Are the microcredit programs that everyone is abuzz about overrated? Apparently this is a hotly debated issue.My first inclination is to dismiss microcredit because it doesn't change the structural causes of poverty. Microcredit brings poor people into the existing global system of exploitation, and might even mask that very real exploitation, putting even more onus on the poor to get themselves out of the hole others have dug them into. It doesn't speak to social justice at all.
BUT, as I was reminded by The Rebel Sell, something that actually works shouldn't necessarily be dismissed so quickly, for solely ideological reasons. It is important to also look at the real and measurable results. Our fight for justice can, and does, occur in parallel to all sorts of development activities; indeed, as people rise out of the most devastating of poverty, they may have more resources and power with which to fight.
So microcredit needs to be examined on a functional basis: does it work? Does it help alleviate poverty? Does it empower women financially and/or within the family?
The answer is not so clear.
Increasing the burden of debt is one potential problem. As long as microcredit is managed by NGOs like Save the Children, this is a fairly small risk, as there are a whole host of additional helpful programs that accompany the actual money lending transaction. Unfortunately with high interest rates, especially when the private sector gets involved for profit, there can be grave consequences.
If not necessarily effective at improving poverty levels, what about the situation of women? Improving women's equality is vital to so many other progressive goals, that this alone might validate microcredit. If it could improve women's economic position, reduce the birth rate, and improve health, then there might be something to it.
Proponents of these micro-loans list the ways they help women, but results are mixed. According this journal article, "the effects of interventions such as microcredit loan programs—which empower women economically and socially—on domestic violence are ambiguous. Participation in such programs can, on the one hand, reduce a woman's risk of domestic violence by making her life more visible and by increasing her perceived value in the family; on the other hand, if the woman's economic empowerment results in her acting more assertively, her husband may respond with violence."
There does seem to be some preliminary evidence that involvement in one of these microcredit programmes does improve contraceptive use by women, which is a fairly significant marker of progress. There are a lot more articles here.
I can't claim to make a definitive conclusion. Although I would prefer to see the end of the disastrous SAPs and an expansion of important social programs, if microcredit energizes a discouraged development sector and elicits more money for the groups on the ground, then for that reason alone, it is worth pursuing.
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