[Marxism] Microcredit of dubious value
lnp3 at panix.com
Thu Apr 29 11:40:51 MDT 2004
NY Times, April 29, 2004
Debate Stirs Over Tiny Loans for World's Poorest
By CELIA W. DUGGER
GORMA, Bangladesh — Nearly every woman in this village seems to have
gotten tiny loans to invest in a miniature business.
None has made better use of the cash than Firoza Akhter, a shrewd,
flinty young mother who put her profits from four loans into cows,
goats, land, a sturdy house and private tutors for her daughter. "I can
make money out of anything," she boasted in her wheezy voice, a gold,
flower-shaped stud glinting in her nose. Hers is a shining success story
But while she came from humble origins, she was not among the poorest of
the poor. Like many of the 50 million people who take part in
microcredit programs, she hovered at the upper fringe of poverty.
Today there is a growing push for the nonprofit groups and banks that
run such programs to reach deeper into the ranks of the poor, though
there is little rigorous evidence juding whether the very poor benefit
from microcredit, economists say.
Since 1988, the United States Congress has appropriated $2 billion for
such programs. In new rules to take effect next year, it has put teeth
into a requirement that half of American aid for these loans — defined
as $1,000 or less in Europe and Eurasia, $400 or less in Latin America
and $300 or less in the rest of the world — go to the very poor living
on less than $1 a day.
The new rules have stirred strong opposition from other donors and a
range of microfinance institutions, which contend that the industry may
grow faster and ultimately help more very poor people by aiming at a
wider pool that ranges from people who are struggling but not poor to
those much further down the economic ladder.
"This limbo dance to serve the poorest is a distraction from a much
broader issue of trying to reach a billion people who have no access to
credit or a safe place to save their money," said Elizabeth Littlefield,
a former managing director at J. P. Morgan who now heads the
Consultative Group to Assist the Poor, an association of donors.
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