The Seductive Promise of Microfinance ft. Mara Kardas-Nelson

Get Mara's book here: us.macmillan.c...
In the mid-1970s, Muhammad Yunus, an American trained Bangladeshi economist, met a poor female stool maker who needed money to expand her business. In an act widely known as the beginning of microfinance, Yunus lent $27 to forty-two women, hoping small credit would help the women pull themselves out of poverty. Soon, Yunus’s Grameen Bank was born, and the idea of giving very small, high-interest loans to poor people took off. In 2006, Yunus and the Grameen Bank won the Nobel Peace Prize for “efforts to create economic and social development from below.”
But there’s a problem with this story. There are mounting concerns that these small loans are as likely to bury poor people in debt as they are to pull them from poverty, with borrowers from India to Kenya facing consequences such as jail time and forced land sales. Reportedly hundreds have even committed suicide.
What happened? Did microfinance take a wrong turn, or was it flawed from the beginning?
Mara Kardas-Nelson’s We Are Not Able to Live in the Sky is about unintended consequences, blind optimism, and the decades-long ramifications of seemingly small policy choices. The book is rooted in the stories of women borrowers in Sierra Leone, West Africa. Their narratives, woven through a deep history of modern international development, are set against the rise of Yunus’s vision that tiny loans would “put poverty in museums.” Kardas-Nelson asks: What is missed with a single, financially focused solution to global inequity that ignores the real drivers of poverty? Who stands to benefit and, more important, who gets left behind?
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[@A.W.B.247]

I was just thinking about this strategy and what immediately comes to mind in the rate of small business failure and the competitive nature of those businesses with a low barrier to entry. Rather than giving poor people a likely way to financial independence, it’s more likely to reinforce their feelings of failure. Does the book have rates of failure of these business from microloans? I wonder if there is better likelihood of success with state employment programs in getting people out of poverty, maybe for public projects, rather than private business, or does that just end up acting like prison labour?

[@edwoodsr]

The big problem is humans gonna human: some will, some won't, and some can't.