Hey,
Of all multilateral institutions UNCTAD more than any other has
traditionally been viewed as defending ordinary people against
corporations and the South against the North. However, this past summer
the agency came under heavy fire from NGOs for holding a joint summit with
CEOs of multinational enterprises. Yet, the following item from BRIDGES
trade news digest (Vol. 2, Number 44) suggests that, far from heeding the
complaints, UNCTAD is seeking still closer relations with business.
The pitfalls of such an approach appear in the coda to the BRIDGES report
where we here that UNCTAD has been impressed by "entrepreneurial successes
in the developing world made possible via micro-finance". Evidently in
their enthusiasm for commerce the UNCTAD crew have missed recent research
discrediting the claim that micro-credit has been a boon to the poor.
The Grameen Bank, the world's prototype micro-credit institution, has long
been noted for its policy of making funds available to indigent women,
first in Bangladesh and later internationally. In the past attention has
been drawn at once to the progressive ideal underpinning the program -
i.e., the desire to alleviate women's disadvantaged economic status - and
the unusually high rate of repayment on the loans.
Governments have found very attractive the idea that poverty and sexism
alike can be redressed by pure market mechanisms with little or no
infusion of public monies. Lending institutions have noted the very low
percentages of defaults and the public relations points that can be scored
by supporting a (seemingly) socially beneficial undertaking. Both groups,
of course, were delighted at the notion that income redistribution
policies could be dispensed with in the face of the supposed income
generating capacity of micro-credit.
The reality is somewhat different. In speaking to Bangladeshi women who
had obtained loans from the Grameen Bank, University of Manitoba
sociologist Aminur Rahman found that roughly 5 in 6 had requested the loan
under orders from a male relative, and that 60% of the loans obtained were
appropriated by men. Fully 70% of the women reported increased verbal
and/or physical abuse from male relatives after taking out loans.
Rahman further noted that 78% of the loans went for purposes other than
those approved by the Bank. Often the money is required for sustenance.
New York economics reporter Gina Nepp relates that, "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".
Meanwhile the famously high rate of return on Grameen loans, it turns out,
is due to borrowers being driven by their male relatives to local loan
sharks who cover the Grameen payments in return for usurous remuneration.
To be sure, Grameen has lately instituted some reforms : e.g., borrowers
now pay weekly interest not on the total amount of the loan but rather on
the remaining balance (though this is no more than standard practice with
regular commercial borrowing). It is also possible that, at the outset,
Grameen loans did actually go to the women that requested them and it was
only later that opportunistic men began to coerce women into taking out
loans on the males' behalf. The salient point, however, should not be
whether those associated with Grameen are cynical or malign but that
micro-credit is a dubious strategy for fighting poverty. It is a strategy
which is of doubtful value for raising the standard of living of the
impoverished while it all too readily lends itself to the aims of the
powerful.
---Antoni
References :
Bangladeshi Women and the Grameen Bank,
by Jennifer Pepall
International Development Research Centre Reports, August 4, 1998
Microcredit, Microresults,
by Gina Neff
Left Business Observer #74, October 1996
BRIDGES weekly
trade news digest - Vol. 2, Number 44
November 16, 1998 (excerpt)
UNCTAD MEETING PROMOTES PRIVATE SECTOR INVOLVEMENT
The United Nations Conference on Trade and Development (UNCTAD) November
9-12 held "Partners for Development" in Lyon, France. The event brought
together over 400 private companies, nearly 100 non-governmental
organisations, a number of government delegations and entrepreneurs from
developing countries in an effort to foster mobilisation of resources for
development.
"Partners for Development" is part of a drive by UNCTAD to match-up
development projects of interest to the private sector with private sector
investors and put a strong emphasis on information technology for trade,
finance and development. At the event, UNCTAD announced three bio-trade
initiatives to be carried out in conjunction with the Spanish government,
a Brazilian bank and a private Brazilian investor, which would promote the
commercial use of Amazon forest products. UNCTAD also announced a string
of transportation partnerships to accelerate the flow of goods by road,
rail and sea in developing countries.
The exposition also highlighted the entrepreneurial successes in the
developing world made possible via micro-finance, or small loans made to
individuals or small groups in the amount of US$20 to US$1,000 dollars.
Micro-entrepreneurs, a high-percentage of them women, pay back their
lenders at impressive rates, with an overall default rate of three
percent. UNCTAD hoped the Lyon event would encourage other lenders to
follow the lead of the flagship micro-lender, The Grameen Bank, by
implementing micro-credit programmes.
"UN in push on private sector," FINANCIAL TIMES, November 9, 1998;
"Transportation partnerships launched at 'Partners for Development'
meeting in Lyon," UNCTAD PRESS RELEASE, November 12, 1998;
"Developpement: les miracles de la microfinance," LE FIGARO, November 10,
1998.