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   Why doesn't microfinance work?
Reviewed by Sudhirendar Sharma
30 Nov 2012

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, microfinance has proved nothing but a powerful ‘poverty trap’. Contrary to commonly held belief that it can pull people out of poverty, microfinance 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 microfinance 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 microfinance in exposing the ‘business of fighting poverty’. Through provocative reasoning, Bateman argues why microfinance 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 microfinance in development policy should be urgently reconsidered?

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

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

 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!!   

Lead View
People, Partition and the Pain
By Rina Mukherji
15 Aug 2013

Dr Jayanti Basu's book analyzes the complex feelings of hatred and longing for the homeland that have contributed to shaping the personalities of a generation of people who were forced to ..
Book Shelf

Yamuna Manifesto

A Journey in the Future of Water

Spoiling Tibet

On Western Terrorism
Devinder Sharma
Carmen Miranda
Pandurang Hegde
Sudhirendar Sharma
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