The Nation on Microcredit
Filed in archive Microfinance on October 26, 2006
(Picture from Results.org)
I'm not sure if I posted this article from The Nation about microfinance or not, but it's worth highlighting prominently here. I tend to agree with a lot of what the author points out, and microfinance is just one of many tools in the development box, not the miracle many say it is. What are your thoughts on the article?
There is no doubt that Yunus, a Bangladeshi economist, came up with a winning idea that has transformed the lives of many millions of poor women, and perhaps for that alone, he deserves the Nobel Prize. But Yunus--at least the young Yunus, who did not have the support of global institutions when he started out--did not see his Grameen Bank as a panacea. Others, like the World Bank and the United Nations, elevated it to that status (and, some say, convinced Yunus it was a panacea), and microcredit is now presented as a relatively painless approach to development. Through its dynamics of collective responsibility for repayment by a group of women borrowers, microcredit has indeed allowed many poor women to roll back pervasive poverty. However, it is mainly the moderately poor rather than the very poor who benefit, and not very many can claim they have permanently left the instability of poverty. Likewise, not many would claim that the degree of self-sufficiency and the ability to send children to school afforded by microcredit are indicators of their graduating to middle-class prosperity. As economic journalist gina Neff notes, "after 8 years of borrowing, 55% of Grameen households still aren't able to meet their basic nutritional needs--so many women are using their loans to buy food rather than invest in business."
More from the world of microcredit:
*Ecobank Nigeria Plc partners with Accion International on microfinance partnerships in the Niger Delta.
*Farmer suicides lead to microfinance changes in India.
*Bill Gates puts his money on Unitus for microfinance expansion.
*From the Council on Foreign Relations: Defending Microfinance.
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