Seduced and Betrayed
Exposing the Contemporary Microfinance Phenomenon
Publication Year: 2017
Microfinance began as the disbursement of tiny loans to the poor, which they could use to undertake informal income-generating activities. It went on to become one of the most popular international development policies of all time and a mainstay of local development and antipoverty programs across the Global South. The contributors to this multidisciplinary volume consider the origins, evolution, and outcomes of microfinance from a variety of perspectives and contend that it has been an unsuccessful approach to development. The contributors contend that over the last twenty years, microfinance policies have exacerbated poverty and exclusion, undermined gender empowerment, underpinned a massive growth in inequality, destroyed solidarity and trust in the community, and, overall, manifestly weakened those local economies of the Global South where it reached critical mass. They use qualitative anthropological, economic, and political-economic research to unpack the ideas and values that have allowed microfinance to “seduce” the world and blind so many to its corrosive effects.
Published by: University of New Mexico Press
Title Page, Copyright
James K. Galbraith
Seduced and Betrayed is one of the best books on modern economic development to come along in years. Milford Bateman, Kate Maclean, and colleagues here provide a full review of the single most heavily promoted, widely praised, and widespread novelty in the history of transnational finance: the so-called microfinance revolution. The public presentation of microfinance to the Western world was a work of art. Emerging from one of the world’s poorest countries, Muhammad Yunus married a lofty rhetoric of female empowerment to a...
Introduction: Setting the Scene
Milford Bateman and Kate Maclean
This book examines from a multidisciplinary perspective the functioning, outcomes, and often-hidden rationale that lie behind the most important, and certainly the most popular, international development policy of recent years: microfinance.1 Unusually for a technical financial development technique, a large number of high-profile celebrity campaigns have ensured that the general public has a broad awareness of microfinance and how it works.2 The microfinance model involves the disbursement of tiny loans (microloans) to...
Part One: Background
1: The Political Economy of Microfinance
Researchers in the international development policy field, notably James Ferguson (1990) and James Scott (1992), show that a yawning gap generally exists between the declared objective of any particular policy intervention and the hidden political agenda that lies behind that intervention. The purpose of this chapter is to explore aspects of the largely hidden political agenda that emerged first to help establish the contemporary microfinance model as one of the most popular antipoverty interventions of all time and then to sustain it in spite of...
2: Poverty Reduction or the Financialization of Poverty?
Maren Duvendack and Philip Mader
For decades, many have claimed that microfinance successfully alleviates poverty and empowers women. Yet the scientific research on microfinance’s impacts hardly offers such a clear picture. In this chapter we discuss the evidence, reviewing the existing literature on the impact of microcredit and squaring it with evidence on payments extracted from and discipline instilled in the poor. Such a review of what we know—and do not know—about the impacts of microfinance is all the more important in light of the continued enthusiasm for...
Part Two: Seduction
3: Pop Development and the Uses of Feminism
Meena Khandelwal and Carla Freeman
This chapter considers the ideological foundation that makes microfinance one of the most popular development policies in history. What are its claims, and why do they have such broad appeal across the political spectrum? We explore these claims using examples from the “pop development” discourse that circulates in the West/Global North/developed world and ask in particular why a “rescue narrative” is so endemic to the way that microfinance operates in the service of neoliberal capitalism. One answer to this puzzle lies in the focus of...
4: Petit Bourgeois Fantasies: Microcredit, Small-Is-Beautiful Solutions, and Development’s New Antipolitics
The rise of microfinance from an obscure Bangladeshi nongovernmental organization (NGO) innovation (with an initial portfolio of, famously, US$27) to a worldwide institution moving US$90 billion in loans through virtually every pocket of the globe—and all in three decades—has been nothing short of miraculous. And perhaps even more impressive than the growth of the industry and the movement behind it has been microcredit’s ability to establish itself as a commonsense pillar, perhaps the sine qua non, of this new century’s global antipoverty development efforts. Indeed, when Mohammad Yunus (2011), awarded...
5: Kiva’s Staging of “Peer-to-Peer” Charitable Lending: Innovative Marketing or Egregious Deception?
Since its inception, Kiva has mobilized more than a million lenders with its imaginative and picturesque stories of poverty, entrepreneurship, and hope. It has brought the gospel of microfinance to the masses by advancing a flattering discourse of benevolent lending and, more fundamentally, by staging compelling user experiences. This staging has received mixed responses ranging from ecstatic praise to piercing critique, thus inviting closer examination of the suppositions and stakes at play in Kiva’s marketing. Drawing upon analyses of the...
6: Muhammad Yunus’s Model of Social Business: A New, More Humane Form of Capitalism or a Failed “Next Big Idea”?
Milford Bateman and Sonja Novković
One of the most dramatic developments in the field of entrepreneurship and international development policy in recent years has been the rise of the “social enterprise” (Nicholls 2006; Seelos and Mair 2005). A social enterprise is said to combine traditional entrepreneurship and private sector–style operational efficiency while explicitly addressing basic human needs that markets, conventional for-profit businesses, and state policies are unable to fulfill (Dees 2001; Certo and Miller 2008). Today, although it is understood differently in different...
Part Three: Betrayal
7: Bosnia’s Postconflict Microfinance Experiment: A New Balkan Tragedy
Milford Bateman and Dean Sinković
As the small, newly independent Balkan nation of Bosnia and Herzegovina (hereafter Bosnia) began its struggle to recover from the vicious civil war that raged in the former Yugoslavia from 1992 to the end of 1995, the international development community promised its full support. One of the interventions that the international development community argued would very quickly provide Bosnia with a solid foundation for postconflict recovery and reconstruction was the microcredit model. As very many saw it, microcredit would play...
8: From Tigers to Cats?: The Rise and Crisis of Microfinance in Rural India
The striking imagery of microfinance institutions (MFIs) reduced from tigers to cats demonstrates the intensity of the crisis that struck commercial microfinance in India in 2010. The depth of this crisis may appear surprising given that immediately prior to its outbreak India had been seen as a boom market for commercially operated microfinance. Backed by state support under the rubric of “financial inclusion,” investment flowed into the sector from both Indian banks and international financial institutions. As a result, MFIs dramatically...
9: The Destructive Role of Microcredit in Post-apartheid South Africa
Milford Bateman and Khadija Sharife
The end of apartheid in South Africa in 1994 heralded the arrival of the international development community equipped with a plan to promote a thriving, nonracial capitalist economy. A key component at the local level was the microcredit model. Proclaiming that it would rapidly bring new jobs, incomes, empowerment, fairness, and dignity to the viciously exploited black South African population, the microcredit movement created the widespread expectation that significant progress was just around the corner. Right on cue, the initial reports...
10: Public Goods Provision Aided by Microfinance: Groupthink, Ideological Blinkers, and Stories of Success
The spectacular growth of microfinance activities has brought millions of poor people into the reach of the global financial market. But this growth has not merely been quantitative; microfinance has also qualitatively expanded into new areas. Organizations such as the World Bank and the Bill and Melinda Gates Foundation increasingly understand credit as a means of enhancing access to goods like education, health care, irrigation, and water and sanitation. Instead of fostering small businesses or funding consumption, which microlending originally concentrated upon, numerous programs since the turn of the millennium...
11: The “Scandal” of Grameen: The Nobel Prize, the Bank, and the State in Bangladesh
This chapter examines the absence of a critical global or local engagement with the harsh realities of microfinance in the lives of poor women. The power of Grameen Bank–style microfinance lies in its ability to showcase poor Bangladeshi women as model “entrepreneurs.” It is a rhetoric that has seamlessly fed into donors’ desire to create non-Western societies that conform to Western capitalist norms, as well as local nationalist desires to become equal with the West. Grameen has always been celebrated as an innovation in banking for the...
12: Agricultural Microfinance and Risk Saturation
Smallholder agriculture is central to the development agenda. In February 2012 Bill Gates declared, “If you care about the poor then you care about agriculture” (Gates Foundation Media Center 2012). The Food and Agriculture Organization (FAO 2012) estimates that smallholder farmers make up 90 percent of the world’s “extreme poor.” Smallholders have traditionally been considered “underserved” by credit services, as the costs of administering loans in rural environments have not made them appealing candidates for the financial...
Part Four: Alternatives
13: Banking on the Difference: Credit Unions as Superior Local Financial Institutions for the Poor
Jessica Gordon Nembhard
In 2005, the United Nations’ “Year of Microcredit,” the International Cooperative Alliance (ICA) used the occasion to highlight the important role that cooperative enterprises have played for more than a century in providing small-scale finance and supporting sustainable microenterprise development throughout the world. Launching the theme “Microfinance is our business— Co-operating out of poverty” at the International Day of Cooperatives on July 2, 2005, the ICA (2005, 1) claimed that “co-operatives are amongst the most...
14: Microfinance and the “Woman” Question
In this chapter I recontextualize the gendered, feminist appraisals of microfinance that have for decades been very critical of the intervention. The general picture painted of microfinance, particularly since the financial crisis of 2008, is of an industry that is financializing and turning toward mainstream banking practices (Aitken 2010; Mader 2012). However, a number of institutions have resisted pressures to prioritize financial sustainability or to refocus their interventions away from beneficiaries and toward shareholders. Some microfinance...
15: Moral and Other Economies: Nijera Kori and Its Alternatives to Microcredit
Nijera Kori, Bangladesh’s largest movement of landless people, is committed to mobilizing the rural poor to demand their rights; in so doing, they actively reject microcredit and the service-delivery approach that it exemplifies. This rejection is noteworthy in a country that has become known as the “birthplace of microcredit” and that boasts more microcredit borrowers per square mile than any other country in the world (Yunus 2011). This chapter examines the politics of Nijera Kori’s rejection of microcredit, grounded in the particular...
16: The “Solidarity Economy” Model and Local Finance: Lessons from New Left Experiments in Latin America?
Milford Bateman and Kate Maclean
Since the 1990s, many countries in Latin America have been gradually extricating themselves from the nearly continent-wide experiment with neoliberal policies, an experiment that many independent analysts now view as having precipitated nothing short of an economic and social calamity (Hershberg and Rosen 2006; Weisbrot 2006; Weisbrot et al. 2006; Navarro 2007).1 With signs of economic progress and social reconciliation beginning to appear by the midpoint of the 2000s, especially in terms of poverty reduction, Latin America’s...
Conclusion: It’s the Politics, Stupid
Milford Bateman and Kate Maclean
Economics is not a science. Instead, as Ha-Joon Chang concludes, along with many others from Adam Smith to Karl Marx, John Maynard Keynes, John Kenneth Galbraith, and recent Nobel Prize in Economics winners Amartya Sen, Paul Krugman, and Joseph Stiglitz, economics is intimately connected to the politics and ideologies of particular groups in society, groups that ultimately seek to benefit from the economic policies that they promote and help to sustain. We recently saw this connection exposed with stunning clarity after...
Page Count: 392
Publication Year: 2017
OCLC Number: 956584168
MUSE Marc Record: Download for Seduced and Betrayed