Against Microfinance
Recently I received in the mail, probably due to me being on some mailing list of potential donors to socially responsible charities, a brochure about an organization called Finca - Foundation for International Community Assistance. The front of the brochure has a picture of an indigenous latin american woman making a clay pot and the words "This woman doesn't need your charity... (turn page) all she needs is a chance." This organization arranges small loans to poor people around the world so they can start small businesses.
I just have to call bullshit on this. But this is one of those issues where I don't quite have the ammunition to explain why it's wrong, and there's not much information out there about why it's wrong, even in places you would think it would be (like Indymedia).
But I know I've heard and read before that microcredit/microfinance is bad. I just can't remember where. And I know in my gut that it is, too. Let's look at some points I can think of right off the bat about microcredit in general and about this organization FINCA specifically, and their marketing scheme:
- credit and borrowing (especially with interest) is just bad in general. Just look at how USians spend their lives in debt, buying stuff they can't afford.
- There's worldwide campaigns to forgive poor countries their debts. The World Bank and IMF are globally hated. People know it's a trap. Why would shrinking the debt down to household-sized chunks be any better? (The World Bank actually has microfinance projects going on.)
- the poor do need charity. That's clear. They don't need to get hooked into an endless cycle of debt. Actuallly the global south, if anything, needs the global north to pay them back -- but everything taken by the first world from the third over the last 600 years was not borrowing, it was permanent theft.
- The brochure goes on to say things like "we need to trust the poor to help themselves" and "they're ready to take responsiblity for their own finances". But wrapping an appeal for money in social-darwinist dogma is just bullshit. Once you give them a loan, probably with awful terms and no education or training to go with the money, to help them do the project they want to spend the money on, and say "now it's up to them," then it's easy to say "oh it's their fault that they are poor," once they fail and default on the loan.
- The really hypocritical scam of it all is that FINCA is asking for a handout, for donations from the normal person reading this brochure, so that they can go and loan the money and get interest on the loan.
- finca means "plantation" in spanish. Slaves work on plantations.
A couple other critiques of microfinance can be found at:
- this znet review of a book on "deglobalization" which says:
in late 2001 the Wall Street Journal wrote that, "To many, Grameen proves that capitalism can work for the poor as well as the rich" but then had to unhappily concede how Grameen's recent "steep losses" and unethical accounting practices had left the international microcredit industry "alarmed" (in spite of Grameen's more assertive debt collection method: removing tin roofs from delinquent women's houses).
- a paper by a geography professor at University of Toronto studies how microcredit is an expression of neoliberalism, normalizing the idea the State does not have a responsibility for the welfare and economic opportunity of its citizens but that they have that responsibility to themselves. The paper also discusses how microfinance is a gendered system for transforming rural life - almost everythign about microfinance i've seen has stressed that women are getting these loans. This is because women are more productive in agrarian societies and more likely to pay back loans. As the paper states, "microcredit as a governmental strategy is all the more pernicious in its appropriation of feminist languages of empowerment and solidarity to alternative (and fundamentally conservative) ends."
It's interesting, from a google search i'm finding very little negative comment about this and seeing several references to the idea that even anti-globalization types should like microcredit schemes. Like on
this page about a project in Guatemala there's the boldface line (and lie): '"These women are smart, strong and capable" she urges. "They are only held back by a lack of access to credit and education"' No. They're held back by corrupt right-wing neoliberal governments that want to pass treaties like CAFTA, paramilitary death squads, murderous narcotraficantes getting rich from the nostrils and bongs of the global north, and tools of global capitalist domination like the World Bank and the International Monetary Fund. They're held back by imperialism, neocolonialism, racism and greed.
If only people working so hard on these microfinance pipedreams would put their effort into campaigns that really attacked the root causes of global poverty, then we'd be getting somewhere. Instead they're just enslaving these people to, at best, crippling monthly bill payments to some bankers.
Am I missing something? Am I wrong? Let me know. I invite comments and positive analysis of microfinance from credible sources. Leave a comment, please.
Posted by steev at Marzo 20, 2005 06:56 AM