Demystifying Micro-Credit: The Grameen Bank, NGOs, and Neoliberalism in Bangladesh
Abstract
This article is an ethnographic study of the effects of micro-credit on gender relations in rural Bangladesh. Focusing on the 2006 Nobel Peace Prize winner, the Grameen Bank of Bangladesh and three other leading non-governmental organizations (NGOs) in the country, I analyze the role of gender in the expansion of globalization and neoliberalism in Bangladesh. The Grameen Bank has become a global symbol of poor women's empowerment and is celebrated for its 98 percent loan recovery. In this article, I examine some of the NGO tactics behind the loan recovery programs. In particular, I examine how Bangladeshi rural women's honor and shame are instrumentally appropriated by micro-credit NGOs in the furtherance of their capitalist interests.
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1.
1. The other three NGOs are Bangladesh Rural Advancement Committee (BRAC), Proshika Human Development Forum, and Association for Social Advancement (ASA). All of these NGOs work with slight variations on the Grameen Bank model. They all have millions of subscribers, and cover more than eighty percent of the rural population. The Grameen Bank is officially registered as a bank under the Bangladesh Bank Ordinance (1983) but conceptually it is a non-governmental organization. Therefore, in my analysis, I treat it as such.
2.
2. According to the websites of these NGOs: www.grameen.com, www.brac.net, www.asabd.org, www.proshika.org.
3.
3. In Bangladesh, western aid organizations channel most of their aid through the NGO sector, which they helped to create in the 1970s. In 1997, the EU channeled 25% of its aid through the NGO sector.
4.
4. This point will not necessarily hold for smaller NGOs in Latin American countries that have a long tradition of social movements.
5.
5. James Scott (2006) analyzed the high modernist goals of `well-intended' socialist engineering. NGOs, such as the Grameen Bank, also seek to bring about high modernist values, coupled with the incentives of a market-driven economy, to rural constituencies. To facilitate that, they also undertake information gathering on diet, health, education, and consumption, similar to the modern state.
6.
6. Globalization and the need for cheap labor from `third world' countries has resulted in the out-migration of rural people as labor overseas, first to the Middle East in the 1970s and 1980s, and to East Asian countries in the 1990s. It has led to remittances of wages, and a flow of ideas from Muslim societies. One of the consequences of this new networked society of Muslims is the increase in Islamic seminaries (madrassahs). It has increased wealth and brought communication technologies to rural areas (TV, cell phones, internet and Bollywood movies).
7.
7. I maintain that ethnography yields very different conclusions from survey research and focus-group interviews, the methodological tools of development economists. Ethnography requires a sustained amount of time with a community, building their trust, and observing what people do as opposed to what people say they do when they are asked questions in a survey.
8.
8. URL (accessed June 2007): http://www.grameen-info.org
9.
9. During 1975—90, Bangladesh was under military dictatorship.
10.
10. Transparency International (TI) routinely lists Bangladesh as one of the most corrupt countries in the world.
11.
11. The development NGOs do not support the Jamaat-I-Islami and other Islamist parties which espouse a non-modernist role for women. If they sided with the Islamists, they would lose their western aid.
12.
12. `Prof. Yunus plans to form a political party in Bangladesh', 11 Feb. 2007. URL (accessed June 2007): http://muhammadyunus.org/content/view/83/1/lang,en/
13.
13. Since the rural population is largely illiterate, voters are taught the symbols of different political parties (fish, a spring of wheat, the scales of justice, etc. that are the signs for various political parties) as identifiers of which political party they will vote for.
14.
14. This topic is a paper in itself. But I do want to make the point that the NGO sector in Bangladesh signals a new kind of state formation for the 21st century, one that is a cross between private capital and welfarism.
15.
15. URL (assessed June 2007): http://www.muhammadyunus.org/
16.
16. From its inception Bangladesh was not a welfare state. I argue that countries like Bangladesh that came into being in the environment of globalization and neoliberalism, and are closely tied to western aid, can only be a proto-capitalist state.
17.
17. In my research I found that NGO managers blamed the borrowers and their husbands for failures. For example, when 50% of breeder chickens died within a week of getting a loan and setting up operations, the NGO (BRAC in this instance) managers would speak of the failure as a fault of the `poor, illiterate village women', and not as BRAC's fault in targeting people who didn't have the wherewithal (the training, the facilities, etc.) to run a chicken farm from a tin-shed in their house.
18.
18. The NGO definition of poor is a family of four with less than 0.5 acre of arable land and living below the level of poverty in Bangladesh.
19.
19. Giving to kin has a double bind. It is expected that kin members will intercede and prevent a potential default in order to save the honor of the family. However, if a serious default occurs, then the family usually sides with the defaulting male member and asks the woman to find other means (borrow at 120%) to pay off the loan.
20.
20. The leading NGOs have model villages, usually close to the capital Dhaka, to showcase to international donors.
21.
21. In my area, the local headmistress of a school, the wife of a lawyer, and wives of some of the richest merchants in town were members of micro-credit NGOs. NGOs prefer richer female members because they will not default. As high-status people in rural society, they can coerce poorer members to pay up. However, rich male members just do the opposite. When ASA began to target richer clients in my area, the collection became a problem with the rich clients threatening `they will not pay back'. The situation was mediated by several prominent politicians, and finally, a payment schedule was worked out. Thus, local politicians became involved in NGO loan recovery.
22.
22. All the NGOs I studied mimicked this basic structure, group responsibility of individual loans, strict recovery through weekly (ASA and Grameen) or biweekly meetings (BRAC) and monthly meetings (Proshika), and product tie-ins with loans (hybrid seeds with agricultural loans, breeder chickens for BRAC loanees).
23.
23. At the time of my research, the Grameen Bank had decided to lower the payment schedule from fifty-two weeks to fifty weeks, which would mean an additional rise in the weekly amount (kisti) paid by the borrowers. For poor people, a weekly rise of a few takas (the unit of currency) is a tremendous hardship.
24.
24. In development jargon this is euphemistically known as peer monitoring.
25.
25. In my area, the NGO Proshika had filed 74 cases against its women members and many of them were taken into custody.
26.
26. These incidents were happening in front of NGO officers. They would exhort the women to `collect the money or else . . .' I brought several such incidents to the attention of NGO workers in my area, but they would dismiss my concerns by saying, `These are the work of illiterate people. We (the NGO) do not encourage this. Did you see us present at the event?' Interestingly, officers in NGO headquarters in Dhaka get incensed if you report such incidents to them. I was literally thrown out of one of the leading NGO offices when I brought such activities to the attention of senior officials.
27.
27. Moneylending in Bengal was traditionally handled by a caste of Hindu moneylenders. In some instances, Hindu widows often participated in small-time moneylending. With the creation of Pakistan in 1947, and with different waves of migration of Hindus from Bangladesh (formerly East Pakistan), Muslim male moneylenders have emerged. Often Muslims give up moneylending after performing the Hajj. However, the entrance of poor Muslim women into the institution of moneylending is a new phenomenon.
28.
28. Calculated at Taka 47 (1998 rate) to 1 USD.
29.
29. Personal communication to author by scholars from Bangladesh.
30.
30. Gonogebeshona (People's Research) is a new concept developed by a professor of economics, Dr. Amisur Rahman of Bangladesh. It is a participatory form of research where the researcher and the targeted group work together to find solutions to problems. This research could offer an alternative to the existing model of top-down research conducted by highly paid consultants. For more information, consult the website: http://www.rib_bangladesh.org/.
31.
31. During my research, local NGO researchers often reminded me that I was looking at the negative side of micro-credit. Instead, as a feminist scholar I should focus on the positive side of micro-credit such as rural women's ability to handle money, sign, and speak their names in public.
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Article first published online: March 1, 2008
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