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   Poverty Capital
Reviewed by Sudhirendar Sharma
30 Oct 2010

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Weapon of mass salvation

‘The poor you have, always with you’, said Jesus. And yet, at certain times in history they become sharply visible. Whilst in the 1980s poverty was framed as a problem of delinquent behavior prompting redistribution through welfare schemes, the current idea of poverty hovers around the need for developing entrepreneurialism. As wealth has grown faster than aid in recent times, microfinance has emerged as the universal weapon of mass salvation.

The vexed question at hand is whether microfinance will ensure financial inclusion, on fair and just terms, for the world’s poor. Can microfinance, as an asset class, sought after by Wall Street investors, maintain this social purpose? Or will it fuel financial speculation, predatory capitalism, and ever-expanding debt? Focusing on microfinance as an active frontier of ‘creative capitalism’, author Ananya Roy examines the circuits of capital and truth that structure ‘development’.

Poverty Capital is neither about poverty nor microfinance, but about those who manage poverty and about powerful institutions who not only control capital but possess authoritative knowledge about poverty too. Ironically, the idea of microfinance is the creation of the global south that has been conveniently appropriated by the global north as much a response to recent market failure as to justify the continuous reduction in overseas development assistance.

Roy unfolds the seductions of microfinance at various levels, from Washington to Beirut and from Cairo to Dhaka. Outlining three contrasting paradigms of microfinance – the right-based pro-poor approach, creative capitalism as a lucrative market, and the critique of microfinance that rejects its impact on poverty – the author questions whether poverty can be transformed into poverty capital and whether poverty capital will serve the interests of the poor?

The designation of microfinance as subprime lending raises further doubts on the claims made by the proponents of microfinance. Poverty Capital challenges the consensus on microfinance and questions the ways in which microfinance seeks to integrate the micro-capital of the poor with the highly vulnerable global financial flows. Will the poor benefit from such integration or will their inclusion take place in highly exploitative and predatory ways?

Some of the recent developments (in India) have clearly demonstrated that the design of microfinance has been highly exploitative. Far from reducing poverty, the microfinance sector has instead capitalized on poverty to build its capital. Let the MFIs have the courage to read Roy’s unpeeling of the many layers of microfinance.

Poverty Capital: Microfinance and the Making of Development
by Ananya Roy ; Routledge, New York, 253 pages, $ 29.95

 Other books reviewed by Dr Sudhirendar Sharma
Features > Book Shelf
Spoiling Tibet
Posting Date: 28 Feb 2014

A Journey in the Future of Water
Posting Date: 28 Feb 2014

Yamuna Manifesto
Posting Date: 28 Feb 2014

Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

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Book Shelf

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