Why are the stories of microfinance borrowers important to consumer education?

I have been told that in microfinance there are no bad borrowers; there are only bad lenders.

The justification for these statements come from the responsibility that is placed on lenders to only lend amounts that they know they can recover. Thus, lenders should ensure that their clients are capable of repaying their loan(s) and able to understand their loan terms before lending any amount.

In microfinance, such responsibility is particularly important as most borrowers in such programs are small business owners usually living day to day and lack the educational background that is necessary to read and understand loan applications and agreements.

But, I also believe that microfinance borrowers are not alone in their struggles. Financial consumers, in the developing and undeveloped world, struggle with financial literacy and the skills necessary to ensure that they will benefit rather than suffer from borrowing.

In the world of finance, such consumers are often blamed when they make bad financial decisions. Unfortunately, the practices of lenders often make the consequences for consumers who are not prepared or unable to protect themselves even worse.

So, who is to blame for the misfortunes of microfinance borrowers?

Below are stories that I documented during interviews with past and current microfinance borrowers in which borrowers and/or lenders did not act responsibly and/or ethically. Such stories are important to the upcoming manual because each allows the reader the opportunity to learn from the past experiences of other borrowers, and illustrates why the sections of the manual are applicable to the lives of microfinance participants.

In upcoming blog posts, you can read such stories to learn about some of the challenges of Kenyan microfinance borrowers, and why the challenges of borrowers are important to understand when preparing a consumer education material to expand protection for microfinance participants.