<body><script type="text/javascript"> function setAttributeOnload(object, attribute, val) { if(window.addEventListener) { window.addEventListener('load', function(){ object[attribute] = val; }, false); } else { window.attachEvent('onload', function(){ object[attribute] = val; }); } } </script> <div id="navbar-iframe-container"></div> <script type="text/javascript" src="https://apis.google.com/js/plusone.js"></script> <script type="text/javascript"> gapi.load("gapi.iframes:gapi.iframes.style.bubble", function() { if (gapi.iframes && gapi.iframes.getContext) { gapi.iframes.getContext().openChild({ url: 'https://www.blogger.com/navbar.g?targetBlogID\x3d8044287\x26blogName\x3dVancouver+Participatory+Economics+Col...\x26publishMode\x3dPUBLISH_MODE_BLOGSPOT\x26navbarType\x3dBLUE\x26layoutType\x3dCLASSIC\x26searchRoot\x3dhttp://vanparecon.blogspot.com/search\x26blogLocale\x3den_US\x26v\x3d2\x26homepageUrl\x3dhttp://vanparecon.blogspot.com/\x26vt\x3d-76316457561610141', where: document.getElementById("navbar-iframe-container"), id: "navbar-iframe" }); } }); </script>

Vancouver Participatory Economics Collective

This is the blog for the Vancouver ParEcon Collective. Posts are made by collective members, regarding participatory economics, vision, strategy and related issues.

Monday, October 23, 2006

Nobel, microcredit and Canada in Afghanistan

Will microcredit save the world?
CTV news reports today that Canada's minister responsible for international development aid, Josee Verner, is in the midst of a "surprise visit" to Afghanistan. There, she announced (amongst other things) the granting of $5 million of development aid for Afghanistan which will go "towards micro-credit initiatives to help women establish their own businesses selling and growing fruits and vegetables."
Microcredit has been all the rage in development circles for several years, and the man chiefly responsible, Muhammad Yunus, was just awarded the Nobel Prize for his work.
Typically, microcredit schemes operate in the developing world where they loan out very small sums to small-scale women entrepeneurs who would otherwise not have access to credit. This is supposed to help these women pull themselves up by their bootstraps, meanwhile helping kickstart the economies of the impoverished regions where such projects are found. Thus, there is hope that the free market can help eliminate poverty in the Third World without the troublesome spectre of government involvement. You can hear the capitalist ideologues clapping their hands in glee.
The most celebrated microcredit project is the Grameen Bank, founded by Yunus in his home country of Bangladesh. Besides the supposed innovation of very small loans, the women who borrow do so in small groups which sink or swim as a unit. That is, if one woman in a peer group defaults, none of the other women in her group will receive any more loans.
Reality not so rosy
There is just one slight problem with the microcredit panacea: It's bollocks (apologies to the Black Adder):
**After 8 years under the Grameen tutelage, 55% of borrowing households could not meet basic nutritional needs. That is, the investment capital they are borrowing is in fact used for basic survival consumption, NOT investment.
**Far from loaning to the "poorest of the poor", Grameen borrowers must own their own house!
**Most women borrowers do not maintain control over the money borrowed; male family members end up controlling their businesses. Further, this dynamic tends to INCREASE as loans are renewed. That is, far from empowering women, the Grameen project tends to remove their decision-making power and reinforces traditional female roles.
**Grameen Bank isn't even successful from a capitalist's point of view: it has relied upon outside donations to stay afloat.
(See the great article by Gina Neff in Left Business Observer from 10 years ago.)
What it means
Mainstream commentators see the award of the Nobel to Yunus as confirmation for all of their prejudices: governments cannot eliminate poverty; the poor can pull themselves out of their circumstances; the free market cures all, and so on ad nauseum.
However, the reality which we just reviewed, shows that just the opposite is true. Walden Bello says it best: poverty elimination in the developing world will require "not only massive capital-intensive, state-directed investments to build industries but also an assault on the structures of inequality such as concentrated land ownership".

0 Comments:

Post a Comment

<< Home