Monday, December 10, 2012

Story of half-truths and self-serving myths

Were it not for over-hyped half-truths, micro-credit would have pulled Sufiya Begum out of poverty. The very first client of Grameen Bank died in abject poverty in 1998 after all her income-generating projects came to nothing. If accumulated evidence from Bangladesh to Bolivia and from Cambodia to Mexico are anything to go by, micro-finance has proved nothing but a powerful ‘poverty trap’. Contrary to commonly held belief that it can pull people out of poverty, micro-finance has instead been a major contributory factor in the destruction of the positive economic and social development trajectories.

Milford Bateman wonders if the net impact of micro-finance could have been any different as it is now clear that a few individual ‘success stories’ were carefully promoted to give the world an impression that much progress in fighting poverty has been achieved. In reality, it has been a politically suspect model of poverty alleviation that the international development community sought to legitimize and perpetuate across the poverty-ridden developing world.

Backed by few ‘success stories’, the popular narrative on microfinance focused on its successful operational aspects, such as achieving high repayment rates, increasing the number of clients and expanding the volume of microfinance disbursed. It was automatically assumed that since the model was operationally sustainable it would have led to poverty reduction. Subsumed under this euphoria were stories of debt-ridden clients, many of whom ended up taking their own lives.

Spread over eight chapters, the book explores the depth and dimensions of micro-finance in exposing the ‘business of fighting poverty’. Through provocative reasoning, Bateman argues why micro-finance is not the solution to poverty and underdevelopment that we were originally led to believe it would be. In fact, it is an ‘anti-development policy’ that has outlived its social relevance. Why doesn’t microfinance work forcefully argues that the role of micro-finance in development policy should be urgently reconsidered?

It is a readable critique on micro-finance that should not be read by those who are overwhelmed by the myths attached to micro-finance....Link

Why Doesn’t Microfinance Work? 
by Milford Bateman
Zed Books, UK
262 pages, US$ 35.

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