Microfinance’s Success Sets Off a Debate in Mexico

by Dollars and Sense

From Saturday's New York Times:

Microfinance’s Success Sets Off a Debate in Mexico

By ELISABETH MALKIN
Published: April 5, 2008

VILLA DE VÁZQUEZ, Mexico — Carlos Danel and Carlos Labarthe turned a nonprofit that lent money to Mexico’s poor into one of the country’s most profitable banks.

But not all of their colleagues in the world of microlending — so named for the tiny loans it grants — are heaping praise on the co-executives of Compartamos. Some are vilifying them as “pawnbrokers” and “money lenders.”

They are the center of a fractious debate: how far should microfinance go toward becoming big business? Read more.

For a critique of microcredit, see Microcredit and Women's Poverty, by economists Susan Feiner and Drucilla Barker. The article was included in a volume edited by Farooque Chowdhury, Microcredit: Myth Manufactured (with a preface by Doug Henwood of the Left Business Observer).

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4/07/2008 11:16:00 AM

Comments:

I am saddened to see so much of the focus on micro credit being turned towards who is making money, and how much money is being made. The real issue here is and always has been the primitive accumulation of capital as a first step towards development. The altruism or not of the lender does not really matter as long as the terms of the loans are allowing a reasonable amount of the people involved to accumulate the basic capital needed to start the development of a small business.
I am not advocating ignoring exploitation by large profitable lenders, just a return to extoling the virtue of the oportunities that microcredit can provide from a development sense. There is enough for the left to be critical of on the right without attacking fairly uncontroversial things such as microcredit loans.

# posted by

James Miehls : Tuesday, April 08, 2008 10:22:00 AM

I have actually seen relatively little criticism (from the left or elsewhere) of microfinance. What I have seen instead is lots and lots of uncritical praise for it. If it can often be exploitative (with interest rates that rival those of payday loans and pawn shops), and if (as Feiner and Barker argue) it can box women into traditional roles and feed into coercive gender norms, shouldn't leftists point that out?

# posted by

Dollars and Sense : Thursday, April 10, 2008 11:24:00 AM

I have actually seen relatively little criticism (from the left or elsewhere) of microfinance. What I have seen instead is lots and lots of uncritical praise for it. (It is in this sense, as it seems to me, that microcredit loans are "fairly uncontroversial".)

If microlending can often be exploitative (with interest rates that rival those of payday loans and pawn shops), if it's track-record at addressing poverty is nowhere near what people claim, and if (as Feiner and Barker argue) it can box women into traditional roles and feed into coercive gender norms, shouldn't leftists point that out?

A side-note: Using the term "primitive accumulation" in this connection is a little strange, in any case, given that that process has always depended on exploitation and/or theft. If anything, it is the microlenders who are doing the accumulating here (at least the ones who charge exorbitant rates).

# posted by

Unknown : Thursday, April 10, 2008 11:34:00 AM