new internationalist
issue 314 - July 1999

Bandaid
bandwagon
Sarah Blackstock believes the reputation of micro-credit has more to do with its
corporate friendliness than its success in helping poor people.

photo by SARAH BLACKSTOCK

When the women in a small village in Tangail district hear I am researching micro-credit, they approach my translator and ask if we can arrange a secret meeting. They want to set the record straight. Away from their homes, husbands and the NGOs that disburse credit to them, the women feel safe to say the unmentionable in Bangladesh – micro-credit isn’t all it’s cracked up to be.

Micro-credit provides poor people with small loans – usually no more than $50 – to initiate self-run, income-generating projects. More than 30 million micro-loans are disbursed worldwide every year – and they are increasing at an annual rate of 30 to 40 per cent, according to the World Bank.

Micro-credit gained international fame as a result of the widely touted ‘success’ of Grameen Bank in Bangladesh. Since establishing the Bank in 1976, Professor Muhammad Yunus has tirelessly promoted micro-credit as the most crucial of poverty-alleviation tools, telling politicians, bankers and development practitioners that access to credit is a human right.

Certainly, micro-credit has been useful to many poor people. However, it may not be as successful as its proponents claim. In 1998 Harvard economist Jonathan Morduch studied three major micro-credit organizations in Bangladesh, including Grameen Bank. ‘While strong claims are made for the ability of micro-finance to reduce poverty,’ he says, ‘only a handful of studies use sizable samples and appropriate frameworks to answer the question.’ What has really sold micro-credit is Yunus’s seductive oratorical skills, which have inspired hundreds of audiences. ‘If we can come up with a system that allows everybody access to credit while ensuring excellent repayment, I can guarantee that poverty will not last long,’ urged Yunus in a typical speech.

In 1997 the world’s élite – including the Clintons, executives of major banks and multinationals – gathered in Washington at a Micro-Credit Summit. They pledged their support to provide 100 million of the world’s poor families with small loans for self-employment projects by the year 2005. The Summit was organized by the American-based RESULTS Educational Fund which, alongside Grameen, is one of the leading micro-credit promoters, and is ‘dedicated to mass educational strategies to generate the will to end world hunger’. Its sister organization, RESULTS (Responsibility Ending Starvation Using Legislation, Trim-tabbing and Support), is a grassroots lobby group, training and empowering ‘everyday’ people to lobby their politicians and local media in favour of the anti-poverty projects it supports – one of the main ones being micro-credit.

Working closely with Grameen Bank, RESULTS’ propaganda strategy uses similar tactics to the micro-credit pioneer himself. Both ascribe poverty to a lack of inspiration and depoliticize it by refusing to look at its causes. Micro-credit propagators are always the first to advocate that poor people need to be able to help themselves. The kind of micro-credit they promote isn’t really about gaining control, but ensuring the key beneficiaries of global capitalism aren’t forced to take any responsibility for poverty.

While the corporate sponsors of micro-credit may bathe in the glow of selfless generosity, they are at least as motivated by the potential for profits. Soon after the Micro-Credit Summit, plans for a Grameen-Monsanto Centre for Environment-Friendly Technologies were announced. At the Centre, demonstration farms were to provide access for poor farmers to Monsanto’s own high-tech products. When people around the world fiercely protested the Centre as a threat to biodiversity and indigenous farming practices Grameen pulled out of the deal to save its image. However, Monsanto has kept its place on RESULTS’ Council of Corporations and the relationship between Grameen and Monsanto continues. Grameen Foundation USA, whose job is to promote the work of Grameen Bank in the Americas, shares board members with RESULTS and boasts members including Yvette Neier, a marketing expert – one of whose clients is Monsanto.

But as one micro-credit borrower told me in Bangladesh: ‘We don’t move up like the NGOs promise. Micro-credit keeps us going in circles. But no-one wants us to say that. All they care about is that we make our repayments and follow the rules.’

Sarah Blackstock is an activist and writer based in Toronto.