize and expose the industry but recommends how to fix it -- because he has seen that microfinance can work and so lays out the conditions necessary for its success. The question is: will anyone listen?
Confessions of a Microfinance Heretic is one of the more fearless, mind-bending, upsetting, and captivating books I’ve ever edited. To be honest, I really hoped that Hugh’s early proposal was some kind of hoax when I first read it—if it were true, Hugh would be challenging everything I thought I knew about microcredit and micro-entrepreneurship. The more I read, and the more I interviewed Hugh and researched his story, the more I realized that Berrett-Koehler had stumbled across one of the great “whistleblowing” narratives in nonfiction.
The scale of the dysfunction and injustice that Hugh describes is in the billions, not millions, of dollars. Although we’ve sold nearly a million copies of Confessions of an Economic Hitman, we almost never publish such tell-all memoirs. Such books tend to be “me too” narratives that feed the public need for scandal rather than search for hope in the rubble. Hugh’s book was different—nobody was saying what Hugh was saying about the economics of poverty, global development, and charity. Most narratives about microfinance have a slight whiff of self-congratulation and self-satisfaction, but very few have dug into the essential model or the methods used in the field. Hugh paints a picture of a system that is, on the whole, harming the poor and reaping unjust returns for the institutions that claim to be acting in interest of poverty. (And to Hugh’s credit, he doesn’t hesitate to call out the few examples where microfinance gets it right.) Hugh’s world is upside down, and his case becomes overwhelming and undeniable as the book proceeds.
You see, Hugh has spent more time on the ground working among the poor than most anyone in the sector. Combine that with his expertise as an economist and finance professional, and you can’t escape the conclusion that microfinance is robbing the future of those it was intended to help. Publishing this book was not a choice for Berrett-Koehler. It was a necessity.