By Corinna Barnard
Saturday, May 14, 2011
Bad news came this week for shareholders of India's largest microlender. That offers a chance to tout two writers who always said high interest rates--of 20 percent and higher--were never the best news for the world's poorest female borrowers.
And the loans were not "off the rack." They were customized and detailed and required agents riding around on scooters to collect payments and check on things such as whether recipients were keeping up with matching savings accounts that were sometimes required. Microlending was portrayed as expensive and risky, which justified the high interest rates.
From that answer we derived our editorial stance: Microcredit was a lot better than no credit and it was better than loan sharks.
That was pretty sober compared to the glowing coverage that microcredit often enjoyed elsewhere in the press.
Microcredit deserves its due. It helps many female "micro-entrepreneurs" buy sewing machines, wheel barrows and hand carts. And after the Asian tsunami of 2004, microcredit loans--along with small direct grants from aid groups--rushed in to help many people start over. Barbara Crossett herself called for microcredit in that situation.
But while there may be a place for microcredit and microfinance, it shouldn't be taken as a market-based, profit-motivated panacea for ending women's poverty.
In 2007, Susan Feiner--our self-described resident feminist economist--wrote an opinion piece for Women's eNews about why Muhammad Yunus, the widely recognized father of microfinance who has been kicked off the board of the Grameen Bank he founded, didn't deserved a Nobel Prize. She thought a more deserving candidate was the Self-Employed Women's Association of India.
That column, " Microcredit? Spare Us the Praise for a Panacea," offers a searching critique of remedies to female poverty. It may now be a good time to revisit Feiner's piece, because, after all, she did tell us so.
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Corinna Barnard is editor of Women's eNews.
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