Home Mail Articles Stats/current Supplements Subscriptions Links

The following article appeared in Left Business Observer #77, May 1997. It retains its copyright and may not be reprinted or redistributed in any form - print, electronic, facsimile, anything - without the permission of LBO.


by Gina Neff

Gina Neff is an economic journalist in New York City. Her piece on foundations is also on this site. So is her analysis of microcredit, a prequel to this article.

It could have been the United Nations: a sea of colorful national costumes, Sony receivers for simultaneous translation on every chair, and on the dais, royalty, presidents, and prime ministers. Instead, this was the ballroom of the same Washington hotel that hosts the annual IMF/World Bank meetings, and here, too, the talk was mainly financial. This was the Microcredit Summit convened by RESULTS Education Fund this past February.

But celebrants weren't inclined to see it as a bankers' convention, or a technocrats' forum on poverty. To Muhammad Yunus, director of the movement's flagship, the Grameen Bank of Bangladesh (LBO #74), it was a "grand celebration." For Bella Abzug it was a chance to lead the crowd in a few rounds of "We Shall Overcome." Bangladeshi prime minister Sheikh Hasina saw the conference as the beginning of "one of the great humanitarian movements of history." Michael Chu, president and CEO of ACCION International, claimed that the push for microcredit "will allow self-initiative to vanquish poverty." By its end, the conference seemed little more than an international pep rally for banking.

Inspiration is RESULTS' specialty. Their promotional literature says RESULTS "uses a unique mix of group empowerment and support which includes monthly national conference calls connecting hundreds of volunteers with a guest speaker" - an "empowerment" technique that was used by the Hunger Project, which Sam Daley-Harris left in order to found RESULTS. The Hunger Project, which was started by Werner Erhard of est fame, held that a revolution in consciousness would solve the malnutrition epidemic where traditional programs failed. Such an idea isn't surprising coming from Erhard, who counts among his major intellectual influences Napoleon Hill's classic book, Think and Grow Rich.

While officials deny any formal connection between RESULTS and the Hunger Project, they share board members such as est follower Valerie Harper ("Rhoda," of 1970s TV). Lynn McMullen, executive director of RESULTS, claims most people working for them, "wouldn't know what est is," but she did say that "a lot of the staff has done the Forum," est's pricey spin-off motivational training for executives.

The oft-repeated mission of the Summit - organizing to provide 100 million of the world's poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the year 2005 - was finalized before the summit began. Neither the feasibility nor desirability of that mission - open to challenge even on very orthodox financial or developmental grounds, since microcredit doesn't seem to be able to reduce poverty or turn the claimed profit - was up for discussion. Rather, the agenda of the Summit was focused entirely on how participants could be "empowered" to implement these predetermined goals, and not on investigating the causes of poverty.


Monied interests

That fit well with the corporate attitudes of the sponsors. Unlike the UN conferences that the organizers modeled the Summit on, this one was convened by a nonprofit organization and relied heavily on the donations of corporations who were looking for "partnership" with microcredit programs. Robert Shapiro, CEO of Monsanto (a firm that was a major sponsor of the Summit - and just happens to make agricultural chemicals) saw how his company could bring not only money to microcredit institutions but also the "ability to learn and coordinate on a global level." Transnational corporations also bring their products. As Toby Moffett, a former Congressman turned governmental affairs officer with Monsanto, said, his firm would have a "real interest in programs dealing with agriculture and pharmaceuticals as it relates to our business." Citibank, MasterCard, and Deloitte Touche Tohmatsu echoed the "partnership with the poor" theme.

While voluntarism is all the rage, is it too cruel to suspect the motives of Deloitte, one of the largest accounting firms in the world, which just happens to be writing the best practices manual for the World Bank's toe-in-the-water foray into microcredit while auditing several established microlenders? Or those of MasterCard, which is running a trial program in the Dominican Republic that provides borrowers with ATM cards?

According to the rhetoric at the Summit, big business can have a heart and make a buck. In an "envisioning" exercise led by an enthusiastic fellow who introduced himself as a "consultant for firms going through cultural change," corporate "delegates" offered the elite vision of what they thought microcredit could do. "Rather than give money away," one suggested, "they put it into loans, which will pay higher than the market interest rate and they'll get their money back." Another said earnestly that if the summit were successful "foreign aid could be cut by half" - as if classical "foreign aid" itself didn't involve a lot of lending.

Though Summit organizers carefully avoided drawing any link to the decimation of U.S. welfare and foreign aid budgets, microcredit is a convenient vehicle for governments eager to cut spending on domestic and foreign poor, and politicians have already begun exploiting the opportunity. At a ceremony held a few days before the summit to honor the recipients of awards for microenterprise excellence, President Clinton announced a $10-million welfare-to-work partnership between Chase Manhattan Bank, the Rockefeller Foundation, and the Department of Housing and Urban Development, with the impossibly optimistic goal of raising employment rates by as much as 20 percent to 30 percent in impoverished urban neighborhoods. While microcredit practitioners concede that the transformation of millions of welfare recipients into microentrepreneurs is impossible, the microcrediteers' bootstrap rhetoric (and the minimal empirical evidence on which it's based) is nonetheless helping provide political cover for the end of AFDC.

Intentionally or not, the microcredit movement also promotes the transformation of the world into a borderless supermarket - and circulates the message that the market is the measure of all things. It's lack of access to credit, the rhetoric goes, that traps people in poverty - not exploitation in labor markets, saggy prices for raw agricultural commodities, or crushing national-debt burdens and their resulting austerity programs.

Only a few voices of dissent were heard. Warning that "the poor equally need access to better technologies, to health and education services, to fair markets and adequate infrastructure," Fawzi Al-Sultan, president of the International Fund for Agricultural Development, reminded the audience that "a loan constitutes a burden for the poor borrower." Poul Grosen of the United Nations Capital Development Fund was more direct: credit "can even deepen poverty. The poor are creditworthy, yes, but sometimes grants - such as capital for start-ups, training programs, technology upgrades, capacity building and rehabilitation - are a more appropriate approach to reducing poverty than extending loans." Grosen, in making the connection between tightening first-world budgets and third-world microcredit, asked the question that no one else at the summit had dared: "How far are we prepared to let microfinance replace grants and fiscal transfers in the financing of social investments?" Pretty far, one guesses, if the "we" is made up of Citibankers and Monsanto lobbyists.

As Hillary Clinton showed slides of her trips to microcredit programs in Nicaragua, Bangladesh, and India, and craftily heart-tugging videos told inspiring stories of poor women around the world, the larger, structural questions seemed moot. In the vendors' hall, the tables of software, auditing services, technical assistance videos, and "non-jargon business planning curriculums" side-by-side with woman-made dolls, T-shirts, and woven handbags - the products of microenterprise - manifested the difference between those who will be managing the global economy and those who will be working in it. Here, too, the culture of the market prevailed: on the last day of the summit, one of the booths had marked their handmade paper notebooks down by 50 percent.

Home Mail Articles Stats/current Supplements Subscriptions Links