The current popularity of microfinance is partly supported by anecdotal success stories of microentrepreneurs literally lifting themselves out of poverty. Microfinance institutions, such as the Grameen Foundation, provide numerous accounts on their websites. We aim to contribute to the promise held by microfinance by providing a reflective standpoint on these stories (that we see as a “discourse”) and their implicit underlying values and assumptions1.
We were struck by the idea that the numerous success stories held strong similarities: they express values such as accessibility of microloans, individualism, mastery, entrepreneurship, masculinity and modernity. Assumptions about access to property and free markets for the development of a wealthy economy are also, in our opinion implicit in these stories (see table). We aim to highlight the underlying values and assumptions in this form of discourse with the motivation to understand whether the components of the discourse are inevitable, and whether the values and assumptions are really those one wants to commit to.
Accessibility: microloans for all
The imagery and predominant idea is that it is the “poorest of the poor” that are being helped through microfinance schemes. However, studies show that 85% of microcredit goes to what the UN defines as the “working poor” or individuals right above or on the poverty line (Datta, 2004). A misconception about who it is that receives credit (the working poor rather than the ultra poor) may lead to the most destitute being lost in the discourse as well as in distributed resources. In other words, while microfinance may appear to be an accessible solution to all, in reality it is likely that it makes invisible those most in need of resources.
Numerous and various microfinance programs focus on poverty alleviation. Those called “Institutionalist” that is, those praising a view of economic self-sufficiency (Brau & Woller, 2004) rest foremost on an individual mode to fight poverty (individual, in the sense of focus on the individual and her household). In many cases, loans are taken mostly by one woman (member of a self-help group) to start her own microenterprise. Individuals, and an individualistic view of society, have a central position here. This may occult the idea that microfinance is a complementary mechanism of poverty alleviation and to development plans that centre on more collective initiatives such as the development of infrastructures, health, education, and other social services.
Mastery and Entrepreneurship
The stories of those who have changed their lives thanks to a microcredit present another kind of similarity: the praise of entrepreneurship. Underlying these stories is the idea that individuals can become the captains of their own fate (value of “mastery”) through entrepreneurship. It appears as though the pursuit were solely a matter of individual will, as if people could free themselves of the social structures in which both the entrepreneurs and their activities are inscribed. It may also implicitly support the notion that those who do not lift themselves out of poverty are those who neither work nor want to change their situation enough; while we know that entrepreneurship may not be feasible for all (c.f., Datta, 2004; Karnani, 2007).
Most of microcredit loans are given to women. In the many inspiring stories, what decided many women to engage in microcredit is linked to their suffering - linked to their conditions of women (e.g., in charge of the household and children). Frequently, these stories support the idea of traditional gender roles, the praise of assertiveness (“masculinity”), and stereotypical views of the nature of men and women. However, some posit that if women have higher repayment rates among microcredit borrowers, it is not because women are more reliable (as females), rather its due to women have less alternative options. For example, many of them have their entrepreneurial activity linked to, or located in, their home and are therefore easier to assert social pressure on than men.
Most of the inspiring stories of successful microentrepreneurs take place in developing nations. In the background, a stereotypical, “traditional” culture is implicitly (or explicitly) referred to, and believed by many to be part of the problem. Traditional culture is commonly seen as being made of the yoke of traditions that immobilise individuals in their social empowerment, reproducing power inequalities and blocking modernisation (and thereby economical prosperity). Is culture really a barrier to development, or is it in itself a stereotype common in non-traditional societies about traditional societies? Culture, and thus too traditional culture, is argued by some to be one of the essential driver to development.
Table1 – Values and assumptions associated with the orthodoxy
|Similarities between the stories||Values||Assumptions||Latent problem|
|Microcredits are given to the poor||Accessibility to all||Microcredit can be given to anybody as long as they work to pay back.||Only about 15% of the microfinance loans go to the extreme poor. Microenterprise is not a solution for all. Oftentimes, the needs and limitations of the poorest are overlooked.|
|Individual loans granted||Individualism||Society builds primarily on individuals, rather than institutions.||Actions and evaluations are done at the individual level. Potential omission of other dimensions such as social links or institutions.|
|Initiative and hard work lead to prosperous business activities||Mastery and entrepreneurship||Individuals can master their fate. Hard work leads to success.||Omission of social structures embedding individuals such as gender relationships and social relationships. Social structures have an impact on an individual’s economic success.|
|Credit given to women||Masculinity||Women have a stronger empathy (than males) for their children.||Perpetuation of gender stereotypes. Segregation of men and women in development projects.|
|Women break free from the yoke of tradition||Modernity||Traditional cultures are conservative and curtail economic and social development.||Views of culture as potential barrier to development and determinant of success. Possible agenda to change indigenous cultures, and at times introduce Western views and mindsets.|
|Better economic conditions, increased ownership of goods||Property, market, freedom||Economic empowerment of households leads to the (economic) development of a society||Anglo-Saxon and Western views on societies and their development path, and projection to other environments. Localized paths towards development and openness to other possible alternatives are overlooked.|
Source: Romani, L. & Lerpold, L. (forthcoming 2010), Microfinance and Poverty Alleviation: Underlying Values and Assumptions. In M. Munoz (Ed.), Contemporary Microenterprises: Concepts and Cases, Edward Elgar.
Implicit values in line with a “Western discourse”?
The values reflected in the stories praise a solution for all (accessibility), individualism (action and analysis at the individual level), mastery (being in charge of your own fate), entrepreneurship (individual lifting out of poverty), masculinity (gender differentiation and assertiveness) and modernity (as opposed to traditional societies). Considered together, these values are strikingly similar to prevailing values associated with the “Western” world (see Said, 1978). In the success stories on microfinance, the focus on individuals suggests that the role of the State or of political agents in changing people’s life is absent. In contrast, mechanisms such as access to the market or accumulation of capital (and sometimes of goods – such as school books or uniforms) are present. These discourses echo the assumed ideology behind free markets and the importance of capital accumulation as a condition for development, an ideology deeply embedded in the Anglo-Saxon world.
In sum, the values present in numerous successful microfinance stories, and the assumptions regarding the development of a society, are seemingly linked to a “Western discourse” (Said, 1978). This leads us to some key questions. Are these values present because the discourse is addressed to Westerners? The fundraising donors are principally from the Western world, thus could the message be selected, packaged, and adapted according to assumptions of Western preferences (e.g., values such as entrepreneurship, modernity, assumptions on economic prosperity)? Are these success stories mainly used to convince Westerners about the benefit of microfinance, or are they also used to convince and motivate people to take a microloan credit? Are the signified values and assumptions representing beliefs and preferences of microfinance clients, or rather those of development professionals? In the latter case, how explicit and reflective are they about these values? And what will be the consequences?
Read more great stories on Celsias:
Brau, J. C., & Woller, G. M. (2004). Microfinance: a comprehensive review of the existing literature. Journal of Entrepreneurial Finance and Business Ventures 9(1), 1-26.
Datta, D. (2004). Microcredit in rural Bangladesh. Is it reaching the poorest? Journal of Microfinance 6(1), 55-81.
Karnani, A. (2007). Microfinance Misses its Mark. Stanford Social Innovation Review, Summer 2007, 34-40.
Said, E. (1978). Orientalism. London: Routledge and Kegan Paul.