Saturday, July 17, 2010

myth manufactured

"Microcredit discredited

Farooque Chowdhury: "Micro Credits - Manufactured Myth". Publisher Shrabon Prokashani

By Gerhard Klas

Bangladesh is the home of the Nobel Peace Prize winner Muhammad Yunus. Yunus is the founder of Grameen Bank. A bank which grants loans to small traders, which nowhere else would get a loan. Now - just in Bangladesh - a book published, which criticized the extension of micro credit.

Group picture with women dressed in colorful saris, happy smile, as these pictures adorn the promotional material for countless non-governmental micro-credit and investment funds around the world. There are 30 million borrowers in Bangladesh alone. This is one fifth of the population of poverty, illiteracy and natural disasters plagued the country. Nowhere in the world, micro-credit so widespread. Supposedly, they help women to escape poverty. Not true, says Farooque Chowdhury, editor of the book, "Microcredit - a constructed myth."

"The true facts about the micro-loans are usually not reported. They should, however."

In the book are political scientists, sociologists, economists, feminists and development experts to speak, most of them from Bangladesh. One of the problems that they outline, is the indebtedness. This is confirmed by the national regulatory authority for micro-credit, which was established in 2006 in Dhaka: More than 70 percent of borrowers are now at more than one institution in debt. Farooque Chowdhury describes numerous instances in which the small, micro-credit established with the service does not yield the expected proceeds. Or unforeseen events - such as accidents, diseases, natural disasters or deaths - those which borrowers it to pay off their weekly rates.

"The burden of micro-credit will be for the borrowers get bigger and bigger, they end up in the micro-credit trap. They begin with a loan. But then they take on more loans from other organizations. With the new loans they are trying each case, to pay off old debts. This is how the cycle. "

The debtors sell eventually lend their property, or dispose of their small estates. The power of money-lenders should not be underestimated, so Farooqee Chowdhury.

"This means not only a financial trap, but there is this also a psychological component. A debtor is submissive to the creditor. The book describes through examples how the debtors are patronized by the lenders. The creditors control the lives of debtors whose life revolves completely around the credit. "

The consequences are devastating: Indebted parents send their children to school instead of field work, whole families to flee because of the debt pressure from their villages - that is exactly the opposite of every so-called development-policy objectives. Some borrowers, they say, bring himself to despair. Of course, it is difficult to identify the reasons for a suicide doubt if there is no suicide note. This is in Bangladesh is almost never the case because most can not read and write. The cases researched in the book are based therefore on the testimony of relatives, neighbors and friends. What is a burden to many, is for others a business, the political scientist Farooquee Chowdhury:

"This book is also about how micro loans have opened up a new capital market. For a long time that the rate of profit, and capital is looking for new, lucrative markets. Microcredit is one such, promising market: low attendance, but safe profits. Even calculate the large banks, as they can conquer this market. The micro-loans have many aspects. Even the social should not be ignored: With their help, the poor are kept quiet and secure the social status quo. At the same time this promising market value produced on their back and spreads all over the world. "

Farooque Chowdhury presented with "micro loans - a constructed myth," a book that confirms the doubts of all those who have distrusted the mantra of the micro-credit as a tool against poverty ever. A long overdue debate - even in this country, where pictures of happy smiling South-Asian women in colorful saris and a Nobel Prize Title sufficient micro-loans to be regarded as an appropriate means of fighting poverty.

Farooque Chowdhury: "Micro Credits - Manufactured Myth". The book is published by Shrabon Prokashani, has 266 pages and costs about 25 €, ISBN: 984-70088-0003-1."Link

see more contents of the book here:

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