This is a tangent from the Hatrack Holiday drive thread, and could/will become contentious, so I want to start it in it's own thread.
Several people wanted the fund drive to go toward Kiva, a group the collects money and uses it to fund various microlenders, who in turn use the money to provide small loans to the poor in various developing nations so that they can run their own businesses, and presumably raise their economic standing. A side benefit is that the money you "give" eventually gets repaid, so you can reuse the funds to help someone else.
I had heard on NPR that the actual benefits for the lendees was a bit more murky than proponents, such as this year's Nobel Peace Price winner Muhammed Yunus, proclaim. The main criticism I have heard, and is mentioned in the wiki article, is that the women get thrown into revolving debt, to the point were they need the loans to pay for necessities, not business expenditures. Some other worries are that husbands/sons are using their mothers/wives as a free cash machine, ruining their relatives' credit while taking the money for themselves.
In the Wiki article there is a small section of criticisms (and it is small), with the one web-accessible citation coming from a seemingly biased source (I believe the web site is called the Left Business Observer). The article seemed well written, and not a quick take, and had follow ups.
Do you think these concerns are more hypothetical than real? I'm guessing probably not, though I also don't think microlending is useless. I do think the attempts of proponents to paint it as a sort of charity does the idea a disservice, and could be an attempt to try and distract from the real results of the programs (which according to the Wiki article, seems to not go any better for the lenders as the lendees; the article states that were it not for foreign grants (charity as it were), the microlenders would be unprofitable.
-Bok
Posted by Nato (Member # 1448) on :
I think the idea of microlending is a good one, although I did listen to that NPR story a few months ago, and I see that it could seems to catch some women up in the sort of revolving debt you mentioned. They must make small, but sometimes hard-to-come-by payments to lenders every day. They're only a few dollars, but a few dollars is enough to buy food for your family.
So I guess we should pay attention to the execution of microlending, but I think it has potential.
Posted by Risuena (Member # 2924) on :
While I have not directly been a part of any microcredit organization, I have been part of an organization that has funded and evaluated many such programs. All of us working there were very aware of the potential problems of microcredit - such as those that Bok mentionedas well as some others.
For every group that we considered a success, there was at least one that was not. We had groups that had close to 100% default rates, we had other groups were the loan committees only gave loans to their friends and families, or even outright embezzled the funds. There have also been groups that have used strong-arm tactics to enforce a 100% repayment rate, also incidences where the communities became so polarized that there were de facto coups within the loan committees or even the local government. The thing is though, that none of these is really unique to microcredit - all of these consequences or similar ones have happened with other types of development projects. It's just a matter of what type of project allows for the greatest amount of benefits with the least amount of harm - and no one has found a solution for that.
One reason for why microcredit is so important is that many people within the field of development (myself included) define poverty as the lack of options and microcredit is a tool that provides another choice to those who have too few. So many of the people who would recieve microloans have no access to banks, regular wages, or so many other things that most of us take for granted.
My own personal preference, however, is to combine microcredit with other forms of development assistance, such as microgrants, technical assistance and training, or anything else that may be beneficial. The technical assistance and training will provided the lendees with the necessary knowledge and tools to make their venture successful and the microgrants so that they hopefully some cushion, however small to keep them from falling into that revolving debt that is the biggest drawback to microcredit.
So that's my $.02 and a bit extra. Hopefully it makes sense.
Posted by Icarus (Member # 3162) on :
As I understand it, microloans are what creates the Force. They don't control us and we don't control them, but it is possible to work with/through them, if you're sensitive and cultivate the ability.
Does that help?
Posted by Strider (Member # 1807) on :
quote:but it is possible to work with/through them, if you're sensitive and cultivate the ability.
or in Lucasspeak, if you're one of the elite few lucky enough to be genetically predisposed
Posted by Risuena (Member # 2924) on :
Oh, about the organizations themselves and their need for foreign grants/charity:
First, having worked for an international donor organization, I don't consider the grants we gave charity* - mostly because the money comes with strings and expectations attached. All the groups had submit detailed proposals and went through a long vetting process (mostly because we were extremely inefficient...) and once they started recieveing the money, they had to submit detailed progress and financial reports every six months as well as be visited by our staff and auditors. If at any point we felt that the project was not going as it should or there were irresolvable issues, we could stop the project and the payments.
I'd also like to point out that we tried to only fund projects which also entailed the assistance and involvement of the local or regional government, the community members and local businesses to ensure that we were not the only source of funding and to give the project a chance to succeed after our funding ended.
Funding is also a continual struggle for both the international donor and the grantee NGO. Everyone recognizes that the NGOs are dependent on the donors and no one wants that, but there's no real way around it. At least with microcredit, the theory is that repayment will keep the loan fund intact as well as allow for a surplus to pay for the NGO's operating costs, but it never really works out like that.
I have to say that as much as I believe in the need for development assistance, it's a struggle for me because everything is so complicated and convoluted and for every success there's a failure just as big and it can be very disillusioning just thinking about all the difficulties that need to be faced. But I can't not do something, you know?
*I may have a very limited definition of what charity is since to me it smacks of paternalism, which is a very, very bad word in development