There is little evidence that microcredit programs are the solution to poverty. John Hatch of FINCA International said that most microloans finance current consumption instead of creating new business enterprises. Research in Bangladesh by the Massachusetts Institute of Technology’s Poverty Action Lab found that microcredit can result in more debt for the poor. … In Bangladesh, where in 2001 approximately one out of four households had at least one microloan, microcredit seems to have had little impact on the country’s relative development performance. In 1991, for example, Bangladesh ranked 136th on the UN Development Programme’s Human Development Index (a measure of societal well-being); 15 years later it ranked 137th. –“Beware of Bad Microcredit,” Harvard Business Review, September 2007
David Bornstein fala da mídia (Globo News/YouTube):
He describes how to change the world by focusing on the power of positive new ideas and social innovation.
He is represented by The Lavin Agency, which pitches him as follows:
David tells compelling stories about how, with determination and innovation, individuals and organizations around the globe are achieving massive and meaningful changes through social entrepreneurship. Along the way he highlights the messages, strategies and inspirations, creative ways of using limited resources that have made these individuals or groups highly successful in their endeavors. He defines the qualities of successful social entrepreneurs and their particular patterns of innovation or their “lenses” that allow them to identify opportunity where others might read road blocks or insurmountable challenges. He closes his talk by emphasizing the through lines, the common threads that link these diverse, successful social entrepreneurs.
Superinteressante (Grupo Abril), week of August 14: “The Secrets of Positive Thinking [Revealed]!”
Bornstein’s articles have appeared in The Atlantic Monthly, The New York Times, New York Newsday, Il Mundo (Italy), Defis Sud (Belgium) and other publications. He co-wrote the two-hour PBS documentary series “To Our Credit,” (1998) which focuses on “micro-credit” programs in five countries.
The PBS documentary was produced by
And who funds MFDI?
MFDI is an American 501(c)3 non-profit agency which has been operational now for 15+ years. It relates closely to Media for Development Trust (MFD) a Zimbabwean registered charity (W.O. 21/89) set up in the late 1980s, and also to Media for Development International / Tanzania, a branch office established in 2004 in Dar es Salaam, Tanzania. The three are sister agencies. MFDI / USA supports the others, and they work together in film, radio, and TV productions as well as distributing African social message videos. Some of their key productions include: Consequences, It’s Not Easy, Neria, More Time, Everyone’s Child, and most recently, Yellow Card. These have been some of the most widely viewed films throughout Africa.
In other words, it is a 501(c)3. According to its latest Form 990:
Steve Smith, President
84 Crescent Ln
Glenwood Springs, CO 81601
Bornstein’s last article for the Atlantic was an article on the Grameen Bank in 1995.
He published one article for the New York Times, on May 2, 2004. On the Grameen Bank.Another in 1999. (Let me check the Brooklyn Library. Times archive search seems a little funky.)
His book on the Grameen Bank was reviewed twice by the Times.
His alma mater profiled him recently.
Despite his success, Bornstein warned students that writing optimistic stories, like the one he wrote for The Atlantic Monthly, can be difficult. He said optimistic news is often regarded as advocacy, and he offered students tips for pitching these kinds of stories.
The one he wrote in 1997.
Given that news is oriented to the recent past — what just happened, good, bad and neutral — and optimism is an orientation to the future, what does the notion of “optimistic news” really mean?
He responded hotly to an Alexander Cockburn article in The Nation on “The Myth of Microloans” earlier this year. Cockburn had written:
The committee that gave Henry Kissinger the Nobel peace prize has given it this year to Mohammed Younus, the economist who put the word “microloan” on the map with the Grameen Bank in his native land of Bangladesh. That’s progress of a sort. But in terms of hot air, any sentences linking “peace” with “Henry Kissinger” aren’t immeasurably more vacuous than the notion that microloans can help–to use the language of the Nobel Committee’s citation “large population groups find ways in which to break out of poverty.” … The trouble is that microloans don’t make any sort of a macro-difference.
Alexander Cockburn doesn’t appreciate what the Grameen Bank has accomplished [“The Myth of Microloans,” Nov. 6]. Through its uncollateralized loans, the bank has helped millions of villagers acquire livestock, land and other assets, as well as half a billion dollars in savings. The bank has helped 650,000 villagers purchase homes, all of which must be legally registered in the wife’s name. The bank is also owned by villagers, who elect nine of twelve positions on its board of directors. These changes are deeply subversive—which is why the bank has been harassed by the Bangladeshi government and been a target of opposition and violence from landowners, moneylenders, Muslim fundamentalists and socialists alike.
It listed 5.58 million members as of 2005, in 59,806 villages, and profits of $15 million.
The average loan of the Grameen bank is $130 in Bangladesh, lower in India. Now, the basic problem of the poor in both countries is landlessness, lack of assets. In the Indian province of Andhra Pradesh, where there are thousands of microloan groups, land costs 100,000 rupees an acre, poor land maybe 60,000 rupees–over $2000. $130 doesn’t buy you the ranch, not even a good cow or buffalo. So how many poor women have escaped the poverty trap in AP, Sainath asks. “Try getting an answer.” “With that $130 the most basic assets do not come to you,” Sainath says. “The amount is tiny. Interest rates are high and the default sanctions savage. During recent floods in AP, freelance journalists came to a village where everything had been washed away. The first people back in were the micro creditors threatening women, demanding monthly installments from women who had lost everything.”
When I interviewed Grameen borrowers who had faced cyclones and floods, they told me clearly that the bank was the key factor in their recovery. Without loans, they could not have repurchased assets to get back to work.
Get back to work for whom? Doing what?
On the same topic:
Beware of Bad Microcredit.
Author: Beck, Steve; Ogden, Tim
Journal: Harvard Business Review
The article mentions microcredit initiatives, which are being added to corporate social responsibility activities. Theoretically, microcredit can improve the standard of living for borrowers, increase school enrollment, empower women, and raise household incomes which can improve nutrition. However, there is little evidence that microcredit programs are the solution to poverty. John Hatch of FINCA International said that most microloans finance current consumption instead of creating new business enterprises. Research in Bangladesh by the Massachusetts Institute of Technology’s Poverty Action Lab found that microcredit can result in more debt for the poor. Advice is given for companies that are considering microcredit programs.
Also from the search through the Brooklyn Public Library news archive:
The Dickensian World of Microfinance.
Author: Feiner, Susan F.; Barker, Drucilla K.
Journal: Women’s Review of Books
The authors reflect on the microcredit programs of the Grameen Bank and the decision by the Nobel Committee to select the Grameen Bank and its founder, Muhammad Yunus, for the 2006 Nobel Peace Prize. It is the author’s view that microcredit programs do not promote gender equity nor enhance the lives of poor women. An overview of the microcredit programs offered by the Grameen Bank is provided. In contrast, the authors discuss India’s Self-Employed Women’s Association.
“The Grameen Bank, Muhammad Yunus, and some of the world’s most powerful policymakers at the International Monetary Fund and the World Bank share a commitment to this economic individualism. They believe that poverty is best understood as a problem of individual behavior. By rejecting the notion that poverty has structural causes, they deny the need for collective responses. According to this tough-love view, any broad-based, civic commitment to increased employment at decent wages will only make matters worse. Helping poor people through policy interventions is pernicious, because such aid undermines the incentive for hard work. This view is consistent with both the neoliberal agenda and the Grameen Bank’s microcredit program.”
Grameen’s founder did indeed win the Nobel for Peace in 2006.
Sudhirendar Sharma, a development analyst, claims that Grameen has “landed poor communities in a perpetual debt-trap,” and that its ultimate benefit goes to the corporations that sell capital goods and infrastructure to the borrowers. Founder Yunus has also attracted criticism from the former Prime Minister of Bangladesh, Sheikh Hasina, who herself is now in jail under corruption charges, who commented “There is no difference between usurers [Yunus] and corrupt people”.
Sheikh Hasina is, in fact, currently in jail “under corruption charges.” A murder charge had been dropped, I think I understand, but a new charge of exortion, in the course of a defense procurement deal, was filed on September 2.
Bangladesh is ruled by an interim military government that has “promised to clean up corruption” — very similar to the rhetoric of the coup in Thailand, actually.
Hasina’s chief political rival, Zia, is also charged with corruption and jailed, but was just released on bail.
But enough about corruption.
The subject is just too depressing.
The Mises Institute‘s Jeffrey Tucker has criticized the Grameen Bank, asserting that the Grameen Bank and others based on the Grameen model are not economically viable and depend on subsidies in order to operate, thus essentially becoming another example of welfare. Abdul Barkat of the University of Dhaka claims that instead of alleviating poverty, Grameen Bank has put 80% of the female beneficiaries in debt traps.
Bornstein wrote an indignant letter to the New York Times on October 17, 2006, about John Tierney’s op-ed Shopping for a Nobel.
To the Editor:
There are several fundamental differences between the Grameen Bank and Wal-Mart.
The Grameen Bank is owned and controlled by its borrowers. Wal-Mart is not controlled by Chinese laborers.
It is “owned by its borrowers”?
The Grameen Bank supports self-employment for the rural poor precisely so they don’t have to ”move hundreds of miles for a job” if they don’t want to.
I have spoken with Bangladeshi villagers who were considering relocating to Dhaka to find factory work. They were distressed by the idea of uprooting their families and moving to a slum.
Journalists should not celebrate this option glibly. People make such sacrifices to survive.
But much is lost: social networks are fractured; children lose access to safe and clean places to play; parents cannot be near their children while they work; and employees are often exploited and humiliated on the job. We should try to do better.
The virtue of microcredit is that it goes to the poor person rather than making the poor person come to it. When it works successfully, it offers a measure of self-determination that low-wage employment does not.
It also encourages people to accumulate assets, which stabilizes their lives and makes them more future-oriented.
Wal-Mart creates ”jobs.” But people are not born simply to sit on assembly lines and eat. The Grameen Bank and thousands of other microcredit lenders around the world are struggling to expand economic options for the poor in line with their full aspirations as human beings.
New York, Oct. 17, 2006
The guy seems to have made his entire career, after tiring of being a beat reporter at Newsday, out of championing the Grameen Bank — though the new book is ostensibly chock full of other inspiring success stories, I gather.
File under “innovation journalists, case studies.”
Fundamental Zeitgeist reference texts for Martian media anthropologists in the Lusophone antipodes: The Estado de S. Paulo’s very thorough and recognizably Journalistic 1.0 style guide — I collect these from all over — and Carlos Lacerda’s The Power of Ideas. Those headphones, by the way, are a Brazilian brand called Clone. FNAC offers no other brand. They broke the first time I used them.