Yunus’s dismissal marks a rupture in the rosy narrative of microfinance. Does microfinance improve the lives of rural women? Yunus and the Grameen Bank frequently cite their high repayment rates as an indicator of both the reliability of the poor as borrowers, and as evidence of entrepreneurial success of the borrowers. In her recently published book, Microfinance and its Discontents, Lamia Karim explores what she calls a contradiction between the rhetoric of MFIs and the lived realities of their female clients. What is the story behind repayment rates? Which social factors do these numbers conceal?
Karim begins by addressing the claims of microfinance. Grameen claims that rural women are natural entrepreneurs when, in fact, female borrowers’ husbands are often the de facto users of the loans. If men are the ultimate users of the loans, does microfinance empower women? Further still, repayment rates do not necessarily indicate an increase in women’s income. Women may be investing in existing low-income activities or their husband’s activities. Finally, repayment rates do not measure intra-household power relations. Women may still have to take care of their children, and often take a daughter out of school to help with the housework. Thus, a high repayment rate does not necessarily indicate female empowerment. Microfinance might even disempower women because women face unequal burdens upon default.
The Grameen Bank has celebrated its 98% repayment rates, but Karim argues that many loans are forcibly recovered. Karim is most forceful in condemning microfinance’s use of shame to enforce loan repayment. NGOs (non-governmental organizations) essentially transfer the administrative costs of loan recovery to rural communities, as other women in the group publicly humiliate women who cannot repay their loans. NGOs are also known to “break homes” of defaulters, meaning stripping one’s home and selling it for parts. Karim also recounts cases of NGOs locking defaulters in the NGO office or calling the police to arrest defaulters. Then, when the women are taken to court, they are doubly humiliated in public. In rural Bangladeshi society, where women are repositories for family honor, husbands have often abandoned their “shamed” wive after such humiliation at the hands of NGOs. Karim also emphasizes that not all MFI employees support such tactics, but many feel trapped by institutional demands for loan repayment.
Many authors have exposed the weaknesses of MFIs in empowering women. However, Karim goes one step further and describes how the microfinance sector has become a pseudo-government in Bangladesh. She starts the narrative by describing Ziaur Rehman’s support of women-in-development (WID) issues in the mid-1970s to gain Western support for his government, as well as Lieutenant General Ershad’s sponsoring of the NGO sector to garner Western support in the 1980s. However, this relationship became complicated when Western donors preferred to conduct development work through the NGOs, claiming NGOs were more efficient and well equipped to work with the communities.
What is the true meaning of empowerment? What did these powerful NGOs do for the poor? Karim describes how these influential NGOs shifted focus from addressing structural inequalities to financial services. The shift was gradual and political, and today, Karim argues, the NGO sector focuses almost exclusively on financial solvency. Karim questions whether the NGOs’ newfound emphasis on making profits empowers women at all. Karim provides one example in which BRAC (Bangladeshi Rehabilitation Assistance Committee) managers “often intimidated and coerced the women into accepting [a] ‘poultry farm concept.’” Since BRAC would make money off of women’s poultry farm enterprises, BRAC eagerly conscripted existing female borrowers into becoming poultry farmers. Women were generally ignorant of the risks and expensive inputs involved in poultry farming, and rarely earned the high income promised by BRAC officials.
Karim’s research is thorough and her insights, fascinating. However, at times, she extrapolates too far. Where some examples discuss one particular MFI, usually Grameen, she makes claims about “NGOs” in Bangladesh. Her insights about the NGO in question are compelling enough; it is unnecessary to apply those insights to the NGO sector as a whole. Further, Karim has the peculiar habit of referring to herself as a native researcher. Throughout the book, Karim refers back to her native perspective, contrasting it to that of (white, male, Western) foreign researchers. For example, she does not have to rely on NGOs to access the local people. In fact, her ethnographic site, Pirpur Thana, is incredibly inconvenient to get to from Dhaka, and has largely been ignored by foreign researchers. She prides herself on these qualities.
However, while Karim is from Bangladesh and knows the language, customs, and verbal and non-verbal ways of communication, she is not as “native” as she claims to be. She relies heavily on two native research assistants, and often admits she would be unable to do her job without them. In one humorous anecdote, Karim describes how her short hair raised so many questions among Bangladeshi women that her assistant told the women that Karim had been sick and had to shave her head. Should a researcher’s “native credentials” lend more credibility to his or her work? Karim seems to think so. But her consistent claims of “nativeness” were more of a distraction from her otherwise thoughtful and provocative research.
Priyanka Chaurasia recently graduated from Columbia University with an MA in Human Rights.