Microfinance and Its Discontents: Women in Debt in Bangladesh

Bangladeshi women count money for repayment to a microcredit bank. Author Lamia Karim’s new book asks why we know so little about microfinance’s consequences. Image source.

In 2006 the Grameen Bank of Bangladesh won the Nobel Peace Prize for its innovative microfinancing operations. Lamia Karim, associate professor of cultural anthropology at the University of Oregon, Eugene, takes a critical look at the Grameen Bank and three of the leading NGOs in Bangladesh in Microfinance and Its Discontents: Women in Debt in Bangladesh (available this month from UMP). Amid euphoria over the benefits of microfinance, Karim offers a timely and sobering perspective on the practical, and possibly detrimental, realities for poor women inducted into microfinance operations.

Most recently, Karim has been interviewed on NPR and quoted in Wall Street Journal on account of recent developments with Grameen Bank’s founder, Muhammad Yunis, and the government of Bangladesh’s efforts to oust him under a law proclaiming mandatory retirement at age of 60 (Yunis is 70). The question is—why now?

These still-unfolding events have shone some public light into the practice of microfinancing. As NPR notes, out of around 7.5 million borrowers, 97% are women. The microcredit loans are touted as loans that are almost always repaid on time and in full. However, as Karim points out, the realities of the women who acquire these loans are such that they are flung deeper and deeper into debt, and that more oversight is needed.

The following is a passage from the Preface of Karim’s book.

What brought me to the study of microfinance and gender was a puzzle about rural women’s entrepreneurship and economic empowerment. Bangladesh is one of the most economically depressed countries in the world, and yet the Grameen Bank and the other three NGOs I studied all boasted a 98 percent rate of loan recovery. Either rural Bangladeshi women were all becoming successful mini-entrepreneurs through these microfinance NGOs, or there was a hidden story behind these high recovery rates. I was provoked by the following questions: What gave one of the poorest countries in the world some of the most creditworthy clients? What does it take to empower women? Is money enough? Rejecting the moralistic discourse that the poor pay back because of a natural correlation between honesty and poverty, I felt instead that there was a complex picture behind these high repayment numbers. I chose Bangladesh for my research because I wanted to discover the story behind the rhetoric of these NGOs.

The initial research was conducted between 1998 and 1999, with follow-up research in 2007. During these years, I have kept pace with the trends within the Bangladeshi microfinance industry. More importantly, I am from Bangladesh, I speak the language fluently, and I have social networks that connect me to the local research and activist communities. In my visits to Bangladesh, I noticed that microfinance had become one of the most regularized aspects of development programs. In order to update my earlier findings, in 2007 I conducted a small study of female borrowers of the Grameen Bank who are known as Grameen phone ladies. These women had purchased Telenor cellular phones with their microfinance loans, and were operating as village phone ladies. While on the ground, microfinance policies were being expanded to new areas, I found that the basic formulation of loans equal economic empowerment remained unchanged.

Given that so much euphoria has resulted over microfinance, why is it that we know so little about its consequences from alternative perspectives? Although recent research by independent scholars in Bangladesh documents that microfinance policies undertaken by Grameen Bank and the leading microfinance NGOs do not benefit the poor, such research remains relatively unknown outside of Bangladesh. In fact, a robust critical discourse regarding microfinance is available in the vernacular literature in Bangladesh that is not accessible to Western readers. Hence, studies such as mine have an important role to play in exposing the consequences of microfinance in the lives of poower women. … This book is an invitation to open up the debate on this practice, to entertain alternatives to the dominant discourses of knowledge, to push the boundaries, and to analyze the ways in which ordinary people make meaning of these policies and practices in their daily struggles with globalization.

Find out more in Microfinance and Its Discontents.

“It is precisely because the microcredit mantra has been so endlessly repeated, often in place of actual empirical documentation to back its claims, that Microfinance and Its Discontents is so compelling. This is an outstanding, courageous, and path-breaking piece of scholarship; one that will doubtless unsettle the microcredit establishment, and by extension, key presumptions of neoliberal research agendas.”—Kamala Visweswaran, University of Texas, Austin

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