#microfinance

[livelovecaliforniadreams]

[apveng]

Haitians Deserve a Rethink on International Aid

Instead of sticking with failed strategies, the international community should target micro-loans to small-scale farmers.

Put another way, today’s Haitian peasants are the descendants of a population of former slaves who fought for the country’s independence, but soon afterward were marginalized for refusing to return to the plantation system and work for miserable wages. The hard truth is that this legacy has never been accounted for in public policies or international agendas.

[barbarasweetchase]

What if I introduce you to a legit investment company that can manage your life trading account and yield good cash for you within a shot period of time

[probablyasocialecologist]

The microfinance delusion: who really wins?

Far from being a panacea, small loans add to poverty and undermine people by saddling them with unsustainable debt, argues anthropologist Jason Hickel

In the past we would have called such people loan sharks, but today they’re called microfinance providers, and they crown themselves with the moral halo that this term carries. Microfinance has become a socially acceptable mechanism for extracting wealth and resources from poor people.

[johnvink]

CAMBODIA, Phnom Penh. 2/08/2019: Construction workers without protective clothing are building the “New World Market 3” ’Borey’ with over 200 houses measuring 4,10 meter by 12 meter, sold at 40000$ each. This is just one of the development projects financed by 'Okhna' (honorary title) Hong Peuv, targeting the lower middle-class. From "Cambodia, the Lure and its Scourge" a new story about the microfinance burden created by development and consumerism. Average debt per capita is 3370$. One-in-three borrower is over-indebted. Link to the story here: https://mapsbase.photoshelter.com/gallery/Cambodia-The-Lure-and-its-Curse/G0000Z9OcilsQpSM/C0000lRpsvmqD_CI #MAPS #microfinance #Cambodia #development #photojournalism https://www.instagram.com/p/B3oHI7dhLnK/?igshid=4eqg59px4ldl

[pabifaye]

Small business #couleurs #nature #adventure#aventures #midi#instagram#pabifaye #pabifaye #finance #microfinance #business #yummy #yum #senegal #voyage #insta #instagram #pabifaye #adventure#aventures (à Diourbel) https://www.instagram.com/p/BsGu8FiB-oh/?utm_source=ig_tumblr_share&igshid=1r0qsvfcm7lx4

[childofhopeuganda]

Bakery dream to reality: Within a year, one single mother’s dream of having her own bakery business has become the means of supporting her large family.

After attending business training with Child of Hope, Amina received a small IGA grant. Through determination and her own initiative, she secured a further top-up loan that enabled her to construct an oven and even employ other people.

Now Amina’s home-made bread, cakes, doughnuts and crisps are in high demand within the local community. With the support of IGA staff she saves money regularly and is already providing for most of her family’s needs, with a sharp improvement in living standards. They are eating better and Amina is now able to afford the regular medical bills that are inevitable when a large number of children are living in a slum.

http://www.childofhopeuganda.org/latest-news/bakery-dream-reality/

[anniekoh]

Two books on how good intentions, bad logic and faddish thinking result in terrible outcomes. 

Hugh Sinclair writes from the inside in Confessions of a Microfinance Heretic: How Microlending Lost Its Way and Betrayed the Poor (2012). He started with a “naive belief” in microfinance, seduced by the “heartwarming tale of a woman living in a hut in some poor country who gets a minuscule loan to buy a productive asset, often a sewing machine or a goat.” But the idea of microfinance was so attractive that, as the UK international aid agency wrote, “[it] absorbed a significant proportion of development resources, both in terms of finances and people. Microfinance activities are highly attractive, not only to the development industry but also to mainstream financial and business interests with little interest in poverty reduction.” 

Sinclair describes his disillusionment: “As cracks began to appear in the overall microfinance model, I initially assumed that they were exceptions, teething problems, or temporary blips. But the cracks did not vanish, and as the sector matured (if that is the right word), the propaganda machine worked overtime to disguise rather than repair them.

This is the true story of a young IESE Business School grad who joined the burgeoning microfinance industry in the early 2000s with the intention of doing good in the world. Over the course of the following decade, he would discover vast global networks of corruption, cover-ups, and countless betrayals of the poor in what had grown into a $70 billion sector. His attempts at exposing wrongdoing would result in death threats, aggressive and personal retaliations, and legal action -- after all, the first rule of microfinance is don’t criticize microfinance. These are his true confessions.

While I could have skipped the sensationalized descriptions of Mozambique and Nigeria, I did appreciate the anecdotal writing approach. I especially enjoyed his recounting of the self-congratulatory microfinance conferences. As someone who has exceeded her lifetime quota of urban planning bromides (the domestic equivalent of international development solutionism), Sinclair’s bluntness made me chortle. He tells a room full of microfinance acolytes, “I’m a dodgy moneylender, exploiting the poor with useless, overpriced loans, ideally obliging their children into forced labor in the process.”

Microfinance advocates crow about reaching 100 million people, but the “barometer of success” is simply access to credit, nothing more. Sinclair critiques the fundamental logic of microfinance, marshalling recent research that shows it has little impact on poverty and that many microloans are for consumer purchases. Bangladesh, the birthplace of microfinance pioneer Grameen Bank, slipped lower on the UN’s Human Development Index during microfinance’s boom from 2001 to 2009.

Sinclair argues that the exploitative microfinance institutions (MFIs) are enabled by the microfinance funds that deliberately turn a blind eye to the injustices of what he calls “eye-watering interest rates” and predatory practices when choosing investment contracts. What microfinance does achieve is high profits, for the MFIs from the interest and fees paid by the poor, and for the funds from interest or equity from the MFI. The funds claim “socially responsible investing” and plaster photos of “empowered” women entrepreneurs on their websites but fail to conduct due diligence. He calls out Kiva.com for not providing data on borrower interest rates, just “averages,” and their willingness to stand by some of the worst microfinance orgs in the name of “social mission.”

Like the mortgage-induced financial crisis in the U.S, the sheer amounts of money sloshing around in microfinance should set off warning bells re: faddish herd behavior. He details the case of Nicaragua, in which $420 million in microfinance was poured into a country of only 5.5 million before the ‘no pago’ (I won’t pay) movement by poor borrowers set off the panicked withdrawal of funds.  

Sinclair enjoins us not to throw out the baby with the bathwater, but does point out that if we regulated microfinance and reined in predatory interest rates in order to “offer the poor microloans on fair terms, at fair interest rates” then the industry would shrink as profits shrank. The $70 billion in microfinance is not a sign of the sector’s health, but the margin for profitable exploitation of the poor.

He mentions the documentary The Micro Debt– a critical investigation into the dark side of Microcredit.

The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor (2014) William Easterly

Over the last century, global poverty has largely been viewed as a technical problem that merely requires the right “expert” solutions. Yet all too often, experts recommend solutions that fix immediate problems without addressing the systemic political factors that created them in the first place. Further, they produce an accidental collusion with “benevolent autocrats,” leaving dictators with yet more power to violate the rights of the poor.

In The Tyranny of Experts, economist William Easterly, bestselling author of The White Man’s Burden, traces the history of the fight against global poverty, showing not only how these tactics have trampled the individual freedom of the world’s poor, but how in doing so have suppressed a vital debate about an alternative approach to solving poverty: freedom. Presenting a wealth of cutting-edge economic research, Easterly argues that only a new model of development—one predicated on respect for the individual rights of people in developing countries, that understands that unchecked state power is the problem and not the solution —will be capable of ending global poverty once and for all.