• They’ve both had sponsors abandon them
• They were both apparently miraculous, and then disgraced
• They both made promises they couldn’t (honestly) keep
• They both managed to out-fox regulators for decades
• They both lied to the world for extended periods
• They both accumulated vast sums in the process
• They both masterminded an almost cult-like following

Nike resolutely backed Lance Armstrong while the rumours of doping emerged, but eventually said “ya basta” and abandoned him. Some microfinance investors, funds and even countries have done likewise. Everyone defended the miracle cure for poverty while the first evidence emerged of something wrong in the sector, but some eventually took drastic action. The Norwegian government stopped all microfinance investing (apart from in South Sudan, apparently). Stichting DOEN largely quit the sector. Unitus pulled out some time ago. The focus is now shifting away from microfinance per se to “all inclusive finance” or “social impact investing”, discreet ways to reduce exposure to the ailing sector.

“Due to the seemingly insurmountable evidence that Armstrong participated in doping… we have terminated his contract… Nike does not condone the use of illegal performance enhancing drugs in any manner.” Nike

Or, “Due to the seemingly insurmountable evidence that microfinance is not working… we have decided to cease microfinance investments… we do not condone the use of futile and extortionate lending practices against poor vulnerable women in any manner” [authors pending]

Many, including Armstrong himself, had reluctantly acknowledged isolated cases of doping in the sport. It turned out to be a widespread network spanning dozens of the leading people in the sport, including doctors, regulators and the leading role-models, with Armstrong himself dishing out the candy from a well-stocked fridge. With each successive microfinance scandal we point the finger at the “rogue operators”, the “inept regulator” or the “unfortunate exceptional cases”. In fact the corruption permeates the leading institutions in the sector, the regulators are inert, the self-regulating bodies welcome the worst offenders with open arms, and Yunus himself has some unanswered questions lingering over him. Notice the parallels?

Yunus famously lamented the loan-sharks disguised as microfinance outfits, but failed to acknowledge that his own Grameen Foundation USA was an investor in one of the worst such offending banks. Citibank was behind the most dubious IPOs in the sector’s chequered history. What about the $2m payment to Maria Otero following the rather profitable Compartmos IPO raised on the back of poor Mexicans coughing up interest of 195% a year? Their mutual buddy Hillary Clinton was delighted with Accion, and supports Yunus to this day. Exploitative interest rates? Yes we can!

“We are no longer convinced that the international professional world of cycling can make this a clean and fair sport” – Rabobank, cycling sponsors, early pioneers of microfinance

The evidence of microfinance having much impact on poverty is minimal, and the evidence of abuse is chronic. The Dutch parliament is currently investigating cases of misuse of public sector funding in microfinance on two counts: extortionate interest rates and personal enrichment. They can add a third – funds destined to microfinance activities which were discreetly diverted to other purposes, as Triple Jump accidentally admitted recently. But facts do not matter in such cases, politics and spin prevail. Drug testers would tip-off the cyclists regarding visits. Citibank sponsors the so-called industry watchdogs – is there really much difference? Accion host the SMART Campaign, Triple Jump bankroll the MicroCredit Summit Campaign. The conflicts of interest are rampant.

But an important difference between Armstrong and microfinance is worth noting: the US Anti-Doping Agency actually takes doping seriously, investigates claims, publishes results and takes action. Armstrong has had seven Tour de Frances titles stripped. What would the microfinance sector’s self-regulatory SMART Campaign have done:

“The SMART Campaign believes doping is bad, but we don’t mind if our members use dope. When confronted with overwhelming evidence of doping, our strategy is to do absolutely nothing. In fact, our main sponsor is one of the leading dope-manufacturers on the planet, but this doesn’t cloud our judgement, honestly”

Professional cycling is actually regulated, and still abuses occur. Microfinance is almost entirely un-regulated, and the most vocal opponents of regulation are the microfinance banks and investment funds, naturally. Evil, incompetent, aggressive regulators will harm the sector, we are told, best have no regulation whatsoever, and shove some of our buddies into so-called self-regulation to keep up appearances.

Cyclists were under immense pressure to perform, to excel, to break records, to exceed expectations, to woo crowds, to deliver the impossible, to put on a good show… and they resorted to doping to accomplish this. Top cyclists made fortunes and sponsors flooded in. The microfinance community claimed it would banish poverty altogether, future generations would have to visit museums to find out what poverty was. This was a ludicrous claim, and what did we do? We cut corners, we lied, we fiddled the books, we engaged PR companies, we boasted of 200 million poor people reached, without going into too much detail about whether reached meant helped. We turned a convenient blind eye. Armstrong and the microfinance sector lied. He used drugs. We used hype and spin.

“The importance attached to microfinance – presented as the cure-all to eliminate poverty – will raise expectations that cannot be fulfilled. If these expectations are disappointed, the public may be disillusioned and lose interest.”

See the similarity? This is not a bunch of amateurs, this is ProCredit Holding’s business philosophy written years ago. I won’t bore the reader with a history of the warnings about the microfinance hype – the writing was very clearly on the wall a decade ago but too many of us were riding the wave to pause to read it. It didn’t suit us to do so. Duvendack et al publish a report decimating the entire sector – the microfinance sector responds with 100 new photos of women with goats and a nice movie. Heinemann airs a documentary criticising the Godfather of the sector, Yunus himself, and the sector hires Burson Marstellar to do a spin campaign to discredit him. People accuse Armstrong of doping, everyone denies it… until it turned out he was in fact running the sport’s biggest, most sophisticated doping ring in cycling history. Some are screaming about the looming crisis in Mexico regarding chronic client over-indebtedness, most ignore it, until the music stops. Then we’ll blame the “corrupt Mexican regulators” or the “reckless Mexican banks”, or simply “poor peasant Mexicans”, as we did in Nicaragua.

The mantra cannot be broken: we are the saviours of the poor, they need us, without us they are doomed, we provide them with a human right, we will make fortunes in the process, and anyone who gets in our way cannot join our team, come to our conferences, or get our lucrative sponsorship deals. The poor should be grateful for our unwavering generosity, and pay us handsomely in the process. Armstrong didn’t do too badly out of his “services to cycling” I gather, and Otero isn’t complaining.

I warn people repeatedly not to throw out the baby with the bathwater. Is anyone suggesting we ban cycling? Is anyone suggesting that everyone who owns a bicycle is a closet narco? Doping appears rampant in the entire professional cycling sector, but so is corruption in the microfinance sector. I take aim very directly at Citi, Deutsche, Triple Jump, Oxfam Novib, responsAbility, Blue Orchard, ASN Bank, Grameen Foundation, Kiva, Calvert Foundation, Standard Chartered, Incofin, World Relief etc. – this is not the entire microfinance investment sector, but it’s a large proportion of it. Armstrong denied the charges to begin with – these microfinance jesters haven’t even denied them – they just sit silently, hoping the latest wave of criticism will pass. Maybe my accusations were complete fantasy and not worth responding to? So why did one of their supposed leaders, the head of the MicroCredit Summit Campaign – Larry Reed – so openly praise the book? Lawyers pored over the book. Reputatble media have supported it. Then again, consider this rather sobering quote by Kim Wilson of Tufts, albeit related to Larry’s predecessor:

“We did not strike at the lies of the Microcredit Summit when we knew they were lies, or at the small fibs perpetuated by MFIs. We did not chip away at the menacing accretions that slowly layered in around the cause [] which in fact diverted us from the cause, one purportedly about women. Nor did we unite when we heard first hand from female borrowers who had been humiliated by loan collectors, their cows taken, their roofs ripped off, their children lent to the landlord. For decades we have girated dumbly inside the spin machine…. We can just stand by, ask meekly that we have social performance indicators, or we really can do something about it.”

It doesn’t matter whether you’re a professional cyclist or a microfinance investment fund manager, the solution is the same: acknowledge the problem, stop the spin, come out the closet, make realistic assurances on how you’ll improve the actual problem. Then solve it. Otherwise professional cycling will die, and so will microfinance. I will regain my faith in the sector when these jokers acknowledge the grave errors they have made. But they refuse to take responsibility for their actions, although they expect others to do so. They insist on transparency for others, but not themselves. Armstrong was a vocal critic of doping – and a user. Our Armstrongs are up to their armpits in the petty cash and have developed an unsavoury habit for doing so, like the junkie on smack. It’s hard to quit.

So, thank you Lance – you have shown us that we are not alone in lying, hypocrisy, deceit and self-interest. You managed to pull the wool over the eyes of Rabobank, Nike and a few million cycling enthusiasts for a decade or so, while we’ve pulled it over the eyes of governments, development organisations, investors, donors and an army of ill-informed Kivans. You deceived your fans, but what actual physical harm did you do – perhaps a little to yourself, but no one committed suicide because of your actions. Some of your fans may be a little disappointed, but you haven’t saddled 200 million people with unaffordable, mostly useless debts.

I personally wish Lance Armstrong all the best. Sure he screwed up, but actually he did nothing compared to the damage we have caused. I wish these microfinance folk would just close shop and shuffle off to some other sector where their victims are not poor vulnerable women desperate for a way out of poverty and willing to sign any contract offered to them – pick on someone your own size for a change. The few remaining good guys, and there are a few, can attempt to fix what is left, but this is impossible while the entire sector is run by an opaque, self-interested, Mafioso voodoo-cult.

Microfinance – on your bike.