Microcredit creates obscene poverty - report by France24

Amon — Tue, 08 Apr 2008 07:01:19 -0500

The crushing burden of microcredit Friday 04 April 2008 In Bangladesh, FRANCE 24 reporters find that far from alleviating poverty, microcredit has been plunging people deeper into debt. Microcredit changed Shobi Rani’s life. An impoverished yoghurt seller, Rani travels across her region in northern Bangladesh on a cycle rickshaw, selling her dairy produce. She is a beneficiary of microcredit, the much touted development scheme to help eradicate poverty. Three months ago, Rani received a loan for 500 euros from the Grameen Bank to start her little dairy enterprise. Every week, a bank official carefully checks how her business is going. The brainchild of Rani’s fellow countryman Mohammed Yunus, who won the 2006 Nobel Peace Prize, the Grameen Bank has been hailed for executing the microcredit mantra: giving the poor a helping hand, not a handout. Called “the banker of the poor,” Grameen has been attracting big businesses such as Danone, the French food giant, who supplies the yoghurt to Rani and thousands of other women in the area involved in similar projects. But the situation is far from rosy in Kalihati, one of the first Bangladeshi villages to benefit from Grameen’s low interest credit scheme. The villagers here who have taken a loan are unable to reimburse their credit, and claim to be harassed by Grameen Bank representatives. Korshed Alom, a former debt collector, was put into early retirement for having questioned the Grameen Bank’s methods: “Their technique is to scare borrowers and insult them. We tell them to sell their clothes, that they have no other choice. I’m not proud of myself, but several times, I had even been obliged to say ‘sell your children.’” The Bank’s representatives choose not to respond to these accusations. It is impossible to obtain an interview with Mohammed Yunus, and the Grameen Bank headquarters are off-limits for journalists who are too curious. The Grameen Bank counts more than 100 million clients in the world’s poorest countries. It targets 500 million clients in 2020. -grameen-bank-mohammed-yunnus... ------------------------ This is well known by now, microcredit rips off the poor and makes them poorer. It should be illegal.

Compartamos and the Debate around the Focus on Profits in Microfinance

Francisco Noguera — Sun, 06 Apr 2008 20:33:31 -0500

April 5, 2008 - 20:00, The New York Times

Microfinance’s Success Sets Off a Debate in Mexico

Story Link: http://www.nytimes.com/2008/04/05/business/worldbusiness/05micro.html?pagewanted=1&ei=5070&en=bf7e56cd419958f0&ex=1208059200&emc

Teaser:
By Elizabeth Malkin

VILLA DE VÁZQUEZ, Mexico - Carlos Danel and Carlos Labarthe turned a nonprofit that lent money to Mexico's poor into one of the country's most profitable banks.

But not all of their colleagues in the world of microlending - so named for the tiny loans it grants - are heaping praise on the co-executives of Compartamos. Some are vilifying them as "pawnbrokers" and "money lenders."

They are the center of a fractious debate: how far should microfinance go toward becoming big business?

At one end stand traditional microlenders, like the economist Muhammad Yunus, founder of the most famous microlender, the Grameen Bank, and winner of the 2006 Nobel Peace Prize. At the other are the Two Carloses, as they are widely known in this tight-knit world that gave them their start as starry-eyed idealists.

By Elizabeth Malkin

VILLA DE VÁZQUEZ, Mexico - Carlos Danel and Carlos Labarthe turned a nonprofit that lent money to Mexico's poor into one of the country's most profitable banks.

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Microcredit creates obscene poverty - report by France24

Compartamos and the Debate around the Focus on Profits in Microfinance