The Kenyan government’s Youth Enterprise Fund, which was supposed to help young unemployed Kenyans start small microfinance projects, is struggling to find young people who can comply with the conditions necessary to access funding. I can recall seeing President Kibaki launching the fund on Kenyan TV. At the time it was made clear that there would be strict penalties for those who took loans and failed to repay them.
In my experience, in spite of all the things which are said in its favour, microfinance is usually unsuccessful in helping people escape from poverty. This is because poverty cannot be solved until the factors which cause poverty are addressed. If things such as corruption, illness, war, crime, and famine are not eliminated, any money which a person earns gets siphoned off to pay for these things, leaving the person in poverty.
If it is impossible in a particular cultural environment for a person with no capital to accumulate wealth, then it is usually impossible in the same cultural environment for a person with a small amount of capital to accumulate wealth. By far the most common result is that the borrowed money gets siphoned away by the negative environmental factors, and the person is left as poor as before, but with the additional burden of a substantial debt.