Without resorting to any research jargon let me start by saying that on a number of occasions I had the opportunity to talk to ‘microcredit’ borrowers. From them, I particularly wanted to know more about microcredit and its effects on their lives. Some of the stories they told, were both enlightening and disturbing. Strangely, these stories reminded me of Shylock, the vicious money lender in Shakespeare’s Merchant of Venice. This post is generally about Microcredit and its uncritical acceptance.
No discussion on microcredit can proceed without reference to Dr Muhammad Yunus and his Grameen Bank. In my opinion, neither of them ever faced the necessary level of scrutiny as the nature of their activities would warrant. Rigorous scrutiny is essential given that Grameen Bank’s activities – which is largely corporate and commercial in nature – involve:
(a) operations in the poverty reduction sector which concerns crucial policy choices of public nature; and
(b) transactions with the borrowers (i.e., largely around and below the poverty line) whose bargaining powers are alarmingly inadequate compared to Grameen’s corporate strength. In the absence of an appropriate regulatory body or a strong consumer group balancing these uneven positions, the issue of appropriate scrutiny becomes even more pertinent.
Regrettably, just because Dr Yunus happens to be our one and only Nobel laureate – there seemed to exist an unwritten policy in the Bangladesh media to remain uncritical of Yunus and his organisation no matter what. This is something that can only be compared to a Tagorian (Rabindrik) ‘pledge of perpetual forgiveness’ in a je tare dekhibare pay osheem khomay kind of way. Hopefully, that time has now passed. In my opinion, with his newly gained social capital (thanks to the Nobel Committee in Sweden), Yunus’s capacity to harm the country and its poor has probably increased manifold. Now-a-days, almost every week there are revealing items in the news on micro-credit which even the Yunus-friendly media cannot ignore any longer. These are the stories of suffering farmers, of the bankrupt, of the people who committed suicide under Grameen Bank’s pressures.
A number of studies have been conducted to critically examine the impacts of microcredit. Evidences are there for everyone to see. The problem is, in our desperate need for a ‘poster boy’ we have chosen to look away. Well-researched but largely overlooked criticisms exist, such as this one:
The public transcripts represent microcredit not only as an innovative approach that empowers the poor – and poor women in particular – but also as an alternative to neoliberal policy prescriptions. It is often thought of as a ‘local’, bottom-up approach that results in self-sufficiency, rather than dependency. Thus, microcredit has been, and continues to be, a panacea for poverty reduction.
The ‘hidden transcripts’ of microcredit and poverty reduction
However, against the public transcripts of its ‘virtuous’ outcomes are rich ‘hidden transcripts’ regarding the poverty impact of microcredit. These hidden transcripts comprise the less publicly known facts about the adverse poverty impacts that also result as a consequence of implementation of microcredit programmes. The hidden transcripts substantially challenge the salience of microcredit as an effective approach to poverty reduction globally. For many of its targeted recipients, microcredit is, in practice, reinforcing poverty and survival insecurities rather than ameliorating these conditions or resulting in self-reliance through self-employment as the public transcripts maintain.
Heloise Weber, ‘Global Governance and Poverty Reduction: The Case of Micro Credit’ in Rorden Wilkinson, Steve Hughes (eds), Global Governance: Critical Perspectives (Routledge, London 2002), pp.133-51 at 135.
But as said, in the middle of all these Macbethan “sound and fury” associated with Microcredit etc, sane voices like the one above are failing to make their mark in the mainstream. It is as if we have found a new narcotic-induced dream, no matter how flawed, and we do not want to see it shattered. It seems like – we would rather believe in a sweet lie than face a bitter truth.
For some years now, Microcredit has been slowly gaining ground in the development debates as a possible poverty reduction tool. And then came this whole ‘hoopla’ with the Nobel Prize. With that a new band of opportunists mushroomed in all corners of the civil society — desperate to get some piece of action, to cash in while there is still time — by teaming up with Yunus (or his affiliates) in various dubious social-business schemes. In the midst of all these uproars, one may even feel that Microcredit and Social-Business have become a new religion with demigods and prophets in every part of the global civil society.
I do understand the reason behind capitalist West’s huge enthusiasm in Yunus. Because, the conventional banking system was a system which could only exploit the rich. Traditionally, banks were the institutions from which one could only ‘borrow umbrellas on sunny days on condition that they must be returned when it rains.’ So the conventional banks’ exploitative dragnet only caught the rich of the society, never the poor. Yunus, incidentally, showed the capitalist banking system a way – that even the have-nots can be exploited through a banking system. He showed them – money can be made even from the destitute, using their entrepreneurship, exploiting their dreams – while at the same time making sure that their real condition never improves, at least not above the limit Grameen executives set for them. No wonder that the West became too anxious to award him the Nobel prize, perhaps to add an aura of nobility to this new brand of exploitation, deceptive but pretty effective. We know that Grameen’s interest rates are higher than all other commercial banks.
What a formula ! Make billions (exploiting the poor) and at the same time have plenty of cheer leaders in the global civil society cheering you on as one of the good guys. Wow ! disturbingly diabolical but quite impressive nevertheless!
It is just my opinion — sometimes I cannot help but think that “Microcredit” and “Social Business” are two of the greatest frauds of our time.