A very short entry here on a very extensive subject in the field of development—Microfinance. The most famous Microfinance project is of course the Grameen Bank although the concept of providing non-collateral loans of a small amount existed way before then. I first came across the concept in my undergraduate second year module on Economic Development and wrote and a really great essay on it.
So I became a true supporter of the Microfinance/Grameen concept. Enter Cambridge Development Studies. I was challenged my Dr. H-J Chang who was a strong (well you can drop the adjective “strong”) critic of the concept–see this article of his, co-written with Milford Bateman, Bateman’s presentation on Microfinance’s shortcomings and this this discussion on Bateman’s book.
Recently, the Guardian’s Development section has a critical article on the subject again. Fine, microfinance isn’t exactly the cure for minority and extremely poor people. moving along Chang’s (and to some extent Bateman’s) argument, it is merely part of the “pure-capitalist/neoliberal” project. Solution? Regulation or especially in Chang’s view, state action to tackle Microfinance’s detriments/short comings.
It’s always nice to talk about state intervention with the presence or indication of failed privatised projects. But returning to the history of Grameen, Microfinance came about in rural, ethnic minority areas or for that matter women who were discriminated by men. Of course now the ideas has been over-blown to include anyone deemed to be poor. But the fact is that such minority groups often don’t trust the state or any outside help. I may be generalising, but this is probably true is the same region where Prof. Yunus initiated Grameen and other rural regions. So how much can the state be active or effective given the long-standing distrust by the people? Granted that they will not benefit if they allow the Microfinance project to be unregulated and sustaining the neoliberal paradigm (or it may not) but how can the state work when the embedded culture doesnt not want the state at all?
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