Microcredit no panacea for poor women


This video from the USA says about itself:

This is an extract of a debate on microcredit broadcasted by Democracy Now! on 13 December between Susan Davis, founder and chair of the Grameen Foundation, and Vandana Shiva. The occasion was the acceptance of the Nobel Peace price acceptance speech made by the founder of Grameen Bank Muhammad Yunus. The debate is not only informative but enlightening of the gap we have to overcome in our critical discourses.

From Women’s eNews in the USA:

Microcredit Skeptics Deserve a Turn in the Limelight

By Corinna Barnard

WeNews editor

Saturday, May 14, 2011

Bad news came this week for shareholders of India’s largest microlender. That offers a chance to tout two writers who always said high interest rates–of 20 percent and higher–were never the best news for the world’s poorest female borrowers.

(WOMENSENEWS)–News this week that India’s largest microlender, SKS Microfinance, reported heavy losses brought two names zinging to mind: Barbara Crossette and Susan Feiner.

Both are part of Women’s eNews’ loose-knit editorial team. Both took issue with the generally bullish outlook on microfinance as a means of ending–or even curbing–female poverty that prevailed for many years.

Around now both writers, in the wake of all the troubles surrounding microfinance, could and should be saying “I told you so.” Since they’re not, I’d like to do that for them.

Crossette is an author with extensive experience covering the United Nations, including a long career for The New York Times. She has written for Women’s eNews and serves us with occasional editorial guidance. Eight or so years ago she gave us a tip about covering microfinance or microcredit that became our ironclad rule: “Ask about the interest rates.”

That information was not at the top of microfinanciers’ press kits. When Women’s eNews’ reporters asked the question the answer they got was startling: a common range of between 20 percent and 50 percent. Wow.

When I told people about those rates their eyes often widened in horror. They’d picked up on the “women’s empowerment” virtues of microfinance and had a hard time believing it was true. Why so much higher than the 6 percent or 8 percent paid by middle-class U.S. borrowers?

“Microcredit”, a new form of financing aimed at getting the poor out of poverty, is being blamed for a spate of suicides in India. Many borrowers say lenders have forgotten the good intentions that were behind the microfinance concept. Instead of helping them to set themselves up with a small businesses, lenders are increasingly harassing them to pay the money back – and in many cases, leading to tragic consequences. Video here.

Bangladesh’s once-legendary banking environment is now fatally polluted. The rot is spreading so fast and far that the entire global microfinance industry is threatened. Controversy ranges far beyond poisonous local politics, the factor most often cited by those despondent about Grameen Bank’s worsening crisis: here.

While the founder of the micro-credit bank in Bangladesh was awarded the Nobel Peace Prize, micro-finance is bringing investors fantastic returns and death and destruction to the world’s poor: here.

Book Review: Why the “Green Revolution” Was Not So Green After All: here.

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5 thoughts on “Microcredit no panacea for poor women

  1. 23rd January 2012

    Press Release

    Main Features of Draft Political Resolution to be Discussed in XXI Party Congress of CPI

    The National Council of the Communist Party of India (CPI) finalized a draft Political Resolution at its session in Hyderabad from January 4 to 6, 2012. As per the Party Constitution, the draft has to be released two months before the commencement of the Party Congress. Not only the delegates to the Congress but all party members are entitled to send their amendments and suggestions to the draft Political Resolution. In pursuance of Party Congress the CPI central organ NEW AGE and Hindi weekly MUKTI SANGHARSH published the finalized draft Political Resolution in the issues dated January 22, 2012. It is being published in other Indian languages as well. The Party Congress will open at Patna on March 27, 2012 and will continue till March 31, 2012.
    MAIN FEATURES
    1- Deepening global economic crisis has gripped the world. What started as the global recession in May 2008 has developed into a full- fledged economic crisis of International Finance Capital. It is not the usual cyclic crisis of capitalism that we have envisaged so far. In the wake of disintegration of the Soviet Union the protagonists of economic Neo-liberalism had claimed “end of history” and projected economic Neo-liberalism as the only path of development. International Finance Capital attempted to establish its economic and political hegemony world over. But within two decades, its bankruptcy has become evident. All the 27 countries of European Union and USA itself are in deep crisis. They went for encouraging credit based economy which has ruined , not only the people but also the countries. After banks and other financial institutions played the trick of declaring themselves bankrupt, now one after other the governments are becoming bankrupt. Their credit standing is being continuously reduced. The bail-out packages are further deepening the crisis. To meet extra burden of bail-out packages to Corporate, i.e. giving financial subsidy to it from public exchequer, the governments have been forced to drastically cut in public spending on education, public health, cut in pensions and wages, retrench workers and enforce other measures under the garb of austerity measures ,that heap further economic burden on the people. This is forcing the people to come out on streets against Corporate capitalism under slogans like “Capture the Wall Street” and “We are 99 per cent”.
    In other parts of the world also the global economic crisis has started affecting the common people. In Arab world, apart from the urge for democratic rights, economic miseries heaped by the rulers have forced Arab people to revolt. Inflation, unemployment, growing disparities between haves and have-nots, mind boggling amounts involved in recently revealed scams and scandals in number of developing countries are other bye-products of this crisis of neo-liberalism. This crisis cannot be resolved in the routine manner. The Latin American people are opting for an alternative to economic Neo-liberalism. Left forces are registering victory in number of countries in Latin America. They symbolize the people’s understanding that Socialism is the Only Alternative.
    2- India was saved from the negative impact of global recession from May 2008 , to greater extent, due to strong presence of public sector entities in Banking and other institutions of finance sector. But it is no more possible. Since the withdrawal of support by the Left to UPA-I, the Congress led government is pursuing the policies of Neo-liberalism with a vengeance. Prime Minister himself declared that UPA is no more “bonded labour” of Left and is free to carry forward the policies that they term as “economic reform”. Since then, the UPAII government is shamelessly pushing forward the policies of Neo-liberalism. Allowing MNCs in different key sectors in the name of FDI, privatizing the public sector units in the name of disinvestment (this FY there is provision in budget to sell the PSU shares worth Rs. 40, 000 crore to meet fiscal deficit), allowing corporate farming, ruthless acquisition of land for so-called industrialization and establishing SEZs (actually handing them over to Builder Mafia), ruthless commercialization of education, privatization of public health system, going in for jobless growth, continuous rise in prices of all essential commodities due to permission of forward trading and unlimited hoarding, growing unemployment and economic disparities are a few features of deepening economic crisis in the country. The agriculture crisis is reflected in growing number of farmers’ suicide. There is definite pro-US drift in the foreign policy of the country. As government refuses to reverse this disastrous course, the crisis is going to deepen further.
    3- Most of the bourgeois political formations, particularly the BJP and its allies in NDA too are fully committed to pursuance of economic Neo-liberalism. When in power, they pursue this disastrous course and when out of power, they pretend to oppose these policies. In practice, both the UPAII and NDA collaborate with each other on economic issues. There is a definite move to marginalize the Left, that is the only force that is capable of opposing these disastrous policies, politically and ideologically. Bourgeoisie is bent upon to de-politicalise and de-ideologies the masses. For that they use number of NGOs who raise issues of public concern in a manner that blunt the class consciousness of the masses.
    4- There is also move to impose a bi-polar politics on the country to continue imposition of economic neo-liberalism. This need to be resisted and foiled by the Left.
    5- Left has to project an alternative to economic neo-liberalism and build broadest possible unity of the masses to oppose the disasters caused by these policies. For that a strong Left, particularly a strong CPI is must.
    6- Strength of CPI is scattered all over the country . It has to further strengthen itself by conducting result oriented struggles at grass-roots level, struggles of workers, peasants, agriculture labour, rural poor, economically and socially segments, particularly the Scheduled Castes/Tribes , most backward among OBCs and religious minorities like Muslims ,handicraftsmen, retailers and small and middle businessmen who are being deprived of their business due to economic Neo-liberalism. A strong CPI is must for more stronger Left to build Left and Democratic unity.
    In this background the XXI Congress of the CPI will consider the following aspects of Political Tactics to be followed till the next Congress .
    POLITICAL TACTICS
    With the deepening of economic crisis, both nationally and internationally, the party has to focus on offering alternatives to policies of economic neo-liberalism and conduct struggles independently and jointly. We have to unite the Left forces around a socio-economic alternative and make concerted efforts to draw other democratic forces, particularly the regional parties, in the struggles for the alternative socio-economic programme that lead to formation of state governments adhering to this concept and an over all anti-economic neo-liberalism shift in country’s polity. There may be issues on which a larger democratic unity could be built. Apart from this, we will fight against poverty, unemployment, hunger and corruption and strive to improve the conditions of the people.
    Party units all over the country will help build and broaden the peoples struggles and movements around the issues of LAND, JOBS, FOOD SECURITY, WATER, HOUSING, HEALTH CARE, DEMOCRATIC RIGHTS AND OTHER peoples issues. Efforts will be made to forge broadest democratic unity on these questions.
    · Broadest possible unity of masses to organize a concerted struggle against the disastrous course of neo-liberalism being pursued by the UPA-II government.
    · Strengthening the party, broadening its mass base through grassroots struggle and actions.
    · The party must make every effort to build up its strength so as to secure increased representation in Parliament and state assemblies in the forthcoming elections. Relying on its own strength it should build front/alliance/adjustment with other left and secular democratic parties for this purpose on the basis of alternate economic policies. The emphasis should be on ensuring adequate representation of the party in concerned house.
    · A left and democratic alternative remains the focal point of our efforts during the transitory period. More close cooperation and unity among the Communist Parties leading to unity of communist movement is an imperative. More frequent and regular consultation between the communist parties and generally among the left parties should take place in order to plan and coordinate joint movements and actions and also to resolve any difference that may crop up. Left unity has to be the base of our left and democratic alternative on the basis of an alternative to economic neo-liberalism.
    · Though our strength is scattered all over the country, the CPI continues to be a big Left force in the country. We must strengthen our relations with other Left parties like AIFB and RSP. We must try to draw other Left groups so as to broaden the Left unity.
    · Our path is path of Marxism-Leninism applied to our own conditions, based on the experience of our movement.
    · Our goal remains socialism evolving from our history and with our specific characteristics. Capitalism is doomed, socialism is the only alternative.

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  2. Pingback: Ancient Roman women’s microcredits | Dear Kitty. Some blog

  3. Yunus’ connection to the Bahrain dictatorship, from a pro-Bahrain regime source:

    Bahrain to host key microfinance summit

    Manama: 2 hours and 6 minutes ago

    The pioneer of microfinance and Nobel Peace Prize winner Prof Muhammad Yunus will launch ‘Social Business Week 2012’ forum in Bahrain this month aimed at developing finance for low-income people wanting to set up business.

    The four-day summit, which kicks off on September 16, will be the forerunner of a region-wide summit on microfinance which will be hosted by Bahrain next year.

    Social Business Week will look at developing finance for low-income people wanting to set up business and is being organised by Family Bank and the Social Development Ministry, said the organisers.

    It will feature a series of workshops and debates about the use of microfinance to improve the lot of poorer people while at the same time boosting the economy, according to Social Development Minister and Family Bank chairman Dr Fatima Al Balooshi.

    ‘Family Bank was set up in 2010 to provide low cost finance to people starting off in business and it is a social organisation that ploughs all its cash back into providing further finance for people starting out in business,’ she said.

    ‘It strengthens the concepts of social economy, in partnership with the development of the kingdom.

    ‘The whole idea behind this is to further develop microfinance in the region as a social goal.

    ‘Bahrain is a country that is socially inclusive and Family Bank has a niche role in helping people with limited resources by providing collateral-free loans of up to BD7,000 and then working with them as they grow with support for larger funding through the Bahrain Development Bank.

    ‘Family Bank helped more than 700 people with low cost loans last year and 65 per cent of these were women wanting to set up business,’ she said.

    ‘This is an historic event which will add to the achievements of the kingdom within the activities of the World Summit for Social Economy which is organised annually in Vienna, Austria,’ she added.

    ‘The Social Business Week is an initiative by the Family Bank and Social Development Ministry in merging the concepts of social economy and the development of Bahrain,’ she said.

    ‘The Family Bank has been established by the ministry to serve as the first social bank to provide Islamic microfinance targeting low-income families, women, youth and the unemployed as one of the institutions that adopt the concepts of socially responsible companies and designed to serve the community without looking for material profit,’ she added.

    The inaugural event will be held at the Bahrain Chamber of Commerce and Industry headquarters in Sanabis followed by workshops there and at the Bahrain University and the NGO Support Centre.-TradeArabia News Service

    http://www.tradearabia.com/news/BANK_222697.html

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  4. Microcredits no shortcut to happiness

    08 May 2013 Helsingin yliopisto (University of Helsinki)

    The importance of microcredits in reducing poverty among women in developing countries has been exaggerated.

    “Microcredits should not be marketed as a panacea for development. They are connected to other livelihood strategies targeting women, plus they cannot replace traditional aid to developing countries,” says Johanna Hietalahti, Master of Social Sciences. Her doctoral thesis for the University of Helsinki focuses on the everyday politics and power plays in microcredit networks in Limpopo, South Africa.

    Microcredits were of greatest benefit to recipients whose households enjoyed regular income and who managed to achieve a good social position in their communities. Only a few businesses were financially sustainable. At worst, microcredits pushed people into a debt spiral and crippled the entire group receiving microcredits.

    “Joint liability is applauded as a Nobel-Prize-worthy substitute for financial collateral. However, it epitomises the key problem of microcredits: joint liability only works for the microfinance institution. There are no rules for how responsibilities are to be shared by group members,” explains Hietalahti. “This leaves room for exploitation and puts group members at the mercy of their ‘own laws’.”

    In microcredit jargon, group credits are based on the solidarity of five well-acquainted women and their will to help one another. Each of them receives an individual loan, but they are jointly liable for one another’s credits. In Limpopo, however, entire village communities and families were sometimes the ultimate guarantors of microcredits. The repayment of loans relied on strict discipline and control. If someone failed to pay a loan, the others raised the sum one way or another.

    Although microcredits basically target people who are not served by the official financial markets, loans were not automatically granted to everyone. Not only did potential credit recipients have to satisfy the organisation’s requirements, they also had to pass the tight screening of the women themselves. Occasionally, a dire need for money forced the group to accept just about anyone.

    Inequality limits women’s activities

    Microcredit organisations share one particular feature: they are committed to eradicating poverty, but function as banks. International funders emphasise quickly gained self-sufficiency, pressuring the organisations to make painful compromises in poverty reduction targets. In addition to structural issues, the microcredit business is marked by power struggles involving both employees and clients.

    In South Africa, women in microcredit groups are considered to be agents of their own development. This is somewhat contradictory in the sense that the society’s structural problems and systematic political inequality restrict women’s activities. Hietalahti’s study calls for a deeper understanding of the everyday lives of women in microcredit groups: of the sacrifices and compromises they are forced to make to keep their microcredit wheels turning despite unfair rules, weak social support and unfavourable power relations.

    http://www.alphagalileo.org/ViewItem.aspx?ItemId=130947&CultureCode=en

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  5. Pingback: Women-hating Saudi regime´s cynical ´feminism washing´ | Dear Kitty. Some blog

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