RELATIONSHIPS AMONG PAPERS IN THIS VOLUME
Louis Garvin
Relationships Between Projects
Two Birds With One Loan: The Grameen Bank's Impact on Population
Growth in Bangladesh is a research project completed as part of a class
(SNRE 545) taught by Sandra Arlinghaus and William Drake. This project
will be combined with others from the class into a single monograph. This
short paper examines relationships between the projects.
Since the mid-1980s, people have been travelling to Bangladesh to learn
more about Professor Yunus' "experiment" with microcredit. In 1991, a network
of organizations trying to replicate the Grameen model was formed named
CASHPOR (Credit And Savings for the Hard-core POoR). In 1992, the Grameen
Trust was added to the Grameen Family of Organizations to assist replication
efforts in other countries. The Grameen Bank has continued to demonstrate
the power of microcredit to alleviate poverty and has captured the world's
attention and imagination. In 1997, over 2900 people attended the Microcredit
Summit in Washington, D.C., representing 1500 organizations from 137 countries.
The summit participants plan to extend the reach of microcredit around
the world and have launched a campaign to reach 100 million of the world's
poorest families by 2005. (Microcredit Summit, webpage).
Professor Gibbons, CASHPOR's Executive Trustee, believes that the Grameen
model should be changed to fit local cultures and needs, but that certain
core elements must be kept to ensure success. (Todd, 1996) These elements
are:
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exclusive focus on the poor, with preference for poor women
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simple loan procedures administered in the village
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small loans repaid weekly and used for any income-generating activity chosen
by the woman herself
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collective responsibility through groups bolstered by compulsory group
savings
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strict credit discipline and close supervision through weekly meetings
and home visits.
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rigorous, practical training of full-time staff
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field-oriented management
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political neutrality
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open and transparent conduct of all business
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setting an interest rate which will cover costs at full operation and aiming
for financial viability.
Using this definition, the use of microcredit to solve problems addressed
by other class research projects is not always clear. For example, Martha
Masterman describes the need for cooperatives for local farmers to give
them better access to market their products. Farming cooperatives are not
in the narrow definition of microcredit given by Gibbons, however. It is
not clear how microcredit could help the street children whose plight is
described by Chandra Sivakumar, because children do not fit within the
defined target and structure of microcredit programs. On the other hand,
the Grameen Bank has itself been expanding beyond its basic microcredit
program into new technology and business development programs. Grameen's
example shows that variations are possible which deviate from the parameters
described by Gibbon. Perhaps solutions based on microcredit could be developed
to specifically address the issues raised by Masterman and Sivakumar.
Of the other class projects, Mark Schmidt and Christina Welter's work
on Uganda shows the most promise for the application of microcredit. Schmidt
describes the lack of any work available for women as the main factor leading
them to work as prostitutes. This high level of prostitution has been a
major contributor to the AIDS epidemic that has ravaged the country. Welter
points out the low status of women as contributing to Uganda's lack of
movement towards a stable and prosperous society. Microcredit can provide
employment for women and raise their status is society. This focus on women
has a positive rippling effect on family health, education, and economic
and societal stability, all of which is desperately needed in Uganda.
Microcredit is only one tool to alleviate poverty. Natalie Henry's analysis
of Mexico describes the maquiladora program, in which foreign individuals
or businesses can establish a wholly owned operation in Mexico for the
manufacture of export products. The maquiladora program forms a stark contrast
to microcredit as practiced by the Grameen Bank. Most maquiladora factories
use foreign management, so the only gains for the Mexican people are wage
labor jobs. Microcredit builds local ownership of assets and strengthens
indigenous economies. The maquiladora program forces people to move to
the factories along the United States/Mexico border, into areas without
a stable social structure and without the proper physical infrastructure
to support them. Microcredit gives people the freedom to control their
own work in their current communities. Maquiladoras provide much needed
jobs and foreign currency for Mexico, but microcredit is a better strategy
for developing countries to build strong communities and long term independence.
Sujata Narayan and Jennifer Talbot discuss the development of ecotourism
in Costa Rica and Niger. Several comparisons between ecotourism and microcredit
can be made:
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Ecotourism may fall somewhere between microcredit and maquiladoras in that
it combines foreign dependency with some local control. In theory, ecotourism
brings in foreign tourists for activities that respect local cultures and
fragile environments and provides employment for local people. Narayan
points out, however, that in reality, foreign tour operators often make
most or all of the profits from ecotourism and that environmental protection
is sometimes not maintained. Her analysis provides a warning for other
countries adopting microcredit: a failure to carefully monitor the program
can lead it astray from its goals. For example, allowing microcredit loans
to go to the wealthy or allowing women to give loan money directly to their
husbands can lead a microcredit program away from its goals of reducing
poverty and raising the status of women.
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Talbot describes how the Tuareg people continued many of the conservation
activities associated with Niger's ecotourism program because they had
been closely involved with the program's development and it had become
an integral part of their lives. In order for microcredit to be successful,
it must similarly be integrated into the local culture. A microcredit program
organized by an unknown outside organization is less likely to be successful
because borrowers may not have confidence that the program will continue.
They may default on their loans if they do not see an advantage to be gained
from staying involved with a trusted program run by themselves and their
neighbors.
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Each program brings benefits outside of economic gain that the other program
type does not address. Microcredit raises the status of women, but does
not directly consider environmental issues as does ecotourism.
Two of the other projects raise interesting questions for future research:
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Natalie Henry describes the strong role the government has played in various
transitions in Mexico. While government programs have also had a large
impact in Bangladesh, the strength of non-governmental organizations (NGOs)
stands the country apart from others. The Grameen Bank and many other large,
successful NGOs play such a major role in the Bangladeshi economy and life
that the government has at times expressed concern that it lacked control.
The Bangladeshi people lost confidence in their government during the military
coups of the 1980s and learned to trust the consistency and honesty of
NGOs, which grew in support and reach during this decade. The Mexican people
have also had little faith in their government in several periods of their
history, yet an NGO infrastructure of comparable size has not emerged.
What conditions have led to the strength of NGOs in Bangladesh? Is there
an ideal mix of government and NGO power that balances the efficiency and
innovation of NGOs with the accountability and legitimacy of a democratic
government?
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Michael Teifel's analysis of Vietnam focused on the ethnic minorities who
live in the northern highlands. The Vietnamese government has considered
their territory as an open frontier for migration from other overpopulated
areas. Teifel points out that the northern highlands can only sustain smaller
populations due to lower agricultural productivity in the mountanous regions.
Bangladesh also has a mountainous region populated by an ethnic minority.
Most of Bangladesh is populated with a relatively homogenous cultural group.
The Chittagong Hill Tracts, however, support about a million tribal people,
of mostly Mongoloid origin, who remain largely separated from the rest
of the country and zealously guard their traditions and cultural heritage.
The Hill Tracts are mountainous and can support a much smaller population
density than the rest of the nation. The Grameen Bank does not operate
in the Hill Tracts most likely due to linguistic and cultural barriers.
Teifel's analysis of ethnic minorities in Vietnam raises several questions:
Are the Hill Tract peoples discriminated against in government representation
and programs? Are people from the rest of the country moving into the Hill
Tracts in an attempt to escape the populat ion pressures in the rest of
the country?
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