By Barbara Crossette
Wednesday, January 12, 2005
Barbara Crossette does not always favor microcredit. But as widows and low-wage workers in countries like Sri Lanka struggle with the devastation of the tsunami, she says now--if ever--is the time for lots of small aid packages.
(WOMENSENEWS)--Microcredit programs, especially for women, have been justifiably criticized in the past for falling short of real development aid.
The programs--in which lenders extend small loans to individuals or very small enterprises--are often too small to make any long-term difference and impose interest rates around 20 percent--too high to allow for much real capital formation.
While micro credit has been a phenomenal success by some terms--the number of borrowers topped 55 million by 2004 and the United Nations is making this the Year of Micro credit--critics also pointed out that it is no panacea.
Low income, they say, is only part of the poverty trap. Poor health, lack of sanitation, bad schools or no schools at all and a low status of women in society are burdens that limit the ability of loans to actually improve life. The U.N.'s Development Program measures these drawbacks in an annual report.
Rounaq Jahan, a Bangladeshi feminist and author, has argued that there is scant evidence that microcredit alone empowers women.
But if ever the time and place were right for the quick introduction of a huge infusion of microcredit loans, it is now, in the stricken coastal regions of South and Southeast Asia.
While government leaders talk about debt relief for nations that may or may not transfer those savings to local people most affected, a strong chorus of economists has been saying, "Hold on. The financial effects of this tsunami disaster are not going to be felt mostly at the national level."
For example, in the hard-hit tourist industry, economists are now calculating that