Sunday, October 15, 2006
Microfinance Nobel prize
It is a sign of the times that Muhammad Yunus and Grameen Bank have won the 2006 Nobel Peace Prize “for their efforts to create economic and social development from below" (quoting the official statement ). Yunus and the Grameen Bank he founded in Bangladesh in 1976 have pioneered the development of microfinance – providing tiny loans to the poorest of the poor. Microfinance is presented as a tool for development but there are reasons to be sceptical:
* Its focus on the poorest of the poor. Microfinance fits the current orthodoxy which holds that the emphasis should be on reducing the grossest forms of poverty rather than making society overall wealthier.
* Grameen Bank is highly profitable. It is probably better seen as a niche financial institution rather than anything to do with development.
* Grameen imposes strict and intrusive conditions on its lending – known as the “16 conditions” - including insisting that borrowers have smaller families. It can be viewed as a form of social and population control.
* Its focus on the poorest of the poor. Microfinance fits the current orthodoxy which holds that the emphasis should be on reducing the grossest forms of poverty rather than making society overall wealthier.
* Grameen Bank is highly profitable. It is probably better seen as a niche financial institution rather than anything to do with development.
* Grameen imposes strict and intrusive conditions on its lending – known as the “16 conditions” - including insisting that borrowers have smaller families. It can be viewed as a form of social and population control.
Labels: development, economics, finance, inequality
