open Democracy News Analysis - The dark side of micro-credit, Santi Rozario - Comments

Syed A Jamal on "The dark side of micro-credit"

Syed A Jamal — Mon, 15 Jun 2009 23:13:28 +0100

Great article on socioeconomic and cultural aspects of dowry.
Thanks
Syed Ahmed Jamal
University of Kansas
Lawrence, Kansas
USA

Taj Hashmi on "The dark side of micro-credit"

Taj Hashmi — Fri, 14 Dec 2007 21:29:33 +0000

I would like to congratulate dr Santi Rozario for her excellent piece on the myth of microcredit, specially with regard to Bangladeshi poor women. My own findings are not that different from Dr Rozario's ones. It is time that the mythical and over-sold (and over-touted) microcredit (being glorified as "micro-finance" by mega banks and corporations in the West) as the panacea to poverty be exposed. I am pasting below a news report from daily New Age of Bangladesh (December 15, 2007) which tells us about a research finding in northern Bangladesh showing how the Grameen bank and other microcredit organizations are sustaining poverty and making money out of it. Cheers, Taj Hashmi Honolulu Microcredit Sustains Poverty________________________________________ BEA CONFERENCE Micro-credit sustains, cashes in on poverty, studies find Khawaza Main Uddin New Age, December 15, 2007 The state is responsible for nurturing poverty, allowing many organisations to cash in on the poor people’s plight, say economists, referring to research findings that the micro-credit acclaimed worldwide hardly contributes to improving the conditions of the poor in Bangladesh. Micro-credit has not changed the conditions of 77 per cent of the recipients and failed to ensure land ownership of 76 per cent, food security of 64 per cent and healthcare facilities for 84 per cent, found a study titled ‘Role of Micro-credit in Poverty Eradication’ that covered Nilphamari district. The research, conducted by two professors of economics at Rajshahi University, Mahfuz Arefin Chowdhury and Moazzem Hossain Khan, reveals that micro-credit has rather increased the overall indebtedness of the poor in 75 per cent cases. The poor in the monga-prone area have failed to prevent their children from dropping out of schools in 85 per cent cases, even after taking micro-credit which has only increased their use of mobile phones by about 50 per cent, according the survey findings presented at the biennial conference of the Bangladesh Economic Association on Friday. The researchers termed micro-credit a programme that nurtures poverty by continuing the vicious cycle of poverty by capitalising on the vulnerabilities of the poor. ‘Poverty is inherent in our policy, our culture. We have seen politics using poverty and profiteering by sustaining it,’ observed Jahangirnagar University Vice-Chancellor Khandaker Mustahidur Rahman, speaking as the chair of a session on poverty. Only 23 per cent of the micro-credit recipients can bear the pressure of loan repayment instalments and the remaining 77 per cent just fail to become successful due to the high rate of interests charged by the lenders, said Moinul Islam, a former BEA president and a professor of economics at Chittagong University. The rate ranges from 28 to 38 per cent, he pointed out. Most of the micro-finance institutions have become ‘profitable’ since micro-credit has proven to be a good business, Moinul told the meeting. ‘Micro-credit alone is not a panacea for poverty. We have to focus on social transformation.’ ‘Those who profess to send poverty to museum in reality try to hide the actual state of poverty in the society, instead of saying goodbye to it. It will remain an illusion, unless there is massive change in the overall policy,’ said Sanat Kumar Saha, a professor at Rajshahi University, presiding over another session on the third day of the four-day conference. The number of micro-credit recipients is shown in the reports of micro-finance organisations at 1.95 crore households, much higher than the number of poor families in Bangladesh, which has a total of 2.25 crore households, an economics teacher said, taking part in the discussion. The economists attribute such duplication of membership of individual borrowers with more than one organisation to obligation to pay back their loans in instalments. Another research, ‘A Case Study of Grameen Bank and BRDB’ conducted by Tapash Kumar Biswas, Khairul Kabir and Mihir Kumar Roy of the Bangladesh Academy for Rural Development of Comilla, has found that the benefits derived from micro-credit have not helped the recipients to cross the below-poverty line, the researchers said. ‘The amounts of credit taken by them [the study respondents] were not enough to generate effective income… In most cases, micro-credit helped in generating part-time self-employment that contributed little to poverty alleviation,’ they reported, suggesting that micro-credit programmes needed to incorporate human poverty-related indicators, such as health, sanitation, population, and nutrition. The researchers underlined the need for effective monitoring and assessment of utilisation of loans disbursed by the micro-credit organisations so that the beneficiaries could get the training necessary and generate income. The researchers of ‘Role of Micro-credit in Poverty Eradication’, Mahfuz and Moazzem, observed, ‘Micro-finance organisations are charging interest at rates much higher than the commercial banks do.’ They recommended that micro-credit institutions should immediately bring down their interest rates — a much-talked-about issue that most of the economists at the conference raised and demanded downward revision of interest rates to alleviate poverty instead of ‘creating poverty’. In a recommendation, the researchers said the Tk 50,000 ceiling on micro-credit should be relaxed so that the recipients could undertake viable income generating projects to get out of poverty.

The dark side of micro-credit, Santi Rozario

Mon, 10 Dec 2007 16:23:13 +0000

Over the last two to three decades rural Bangladeshi society has experienced a complex range of developments. Among these, NGOs, micro-finance institutions and garment industries have become the major agents of change in the lives of rural Bangladeshi women. Women's increased access to independent sources of finance, through participation in outside paid employment or through micro-credit, is usually taken as one of the main indicators of the improvement of women's status and of women's empowerment.

However, a puzzle remains: if these positive changes have resulted in women's "empowerment", why has there not been the kind of improvements in women's position that might be expected, such as the reduction or abolition of dowry payments, or a reduction in domestic violence? Indeed, if anything these tend to be going in the opposite direction. Dowry amounts continue to rise, as does the associated violence against women.

Also on micro-finance in Bangladesh:

Farida Khan, "Muhammad Yunus: an economics for peace"

It is true that individual women, women's organisations and other NGOs continue to struggle against these problems. Yet, despite all this effort, women continue to be subject to demands for large amounts of dowry as a condition for acceptance by their groom's family. Married women are also frequently subjected to physical and psychological violence by their husbands and in-laws if they cannot keep bringing in more and more dowry, especially within the first few years of their marriage.

Understanding dowry

To understand the seemingly intractable problem of dowry, we need to understand the rationale behind the practice. Dowry practices in Bangladesh (the demand or dabi from grooms' families) are a relatively new phenomenon. Their rise is linked to the capitalist transformation of the Bangladeshi economy since the late 1960s and the resultant disjunction between the demands of the economy and the system of values in Bangladeshi society.

This has led to a valorization of men and devalorization of women, legitimated both by a socially created surplus of marriageable women compared to men, and also by the threat posed to ideas of women's purity and honour by women's increasing physical mobility. All this in turn has made it possible for dowry to become a critical source of capital for families with sons, who are an increasingly prized commodity.

These new negative developments in relation to women and dowry can be understood better by appreciating that in Bangladeshi culture marriage and dependence upon your husband is thought essential for women. By 'dependence' I mean both perceived and real economic dependency as well as the moral or cultural dependency of all women on one or another adult man of their family. The necessity for all women to be married, along with the perceived 'risks' posed by an unmarried woman to her family's honour, means that families feel pressured to marry off their daughters as soon as possible after puberty. This lowers the marriage age for women, so creating a perceived surplus of women in relation to men, who are not under the same pressure to marry and so generally marry later in life. This again leads to further inflation of dowries and to the further devaluing of women - economically, culturally and morally - in relation to men.

Also in openDemocracy on the 16 Days theme, part of our overall 50.50 coverage, a multi-voiced blog with contributions from women and men around the world

Other articles in the 16 Days series include:

Roja Bandari, "Iran's women: listen now!"

Rahila Gupta, "The UK's modern slavery shame"

Takyiwaa Manuh, "African women and domestic violence"

Anne-Marie Goetz and Joanne Sandler "War and sexual violence"

Rebecca Barlow, "Women and conflict"

Jameen Kaur, "India's silent tragedy

Beyond the law

Dowry was declared illegal in Bangladesh in 1980. However, like many other laws in Bangladesh this has had little or no impact. When faced with demands for large dowries, families are reluctant to take legal action for fear of losing suitable grooms. Thus villagers will say that if one family takes legal action, no other potential grooms will come forward to ask to marry a girl from that village in future. While there are para-legal staff in some rural villages, poor people only seek their assistance when a woman has been divorced after repeated demands for more and more dowry, combined with extensive violence. Families never report cases when dowry is demanded during marital negotiations.

When I asked several groups of poor women what was their biggest problem during some recent research for CARE Bangladesh, their almost unanimous answer was "dowry". When I asked about violence, I heard numerous stories about how most of the violence against women was related to their parents' inability to meet the demands of husbands and their families for more and more money or other goods.

Dowry has come to be one of the most critical sources of capital for all families. It is not only practiced as a one-off payment during marriage, but many families continue to use their newly-married incoming wives as an ongoing source of capital, by sending them back to their natal home again and again to bring back more capital. If the wives' families cannot oblige, the wives are subjected to violence, or even divorce.

One such woman I spoke to, Ruksana, is the second of four sisters from a poor family. She was married to her cousin Ataul, and her parents paid 80,000 Bangladeshi Taka as dowry. After the marriage her mother-in-law mistreated her and demanded a bicycle, some jewellery and additional Tk30,000. Ruksana's mother took a Tk7000 loan from Grameen Bank, bought a cycle and made some ear-rings in the hope that the mother-in-law (her own brother's wife) would treat her daughter better, but Ruksana was pressured for more money. Ruksana did not want to tell her parents since they were already struggling to keep up payments on the first loan and could not afford enough food. Her mother-in-law then tricked her into signing divorce papers (she was told the papers were to obtain another loan), forced her to return to her parents' house, and arranged a new marriage for Ataul.

The dark side of micro-credit

This is where micro-credit has contributed to the escalation of dowry. While micro-credit has benefited large sections of the rural population in many ways, it has also worked against women's solidarity and contributed heavily to the inflation of dowry. Grooms' families are aware that money is available to brides' families more easily now, through Grameen Bank, the Bangladesh Rural Advancement Committee (BRAC) or other NGOs. I have often heard of women being sent home to persuade their parents to borrow money from an NGO for their husbands to invest in business, including buying items such as rickshaws, vans, grocery shops or irrigation pumps.

Although in theory micro-finance institutions do not lend money for the purposes of dowry payment, in practice it is common knowledge among the barefoot bankers (micro-finance institution employees distributing and collecting loans among village people) that most village families depend on micro-credit to meet dowry demands.

It is because of such near universal dependence of men on their wives' families for capital that dowry has come to be perceived by women's organisations as intractable and as 'too political' a problem to tackle directly.

Dismantling the hierarchy

Notwithstanding certain structural constraints, I still believe there are ways to arrest the problem of dowry, and in my work for CARE I made a number of recommendations. They include; collaboration between institutions working for women's rights to campaign on dowry, inheritance rights and domestic violence; development of a large-scale rural legal aid service following the model already developed by Ain o Salish Kendra (ASK) and the Bangladesh Rural Advancement Committee (BRAC); working with religious authorities; use of media, education and role models to contest village stereotypes of women.

Another key point to consider is that the perpetuation of dowry and violence against women cannot only be blamed on men, particularly poor men. It is actually the middle-class families, who keep their women relatively sheltered in order to protect their purity and honour, and compete most heavily for status hierarchy through dowry displays, who are most responsible for perpetuating both dowry practices and gender domination.

Middle-class women too gain from this status hierarchy. They demand dowry for their sons, are relatively able to pay large dowry for their daughters, and play active roles in maintaining their superior status in relation to less well-off women. As a result, they are often the people least willing to reject the dowry system. It is hard to see how things will change for poor village families when they are taken for granted by the rural and urban middle classes, who act as moral arbiters for the society as a whole.

In tackling the problem of middle class attitudes, a piecemeal approach may work. In the shorter term, the younger middle class generation, who might have studied abroad and returned to Bangladesh, and do not necessarily share the same values to their parents, could be targeted. They are more often prepared to challenge familial values, for instance by marrying someone of their own choice without involvement of dowries.

There also needs to be a dialogue between the women's organisations - especially legal ones such as Ask and the Bangladesh National Women Lawyers' Association (BNWLA) - and religious leaders. I believe if there is the political will on the part of the government, women's organisations, religious leaders, large NGOs and civil society in general, religious leaders can be used quite effectively in addressing the problem of dowry and violence against women. There is some precedence for this; in recent years religious leaders have been used very successfully in motivating large sections of the village people into accepting contraceptives within a relatively short space of time.

Finally, education is frequently recommended as a solution to all sorts of problems in Bangladeshi society. I would recommend the same, but with less emphasis on rote learning and more on educating the young so they begin to question gender and other structural hierarchies very early in life.

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