The microfinance revolution of the 1980s acclaimed micro-credit as a tool that would
improve the lives of economically active people trapped in poverty. The 2006 Nobel prize
awarded to Mohammed Yunus and Grameen Bank confirmed for the industry’s advocates
that microfinance was a panacea, and billions of dollars have been channeled to financial
services for the poor. However, a series of high-profile scandals in 2010 shook development
agencies’ faith in micro lending, and support has waned in light of evidence that
microfinance alone cannot change structural inequalities and end poverty. I show that politics
operate throughout the industry, reproducing inequalities within the process of micro lending.
In my political ethnographic study of 460 people in three countries, I find that race and class
politics is entrenched in all three countries, yet there are different outcomes related to
attitudes of microfinance managers. In Jamaica and Guyana, micro lenders demonstrate that
historically rooted racial and class biases go beyond gender to determine the allocation of
micro loan resources. Ingrained biases interfere with the allocation of loans to the urban poor
because discriminatory practices reinforce pre-existing social divisions. The Haiti case is iii
hopeful: lenders, particularly the caisses populaires (credit unions), are made up of socially
conscious people who recognize the country’s exclusionary politics. Managers and staff have
class origins similar to the clients they serve and view micro loans as a tool to contest class
and race-based oppressions. Haiti’s case suggests that collective systems such as those found
in the caisses populaires and informal banks are effective because they relate to people’s
history; and managers influenced by the masses, organize financial programs that are
responsive to their clients and remain free from elite capture. This bottom-up approach in
microfinance determines a greater level of social transformation for the urban poor.