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Lifting Women Out Of Poverty: Complicated

Illustration for article titled Lifting Women Out Of Poverty: Complicated

We've always heard that microloans were a good idea — in fact, we gave to Kiva earlier this year. But Tanglad at Racialicious asserts that microcredit may be too good to be true:


Tanglad writes:

A whopping 90 to 99 percent of these loans are paid back with interest, another shining indicator of microcredit’s success. But there is an ugly side to ensuring repayment, where poor women are made to police one another and punish defaulters with collective acts of aggression… Microcredit beneficiaries are grouped into cohorts of five to fifteen members. They are given clear instructions: “You are all responsible for the loan and have to make sure that no one defaults.” This lays the foundation of a very effective surveillance system, wherein poor women monitor other poor women. And the poorest women, the ones who need loans the most, are evicted from the group to minimize the risk of default.


Apparently, women involved in microlending go to great lengths to repay their loans, cutting back on family expenses, like food, and children's school items. Still, writes Sarah Bosely in the Guardian, "Women could change the face of Africa." Bosely reports from Uganda, where women hold families together, despite being victims of sexual extortion and violence. She notes that the UN finds that 60% of the billion poorest people on the planet are women; 70% of the 130 million children who are not in school are girls. Wouldn't it make sense that any assistance would be a good thing?

Not according to Tanglad, who argues:

The supposed success of “compassionate capitalism” strategies obscures the enormous social costs behind statistics such as amazing loan repayment rates. Social costs that are ultimately borne by women who are already marginalized by their socioeconomic and indigenous status.

Microcredit: “A Political Economy Of Shame” [Racialicious]
Hope Rests With Africa's Women [Guardian]
Related: Do Hopes For Development In Africa Really Only Lie With Women?

Earlier: Money Doesn't Make The World Go Around, But It Helps

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I'm all for taking a critical look at anti-poverty programs, but the arguments here seem really shortsighted unless Tanglad has some modifications or a better program to suggest.

Yes, the poorest women are often kept out of microfinance arrangements, but that it isn't much of an argument against them to say "Well these programs help women who already earn a dollar a day, so we just shouldn't bother." No program is going to help everyone equally.

The surveillance systems, which are a little messed up, do ensure repayment, which keeps the program goings without much new capital. Microfinance is very cost effective and allows more money to go directly to people in need.