Abstract
In this edited book, Milford Bateman and Kate Maclean, together with contributing authors, set out to review from a multidisciplinary perspective the functioning, efficacy and claims of the most popular, international development policy of recent years: microfinance. The book informed by economics, politics, cultural studies, sociology, feminist theory and social anthropology takes issue with the far-reaching assertions and belief that massive poverty reduction and empowering of poor women (especially in developing countries) can be achieved through microfinance. The book positions microfinance as a failed bottom-up anti-poverty long-term development tool. In its strongest terms possible, it claims that many have been ‘seduced’ by its ‘charming language’ and the poor betrayed by its practice.
The book is divided into four parts dealing with the following topics: background, seduction, betrayal and alternatives. The introduction provides a quick overview of the book’s content and offers an interesting background to how microfinance has evolved and its subsequent use as a vehicle to extend the global neoliberal project on a grand scale.
In part 1, chapters 1 and 2 explore the political agenda (neo-liberalism) behind the established microfinance model and its thrust to global fame as an anti-poverty intervention. Part 2 focuses on how microfinance has managed to ‘seduce’ the wider public despite its ongoing failings. Chapter 3, by Meena Khandelwal and Carla Freeman, employs a feminist perspective to examine the well-known claim that microfinance empowers poor ‘third world’ women. Elliot Prasse-Freeman, in chapter 4, examines numerous studies exposing microfinance failure despite its perceived global reputation as a successful development tool. Bajde’s take on Kiva (chapter 5) highlights the factors behind its appeal as a platform for ‘peer-to-peer’ benevolent lending. Although Kiva’s model is innovative, Bajde casts doubt on its prosocial investing claims and finds its lending model problematic and less transparent. The main thesis of part 2 is that microfinance has managed to ‘seduce’ by playing on emotions and presenting a narrative that is appealing but slippery in its practice. At best, the chapters show that the marketing of microfinance has been deceptive, leaving behind a trail of disillusionment.
Part 3 on ‘betrayal’ contains six chapters and draws on case study evidence from projects and actual experiences of microfinance in Bosnia, India, South Africa and Malawi to demonstrate that microfinance is a failed policy intervention on all fronts. Chapter 7 uses Bosnia to demonstrate how microfinance has succeeded in undermining the social structures of the economy, while Marcus Taylor, in chapter 8, contends with the famous story behind the Indian state of Andhra Pradesh 2010 microfinance meltdown. Lamia Karim, in chapter 11, scrutinises Grameen Bank to bring to the fore the harsh realities of microfinance in the lives of poor women and the excesses of bank officials and its supporters. In chapter 9, Bateman and Sharife, using evidence from South Africa, expose the destructive side of microfinance in facilitating over-indebtedness of the poor while delivering excessive profits to lending institutions. Chapters 10 and 12 draw examples from India and Malawi in further highlighting how microfinance betrays the poor by leaving them worse off.
Part 4 contains four chapters, each attempting to offer workable alternatives to the discredited microfinance. The authors claim the international development community has preferred the market-driven microfinance model and side-lined models such as credit unions, financial cooperatives, locally organised movements exemplified by the landless workers in Bangladesh (chapter 15) and the ‘social solidarity economy model’ in Latin America (chapter 16). The proposed alternatives are presented as superior because they are democratically managed, do not over-indebt the poor and do prioritise the development needs of the community. While actual evidence on alternatives is limited, I find the timely insight by Kate Maclean in chapter 14 very useful. Maclean emphasises the importance of inserting gender as a key category of analysis and a rethink of the past development agendas if the development alternatives being suggested are going to perform any better. The concluding chapter wraps up the discussion by stating, ‘the case for microfinance is crumbling before our eyes …’ (p. 302).
Readers will find the book’s multidisciplinary approach to critiquing the microfinance model very enriching to the current debate. The chapters are well researched and have considerable breadth. The book itself is thought-provoking and inviting (though not to all). The critical reflection running throughout the book is a welcome addition to what is already an exploding and divisive debate.
Nevertheless, the inclusion of ‘microfinance’ in the book title is somewhat misleading as much of what the editors and the other authors succeed at proving is that microcredit has failed the poor. Equally, the excessive attack of Muhammad Yunus in chapter 6 is troubling and a shame to what is a fantastic discussion on social enterprises. Those who have come across and read Milford Bateman’s book, entitled Why Doesn’t Microfinance Work? The Destructive Rise of Local Neoliberalism, published in 2010, would view this new book ‘Seduced and Betrayed’ as an extension of Bateman’s first project. As such, there are several overlaps between them (especially with chapters, 1, 6, 7, 9 and 16). The book is very long on condemning (chapters 1–12) but short on workable alternatives (chapters 13–16), which is disappointing, especially for practitioners. Anything consumed in excess loses its appeal and so does the book’s well-crafted message as one edges towards chapter 12.
To conclude, this book succeeds in its intentions of exposing the flaws of contemporary microfinance and the growing fascination with financial inclusion on the international development agenda. For that reason, the chapters in this book might be too much of a pain for practitioners of microfinance. Even so, this well-written book is academically stimulating, reaches out to a wider audience and will be useful and of interest to policy makers and anyone involved in studying and teaching microfinance.