A response to Banker to the Poor: Micro-Lending and the Battle Against World Poverty by Muhammad Yunus and Microfinance and Its Discontents: Women in Debt in Bangladesh by Lamia Karim

Women Need to Feel a Sense of Hope

Microfinance and women postulates hope as a question.  Hope is the staple for survival and it is no different for those suffering from extreme poverty.  If one possesses hope they live everyday thinking the next will be better and worth living.  Hope for those living in absolute poverty appears to be diminishing from the standpoint of an analyst, but those that survive everyday in unimaginable situations continue live.  What is the answer to providing hope? After reading and questioning the writings of Muhammad Yunus and Lamia Karim I ask, “Does money offer hope?” Professor Muhammad Yunus argues that, yes money provides financial freedom and innovation among poor women.  He also argues that poor people, mostly women, have inherent skills needed for survival.  Lamia Karim writes that money is not the answer, but local activism and social understanding provides the basis of hope for those targeted by microlending NGOs.  She argues that communities and people need to enact their own free will to pull themselves out of the poverty trap and not being swindled by the large money driven institutions.  I believe the essential components needed for sustained hope are skills, leadership, competition, and empowerment.

Empowerment as an Enabling Force

In Yunus’s discussion of microfinance’s start, he openly addresses microfinance as not his own, and that he is aware microfinance began under the Self Employment Women Association (SEWA) in India only a few years before.  The trend of microlending began with its focus on women and empowerment to the poor by Grameen’s replication of SEWA’s model of women-led leadership and group management.  Therefore, one can assert that microfinance was conceived with providing valuable skills and empowerment to women.  I ask, “What is empowerment and does money enhance the skills of the poor or exploit them?  Due to rapid growth and capitalistic tendencies microfinance is accused of no longer focusing on increasing access and supporting the necessary skills for survival, but on creating a state of more and more dependency and amenities for living.

Empowerment is suggestive of giving someone the skills to make individualized choices.  Empowerment to women is a loaded concept that has been exploited.  The term has become a ‘buzz word’ used by grant writing technicians to get moneys for large cookie-cutter projects. Karim argues that microloans are not giving women the chance to make these each decision because men realistically control the money and use women as access points to money.   Empowering has become an enabling force for men and leaders of NGOs.  Skill development is not a priority and the old survival based mentality is now focused on obtaining amenities and not essentials.  This is clear in the multiple loans women seek and get.  Social statistics are reportedly lacking and little evidence-based research is done to prove otherwise.

Leadership Fosters Relationships in Many Ways

Leadership from the top down or the bottom up can be analyzed in multiple ways, but most importantly leadership and belonging to a community is essential for hope and survival in seemingly hopeless situations.  In the case of Bangladesh, individuals, Clergy, and NGOs possess a lot of the leadership and power within the communities.  Karim gives multiple examples of the torn relationships between the three leaders in the communities.  She suggests that NGOs need to work hand-in-hand or be more cognizant of the Clergy’s influences on social norms.  Yunus describes the relationships that illiterate people have with local purdah, and how he changed his personal connection with locals in respect for their local customs.[1]  He is cognizant of the local institutions and the essence of trust and relationship building needed to foster the kind of change needed.  I ask, can this component of Yunus, the relationship builder, be passed along the chain of command in his large organization?

Yunus is a powerful figurehead in his organization and around the world.  He is the face of microfinance.  In his telling’s of starting microfinance in Bangladesh, Yunus is really honest about the trials and tribulations of gaining trust in the community and among the women.  By all standards his way of creating an equal playing field by sitting at the same level of the women and letting the women break down the walls first is all material for good relationship building.  Those first trained with Yunus at the beginning of Grameen possess the same aptitude for relationship building and have done the hard ground pounding work in the first cities.  What has bothered me is the fact that Grameen has grown almost exponentially, and much of the focus is on creating new economic benefits for the loan recipients rather than building those essential relationships.  The focus is now put on individual groups and group leaders to gain and build trust of new lendees, but as Karim directs the plan is not working.  Locals place inherent trust in Grameen and other NGOs, and allow those with a little bit of power to bully and control according to the new standards of lending or rather multi-lending.  Yunus is a strong and influential person, but what is needed for those targeted by microfinance branch workers is more specialized trainings on relationship building rather than having to meet quotas each and every day.  These standards begin in a large institution at the top and need to be implemented on the ground.  Less focus needs to be placed on creating new lending practices every couple of years and shift to making the existing practices better and customer-centered.

Essentially, hope is derived by an individual’s personal drive for better.  Societal norms and leaders often drive what is deemed as better.  Yunus wrote, “We want only courageous, ambitious pioneers in our micro-credit program. Those are the ones who will succeed.”[2] The large growth of microlending programs no longer target those specific individuals and those who want to succeed at what they deem necessary.  New microfinance programs target the larger, almost unmanageable, populations of women.  This is in the end a banking business, and functional shifts in world poverty are unlikely possible when money is mismanaged.

Poverty Measured in Ambiguous Ways

An argument has been made for some time about the term poverty and what it really compasses.  Some are sure that bringing people out of poverty is only successful in terms of economic development, and microfinance is a vehicle for transformative economic development.  Others would argue that poverty should be eradicated through social change or environmental preservation measures.  Essentially, those living in poverty need to be developed into something. Since the beginning of Development as a field there have been countless indicators that signify poverty.  Each school of thought has a significant following for what judges a person as poverty-stricken or not.  The biggest realization is these schools or indicators have not holistically defined or eradicated poverty.  Some major paradigm shifts have made transformations, and in order to do so they had to be studied and widely accepted.  For example, it is widely accepted that more attention be placed on women and children in Development.  This attention to women is one of the reasons microfinance gained notoriety in the field, as well as its attention to economic development.  It couples the new thought with the old.  Contrary to popularity, microfinance has not made decisive and measureable changes in poverty.  Scholars and analysts studying the relationship of microfinance and poverty pick and choose which indicators best fit their appeal.  There is still too much ambiguity.

Women face Unimaginable Daily Choices

Since a new focus is shed on women and children living in poverty, the grave realities of their livelihoods are brought forth.  Women have to make choices each and every day whether to feed their children or feed themselves.  It is not disputed that women take the brunt of household and child-rearing activities around the globe.  Therefore, when given the opportunity to have money to give food to their children, pay for a dowry, or make their child’s life a little bit better women will take a loan.  Women also take loans out of cohesion and duress from family, as Karim notes.  The same question is posed, “Does money make a long-term difference in transforming lives?” I would say no, mostly due to the consumerism tendencies of many societies that have significantly altered cultural norms and traditions.  More and more people are given multiple loans for a number of services either necessary for poverty relief or not.  Yunus is correct in saying that the poor need services just like everyone else.  Karim is correct when saying the government is also responsible for basic services.  It is not up to one vehicle of economic development, microfinance, to solve this problem.  Microfinance is available as an option that can lead to change if not misused by lendees or lenders.

Global Influences Fueling Microfinance

The widespread growth and support for microfinance is largely due to its focus on women and on economic development.  Governments working in Development must adhere to strict transparency guidelines and pay focus to popular industry driven projects.  This is not a fault of one aid agency, but coupled with all the internal government bureaucracy and lack of support for programs most spending is filtered into projects that can be easily marketed and measured by widely accepted indicators.

Microfinance took off in the 1990s when President Clinton and other celebrity-like figures began to voice wide-spread approval.  This has happened countless of times with large campaigns supporting various new fads.  The problem with fads is that they come and go.  Women that are the recipients or beneficiaries of the programs are now in a new position of dependency.  Their livelihood is possessed by international fad that might fade away.  Therefore, the concept of empowering women with financial access and giving them the structure to work is valiant but lacking.

Conditions placed on microfinance programs severely limits the types of social changes needed in various places.  No two cultures and customs are alike and when conditions are placed upon programs from afar little consideration for local customs are taken into account.  Karim notes this in her argument against microfinance.  Women in Bangladesh are still under the control and influence of men and the local Clergy, and NGOs.  Global influences are filtered through these conditions placed on projects by the folks controlling the aid funding.  Therefore, I agree with Yunus’s cry for fewer restrictions and more access to livelihoods, but looking at the structures of aid it is unlikely due to lack of knowledge by tax payers and too much bureaucracy.

In the end, microfinance is a fad that is diminishing and being replaced by a new Development fad along the same lines.  One vehicle will not change poverty as whole, but it will alter at least one person’s ability to provide to one’s family.  Large claims such as solving world poverty are overzealous and can sell books.  Realistically, women and children are the greatest sufferers in the world and large institutions need not to control their livelihoods.  Money will not be the only vehicle for women to break the barrier of entrapment.  Women as individuals need to have opportunities of hope by the standards they imposed on themselves.


[1] Yunus, 74

[2] Yunus, 64