Neo-Liberalism

Considering the Evolution of Microcredit Loans

Microcredit Loans Very small loans provided to very poor people

to subsidize home-based businesses

Basket-making, jewelry-making, quilt-making, etc.

Small, home-based farms?

Others?

Traditional Image of Microcredit Loans

Initial Goals of Microcredit Loans

Increased economy autonomy for women

“Empowerment” Foster social connectivity and solidarity between poor

women

Greater sense of well-being

Increased productivity

Alleviate Poverty in “Third World Countries”– Aid to “Development”

Increased social inclusion of women into formal economy.

Early Microcredit Structures

Created and managed by Non-Governmental Organizations (NGO’s)

Subsidized by private foundations and/or government grants.

Interest was used to create loan opportunities for other women, and to promote social responsibility (giving back).

Developed and implemented by small organizations that worked in specific local communities

Driven mostly by intangible benefits, not profit-making

Feminist Economic Development Model

1970-1980’s –Women’s Rights as Human Rights Paradigm

Access to credit was defined as a human right, that many women were denied due to patriarchal family structure

Established Women’s World Baking Networks

Increase of NGO’s offering Micro-credit Loans

Global Marketization(Globalization) of Microcredit

Loans Growth of organization dedicated only to

Microfinancing all over the world.

Promoted microcredits as a “best-practice” to foundation and policy-makers.

Increased involvement of IGO (International Government Organizations like World Bank, U.S. Agency for International Development) promoting microfinance model to NGO’s.

Increase of NGO’s offering micro-credit using “best practice models” in different part of the world.

The Neoliberalization of Micro-credit Loans

Microcredit Loans >>>>>Micro-financing Institutions (MFIs)

Growth of MFI’s—found everywhere on the globe

Increased government support and IGO support for MFI’s

Focuses on profit-making through granting a very large number of very small loans

Success is defined by number of women’s reached not by decline in poverty

Success defined by repayment rates not by alleviating poverty

Neo-liberalism Microcrediting is commodified, transformed into a

product or service rather than a social project.

Increased focused on creating and “tapping into” new markets, not on alleviating inequality.

Government involvement is viewed as a hindrance—privatization is viewed as “cost-effective”

Policies created to ease entry for private banking institutions not to redistribute wealth in society.

New model of “Financial Services for the Poor”

Impact on NGO’s NGO’s pressured to convert into commercial

banks.

Now lending private money to make marginal profits

Governments and Foundations eager to fund microcredit lenders rather than actual non-profit organizations.

Funding profit making organization rather than social justice organizations.

Globalization Global neo-liberalism characterized by:

Increasing concentration of wealth to a small number of elites

Growing global economic interdependence that supersedes the power/interests of individual states (de-territorialization)

Global dissemination of capitalism (both its economic model and underlying cultural values

World-wide global inequality

Compression of time/space through technological innovation—especially the movement and flow of information and credit.