Microcredit and Women's Empowerment

A Case Study of Bangladesh

Aminul Faraizi, Taskinur Rahman, Jim McAllister

• Publisher: Routledge
• Year: 2014
• Print ISBN:
  9780367255534
• eBook ISBN:
  9781136868214
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Using a case study of Bangladesh, and based on a long term participatory observation method, this book investigates claims of the success of microcredit, as well as the critiques of it, in the context of women's empowerment. It confronts the distinction between women's increasing wealth as a consequence of the success of microcredit programmes and their apparent non-commensurate empowerment, looking at two organisations (the Grameen Bank and the Bangladesh Rural Advancement Committee) as they operate in two localities in rural Bangladesh, in order to discover how enrichment and empowerment are often confused.

The book goes on to establish that the well-publicised success stories of the microcredit programme are blown out of proportion, and that the dynamics of collective responsibility for repayment of loans by a group of women borrowers – usually seen to be a tool for the success of microcredit – is in fact no less repressive than traditional debt collectors. This book makes a contribution to development debates; challenging adherents to more closely specify those conditions under which microcredit does indeed have validity, as well as providing insights relevant to South Asian Studies and Development Studies.

1 The empowerment project

Introduction

Muhammad Yunus, the founder of the Grameen Bank, was awarded the Nobel Peace Prize for developing, practicing and promoting microcredit. Microcredit, a Bangladeshi development model, has become a mantra and is promoted as almost a magic potion for all illness of the poor including poverty, malnutrition, illiteracy and powerlessness. Fazle Hasan Abed is the founder of another well-known microcredit promoting organization called Bangladesh Rural Advancement Committee (popularly known as BRAC); he was awarded a Knighthood by the British for BRAC’s successful achievement in microfinance. Many powerful, rich and famous persons, such as Hillary Clinton (current Secretary of State of the United States of America) and Paul Wolfowitz (former president of the World Bank), as well as commercial banking institutions, such as the Chase Manhattan and American Express, actively promote this panacea. Several UN agencies and European development aid agencies far beyond the Bangladeshi border are also implementing microcredit.

There is no doubt that microcredit has ‘indeed allowed many poor women to roll back pervasive poverty’, but at the same time, it can be said confidently that many of the poor within the microcredit programme are left by it with an extended threat of poverty. Critical scholarship on the microcredit model is limited but emerging steadily. Among critical scholars are post-developmentalists, who examine the transformation occurring within the ‘self’ of the microcredit recipients, and Marxists, who examine gradual expansion of the free market economy in Third World societies within the context of global capitalism. The post-developmentalists argue that the surveillance strategies that are put in place to monitor the working of microcredit surely transform the subjectivity of the microcredit recipients, and this transformation is somewhat similar to the process that occurred in Western societies at the start of the Industrial Revolution. Marxists scholars generally examine the contemporary gradual expansion of private investment in the welfare sector, which was traditionally a state monopoly. They argue that the private interventionist approach enables the state to avoid its responsibility to provide welfare for the poor.

In this book, we have investigated the claims of success for microcredit as panacea, as well as the critical views expressed by focusing on the experiences of microcredit recipients in two villages in Bangladesh where Grameen Bank and BRAC have been promoting microcredit programmes for some years. On the basis of a long-term participatory observation method, this study investigates the competing stories of success and failure of the microcredit programme. Some claim that the success of microcredit is blown out of proportion, that the dynamics of collective responsibility for repayment of loans by a group of women borrowers, which is seen as a tool for the success of microcredit, is in fact no less repressive than the traditional debt collectors. We considered both of the theoretical perspectives mentioned above and examined to what extent microcredit produces a kind of disciplined self, whereas at the same time acknowledging that microcredit recipients also exercise their own agency in resisting disciplinary power. We also explore the claim that the neoliberal policy of privatization of welfare enables capitalism to extend its control to the poorest, some of the most deprived people in the world.

Superficially speaking, is there a need for an empowerment project for women in Bangladesh, in the context where the country had (when this project began) a female Prime Minister – the leader of the opposition was also a woman – who claims that there is no gender discrimination in Bangladesh? One of the leaders of the opposition parties was a religious authority, and he also often cites the Holy Book of Islam to proclaim that Islam does not approve of gender inequality and most Bangladeshis as practicing Muslims follow this principle. Paradoxically, and by contrast, women’s oppression is reported in the public media on a daily basis. Women are the subjects of rape, torture, violence and deprivation of equal rights and liberty. Many also represent the poorest of the poor. Ironically, Bangladesh hosts two of the world’s largest empowerment projects, one run by the BRAC and the other by the Grameen Bank.

The empowerment project that engages us here combines the delivery of a small amount of money (microcredit) and socio-political awareness education to poor women of Bangladesh, mostly in the rural areas. Officially, the microcredit programme is seen as a panacea that should help to eradicate poverty and inequality. The government supports this programme, despite its claim that there is no gender oppression in Bangladesh.

In February 1997, an international Microcredit Summit was held in Washington D.C. and sponsored by some of the most powerful private banks of the United States of America – Chase Manhattan, Citicorp and American Express. The summit promised to deliver more than 21 billion US dollars to non-governmental organization (NGO)-managed microcredit funds to improve the lives of some of the world’s poorest women (Fernando 1997).

Studies conducted on the effectiveness of microcredit as a means to empower women and reduce poverty have produced conflicting outcomes. For example, Goetz and Sen Gupta (1996) conducted a household survey of microcredit recipients and found that women’s capacity to exercise power in the decision-making process within families has remained almost unchanged over a period of 10 years. Contrary to their view, Pitt, Khandker and Cartwright (2003) claimed that microcredit recipients’ capacity to exercise power in the decision-making process improved significantly because of microcredit. Unfortunately, none of these studies explored such decision-making power beyond the economics of microcredit. The whole question of women’s oppression within the context of Bangladeshi cultural, political, religious and patriarchal structure of domination remains largely unexplored.

Some recent studies excavate the surface inhabited by most economist-dominated surveys to reveal a reconfigured global economy and a reorganized neoliberal strategy that together enable the global capital market to penetrate some of the poorest parts of the world, as well as to the poorest people. In this scenario, the poor serve as assets rather than liabilities in the expansion of global capitalism (McMichael 1996). Some researchers have focused on the micro-level to address the question of how poor women are co-opted into microcredit programmes, how the programmes are structured and governed and how the poor are able to organize their lives around microcredit (e.g. see Bhuiyan 2002; Brigg 2006; Fernando 2006). Although these studies contribute significantly to our understanding of the subjectivation process among microcredit recipients, they do not inform us about how (or even if) poor people are able to resist the operation of capital’s disciplinary power and to subvert that power to their own advantage.

This study is an attempt to close the gap between the macro- or neoliberalism-based globalization perspective and the subjectivation perspective. It enables us to see in what ways global capitalism penetrates poor households in Third World societies such as Bangladesh, and what responses and strategies the poor people undertake to deal with the lucrative offers that the microcredit operators make. This study analyses macro-level data to show how commercial banks and NGOs make decisions about their investments, how they market their ‘empowerment’ products and what commercial gains they make, while at the same time examining ethnographic data to reveal how households make decisions about borrowing microcredit, how they see microcredit use as an empowerment strategy, how they view the relationship between themselves and the microcredit managers and finally, what happens to their subjectivity.

Rationales of this study

In Bangladesh, where more than 65 million of the world’s poor live (World Bank 2006), there has been a clear shift of development policy over the past 40 years from ‘relief and rehabilitation’ to ‘empowerment through microcredit’. Unlike the modernization and Marxist approaches to development, there is no single theoretical approach on which the microcredit and empowerment projects rest. Initially, the empowerment project began with the good intention to rehabilitate rural poor people, and it was informed by the broader issues of social justice. The organizers of microcredit believed that poor men and women’s fate is tied up with their lack of access to formal credit delivery organizations, such as banks. Poor people are dependent on local money lenders, who charge an especially high rate of interest for credit they deliver to the poor. The organizers thought that ‘microcredit’ was a way to make financial capital available to the poor, and empowerment issues such as literacy, skill training, health, sanitation and nutrition education should be combined with microcredit delivery. In many ways, this line of thinking reflected the views of modernization theorists prevalent in the 1960s and 1970s.

The modernization approach to improve the conditions of the poor shifted remarkably towards microcredit and empowerment in the 1980s. This shift to microcredit and empowerment as a development strategy reflects the concerns of social movements that engage feminism, environment and human rights (Rankin 2001).

As a development strategy, microcredit has gained considerable attention in popular media worldwide for its success in improving the fate of the poor by empowering them (e.g. Bhuiyan et al. 2005; Brigg 2006; Fernando 2006). Microcredit has been embraced as an important development strategy in a number of developing countries, including Bangladesh. Although some doubts have been expressed against the claimed success by a section of the critical media (e.g. see Pearl and Phillips 2001), very little research of an academic nature has been carried out on these important concerns, microcredit and empowerment. One of the reasons for this academic inattention to microcredit, as Sociology of Development indicates, may be due to a clear shift of theories, policies and practices in recent years. These changes reflect the ineffectiveness of the modernization as well as Marxist approaches to development, which dominated sociology of development as well as development practice during the postwar period.

However, the importance of microcredit is that it combines social development, particularly empowerment of poor Bangladeshis, with various economic development projects. Although microcredit has been practised and popularized in many developing countries worldwide, its impact on empowering the poor is not well researched and documented. Moreover, the impact of the microcredit programme on improving the quality of the lives of poor Bangladeshis and empowering them is much exaggerated in the literature when compared with what is happening. Understanding these limitations, this study examines what is going on in the relationship between microcredit and empowerment.

Method of analysis

The research design is basically a case study in which, first, we used both qualitative and quantitative methods. Following Glesne and Peshkin (1992), we triangulated individual interviews, participant observation and in-depth interview techniques. Focus group methods supplemented data gathering. Mini-group and one-on-one techniques enabled us to get qualitative and analytical information to address the research questions. Information obtained by the use of these methods was then compared and contrasted with data available from a variety of published sources. These included various research reports and papers presented at seminars/workshops, as well as those discussions and debates presented in print journals circulated among and within diverse development agencies and institutions.

The second most important method was content analysis (Lasswell, as cited in Krippendorf 2004). In this, we collected a variety of posters, charts and lectures that have been used by the NGOs to educate the villagers to bring social change (examples and transcripts of some of these are presented in Chapter 5 and Appendices). Content analysis is a standard methodology in the social sciences for studying the content of communication, a means of answering Lasswell’s (1948) question: who says what, to whom, why, to what extent and with what effect? It applies relatively consistent techniques for encapsulating meaning, and transferring understanding, and thus is ideal for conveying, and allowing quantification as well as qualitative analysis of, poster meanings. The posters to which this methodology is applied in this study are standard (propaganda) pieces devised by the NGOs. They are couched within an idiom of village life such that the background information is common cultural capital and as such can be ignored, whereas the analysis concentrates on the ‘foreground’, the message intended to be conveyed. The contents of these sources were carefully scrutinized to assess what impact these had on women’s empowerment.

Sources of evidence

In this study, multiple sources are used: first, existing development literature especially that related to community/rural development, microcredit and empowerment; second, development reports, journals and papers presented in seminars/workshops; third, policy plans of various agencies, including government, non-government and international agencies such as The World Bank and Asian Development Bank and fourth, in-depth interviews, participant observation and ‘mini-group’ discussions. We have chosen two organizations, the BRAC and the Grameen Bank, both are well known locally and internationally for their nationwide activities in empowerment. Each has established a reputation in, and both claim success in, poverty alleviation and empowerment of the poor.

Two villages, Korai and Mondolpara, of Rangpur district were selected because they exemplify three issues that are important to the study of empowerment:

1 typicality – agriculture is the major source of income and village life goes on in ways that are typical of Bengali culture;

2 NGO’s penetration – both BRAC and the Grameen Bank have been operating in these villages for a long period, and the consequences of their involvement are readily identifiable;

3 isolation from exogenous influences – Korai is a traditionally agricultural village, as compared with Mondolpara, which has more diverse sources of income, some of which may be traceable to the village’s proximity to the local urban centres, such as Rangpur town.

This study covers all adult members of both villages. Unless otherwise noted, all tables within this study have been developed from field data collected by the authors or from secondary analysis of data from existing studies. Although these villages provide fair representation of rural Bangladesh as well as microcredit projects, we need to be cautious about generalizing the finding for the rest of the country.

Based on the above methodological framework, this study seeks to address the following questions:

1 What is the reality of the rural poverty alleviation project? Does it help to improve the lot of the poor?

2 How do development activists/practitioners involve the community in the designing and execution of microcredit projects at local levels?

3 What steps are taken to empower and integrate poor people into project operation and governance?

4 How can we demonstrate that microcredit is a powerful force towards empowering and transforming the lives of microcredit clients?

Structure of the book

Addressing the research problem, reviewing the literature on empowerment and development and discussing the significance and research methodology of this study have been the substance of this chapter. In the second chapter, we discuss the theoretical framework that we shall follow in this study. In doing so, we explain genealogically the underlying power relationship in the development discourse. The main argument will show ways in which the microcredit programme is operating within a nexus of power relationship in pursuit of its objective of empowering poor families in Bangladesh (critically analysing the relationship between the poor and development intervention). The central question of this chapter is how and why is development perceived as a TRUTH? We will also discuss the politics of development and empowerment – the roles of the West, the International Monetary Fund (IMF), the World Bank, the nation states of the underdeveloped countries such as Bangladesh – and local élites will be investigated to uncover why they want Development.

In Chapter 3, we review microcredit policies as developed by the NGOs in Bangladesh. Policies of two organizations, BRAC and the Grameen Bank, especially are reviewed and analysed. This is accomplished in three sections. Section 1 reviews policies in published materials – plans, project appraisals and research reports (analysing what these publications say and how they conceptualize poverty, poor people and their proble...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Preface
• Acknowledgements
• Provenance of poster and web materials
• 1 The empowerment project
• 2 Microcredit as an empowerment strategy
• 3 Unpacking microcredit discourses
• 4 Implanting microcredit: BRAC and Grameen Bank officers
• 5 Envisioning microcredit
• 6 The false promise: microcredit and empowering poor women in rural Bangladesh
• Appendix A: table of income, land ownership and occupation of Korai households (in 2005)
• Appendix B: the 16 decisions of the Grameen Bank
• Notes
• Bibliography
• Index