Sunday, October 15, 2006

A closer look at micro-finance

Muhammed Younus has been awarded the 2006 Nobel Peace prize, "for his efforts to create economic and social development from below." It sounds like a pretty impressive scheme, and some Muslims are ecstatic(not as bad as the ridiculous amount of adulation for the Iranian-American space tourist, hey its her money but $20 million can feed a lot of people(you can feed a Palestinian family of 7 a month for just $125)) at Younus at winning "one for the ummah." Now I'm not an economist, but I have to wonder why if the Grameen Bank has been doing such a fantastic job since 1976, why is poverty in Bangladesh worse then ever? Granted that its foolish to expect a single bank or model to uplift a country of 147 million people, but does all this noise about the micro-credit system live up to the hype? A little too good to be true perhaps? I'm not so sure but I found a couple of interesting articles on the subject :

Bandaid Bandwagon
Loans self employed

7 comments:

altaf said...

micro credit = snake oil

it does nothing to address existing economic flaws - it may "help" a few, but in the long (and short) run, giving credit can hardly be a solution to major structural problems. There are other critical articles about the bank as well...

dunno why some muslims get all excited about these awards --- it is like some have this problem, that unless they are recognized by "prestige" and "power" - they feel worthless...

JD said...

altaf wrote: "dunno why some muslims get all excited about these awards --- it is like some have this problem, that unless they are recognized by 'prestige' and 'power' - they feel worthless..."

I think it stems from both a feeling among some Muslims for "accomplishments" to show to the non-Muslim world and also some browbeating non-Muslims give Muslims over the "lack" of awards. Yes, I do think there's some inferiority complex responsible, but the latter issue, the browbeating," does occur as well. The typical "Muslims never win Nobel prizes/Muslims never invent anything and get patents" and so on. I've witnessed this for a number of years now, so I think maybe some Muslims feel a need to prove to the rest of the world that they're (we're) not lacking in brainpower.

altaf said...

"think maybe some Muslims feel a need to prove to the rest of the world that they're (we're) not lacking in brainpower."

jd,

I think this is related to the inferiority complex - why do some Muslims need to "prove" anything to anyone? Yes, of-course, I know that there are folks (including some of those proggie/liberal Moslems) who think just about all Muslims are ignorant. But that is the way things have been since the time of the Prophet (peace be upon him). Nothing new here.

Also the noble prize is hardly something that is entirely based on merit or "brainpower" --- it is very much a political prize - given to only those who find ways to preserve the status quo.

Agnibeena said...

Your comments and the articles you have linked show the utter ignorance of how micro-credit functions on the gound for Bangladeshis through NGOs suchs as Grameen and BRAC. Those NGOs provides much more than just loans. THey are not banks in the Western sense. Do not knock on something without having read extensively on those NGOs. And if you and your cohorts have some better program why don't you take it to the poor Bangladeshis who are surviing day to day who I am sure will be more than willing to take up better offers.

All i see here is lamentations and complaints but no real methods or programs to bring people out of proverty.

DrMaxtor said...

Which NGO's do you speak off Agni ol' bean? I already stated that I'm an economist but fail to see the benefits of micro-finance. Why did this model fail in India and Nigeria? Why is poverty in Bangladesh worse then ever if this is the solution? You cannot fight poverty without fighting corruption(in which Bangladesh ranks number one).
Seems to me Grameen's snake oil sales pitch bagged itself another sucker in people like you mesmerized by eye candy. My solution? Simple, no interest based banking, no parasites IMF and World Bank loans, and a real leader. Guys like that other Dr.M (Dr.Mahatir Mohammed) in the saddle would be a good start.

Yusuf Smith said...

Agnibeena: I listened to an interview with Muhammad Yunus on BBC Radio 4 last night, and he was presenting the bank as a real bank and some sort of real business, when it is in fact an NGO which doesn't make a profit (it lends at high interest rates by the west's standards, but low by local standards, which probably means sub-inflationary) and redistributes a lot of foreign grant aid money.

They are also known for their intrusion into local family life, such as demanding that female borrowers do not accept any dowry when they get married. Not only the Hindu dowry, but the Muslim dowry (paid to the wife by the husband) as well. See this article for more on that.

deena said...

Salam, I am thoroughly enjoying your blog, mashallah. If you're still interested in microcredit I wrote about it on my blog http://lozah.wordpress.com/2009/03/31/micro-credit/
Keep up the good work!