Microfeminism

[bcholmes]

So what am I doing in Haiti? I'm volunteering some IT help to a group called Fonkoze. Fonkoze is a well-respected microfinance institution that is spread across Haiti.

There's a lot of interesting stuff to say about microfinance. Certainly, it's been getting more press ever since Muhammad Yunus won a Nobel Peace Prize for his pioneering work in this field. Also, a lot of people I know have run into Kiva, and have some experience using relatively small amounts of money to help poor people in developing countries (what New Internationalist likes to call "the majority world").

I have a lot of respect for Fonkoze; I've heard countless groups down here praise their work, and even Paul Farmer is an honourary board member. In my opinion, Fonkoze is a force for good in Haiti.

There's stuff I didn't know about microcredit until I came here. The first thing that was very interesting was that almost all recipients of microcredit loans are women. Fonkoze (like other microcredit institutions) asks women to organize into small collectives of (usually) five. As a collective, they participate in various eductional programmes (it's not enough to just lend money to poor people: you need to provide basic literacy and business training. Fonkoze also offers basic health training as part of their programme).

The loan is made out to the collective (with each member having responsibility for a certain percentage of the repayments), and the women help support each other through the process. On the one hand, this is a process that uses peer pressure to help ensure repayment. But on the other hand, it seems to work and it seems to help. Apparently, it's the rare group of men (Haitian and in other developing countries) who will be willing to get together and be jointly responsible for repayment of a loan.

The Grameen Bank (the microcredit institution founded by Yunus) also says that:

studies have shown that the overall output of development is greater when loans are given to women instead of men, as women are more likely to use their earnings to improve their living situations and to educate their children.

Some of Grameen's ideas about what constitutes microcredit include:

• It promotes credit as a human right.
• Its mission is to help the poor families to help themselves to overcome poverty. It is targeted to the poor, particularly poor women.
• Most distinctive feature of Grameencredit is that it is not based on any collateral, or legally enforceable contracts. It is based on "trust", not on legal procedures and system.procedures and system.
• It is offered for creating self-employment for income-generating activities and housing for the poor, as opposed to consumption.

I particularly like that last point.

Having said all that, I worry a bit that the labels of "microfinance" and "microcredit" are becoming brands (like, people will buy anything that's labelled as "organic"). I've read enough literature about how microfinance is this big growth market and all of the world's major financial institutions are racing to add microfinance offerings to the product suite (eBay has a site whereby you can make money off of microfinance!) Really, the literature is creepy: one European banking software company is talking about how it's all "consolidate or be consolidated" in this field right now. As with so many good things, capitalists are finding ways to ruin it.

Here's a quotation from Wikipedia:

Forbes magazine said that "microfinance has become a buzzword of the decade, raising the provocative notion that even philanthropy aimed at alleviating poverty can be profitable to institutional and individual investors."

This does not fill me with warm fuzzies.

The Grameen Bank writes:

The word "microcredit" did not exist before the seventies. Now it has become a buzz-word among the development practitioners. In the process, the word has been imputed to mean everything to everybody. No one now gets shocked if somebody uses the term "microcredit" to mean agricultural credit, or rural credit, or cooperative credit, or consumer credit, credit from the savings and loan associations, or from credit unions, or from money lenders. When someone claims microcredit has a thousand year history, or a hundred year history, nobody finds it as an exciting piece of historical information.

I think this is creating a lot of misunderstanding and confusion in the discussion about microcredit. We really don't know who is talking about what.

I was chatting, today, with a guy named Mark, who showed up a the guest house the other night. Mark has been doing a lot of work around the world: India, Peru, and how Haiti. He had a lot of experience with microfinance programmes in India. He'd tell how various NGOs who were getting grant money to run microcredit programmes. As he told it, a lot of these groups were horribly corrupt and were helping themselves to a lot of the money that was supposed to be dispersed to the borrowers.

But even aside from corruption, there are some legitimate dangers of microcredit. The Criticism section of Wikipedia's entry on Microcredit is worth reading.

Also, Vandana Shiva has said some interesting things about microcredit on Democracy Now!:

I’m very happy that the Grameen Bank and Yunus got the Nobel Peace Prize. I would only say, let us not think this is a solution to every situation that creates poverty. It’s a solution in a particular context. But it cannot be the solution when land is being grabbed from the peasants and leaving them in poverty. For example, in this whole land grab under the special economic zones that’s taking place in India right now, and foreign direct investment in real estate is part of the driving force for this. That cannot be solved by microcredit. It needs a solution in terms of respecting the land rights of the peasants and not treating land of the poor as something that can be grabbed by the rich.

Susan Davis (of Grameen, not the Torontonian) said, in the same interview:

It’s the -- microcredit is an instrument, it’s a strategy, and it can be -- it’s just like Bishop Tutu said about a knife. It can be both harmful and benign. You can use a knife to slice bread or you can use it to stab someone in the heart. Microcredit, in the hands of an institution that is trying to promote development and women’s self-empowerment, is a very powerful and robust instrument. What it does, as Yunus talked about at the Nobel ceremony, is it creates a platform for wider development. He himself said that microcredit is not a panacea and was not trying to argue -- and it’s always a false divide when people go down that road.

What he’s talking about is the active construction of an alternative. He’s talking about being able to have assets and being owned by these people themselves, that we’re talking about always as being the victims of whatever injustice. It’s a very unjust world, but he says ingenuity, intelligence, opportunity is not unevenly distributed, and all people need is a chance. And that’s why credit should be a basic human right, because through that they can access many other of their other rights.

Right now, I think that microcredit, in the hands of groups like Fonkoze and Grameen, is a tool for good (albeit, fundamentally part of the capitalist system). But I think that responsible leftists need to view microfinance orgnizations with some suspicion because over the next ten years the same organizations who will be offering microfinance services will also be pressuring the WTO for water privatization, and also investing heavily in Monsanto.

Comments

[lovecraftienne.livejournal.com]

This makes me wish I were making more. This is an "investment" I could get behind: not caring whether I make money on it or not, it would be nice to think that money I'd just stuff in a bank account or yet another big-corporate-mutual-fund could actually be out helping people instead. I realize I'm an unusual investor in not caring about ROI, but that's what makes it such a good opportunity for me.

Now I just have to figure out how to make enough so that I can do it. :)

[firecat]

You can lend as little as $25 via Kiva.

[lovecraftienne.livejournal.com]

Thank you - I'll keep that in mind. Sadly, I've recently had a pay cut (damn startups), and am barely nose-above-water just now. But that won't last forever. :)

[morganxpage.livejournal.com]

Thanks for this post. It's given me back my hope for the world. I wish there was some way I could aid efforts like this.

~Morgan

[firecat]

Thanks for this fascinating post.

I lend through Kiva, and I have noticed a couple of things. One is that the field lenders charge a lot of interest, compared to the interest rates I'm used to from US banks. I've seen interest rates as high as 50%. To its credit, Kiva doesn't try to hide this, and they have some explanations why it's so. (The explanations don't quite include "gouging," but they do include the equivalent of "only game in town.") My impression is that over the past year or so, the interest rates of Kiva field lenders have decreased slightly. That does make me wonder whether they are getting at some of the loan money in other ways, through fees or such.

The other thing I noticed a few weeks ago, when I made some Kiva loans, was that in a number of cases loans were categorized as being made to women, but the lender pictured was a man, along with a comment "[woman's name] wasn't available when we took this photo so this is a photo of her husband". That made me wonder whether the man is really going to get the money, and/or whether some kind of social pressure is being brought to bear on women not to allow themselves to be photographed, and/or whether women themselves would prefer not to be photographed.

I agree with your concerns about the microcredit tool.