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Latest update: 06/04/2008
The crushing burden of microcredit
In Bangladesh, FRANCE 24 reporters find that far from alleviating poverty, microcredit has been plunging people deeper into debt.
Microcredit changed Shobi Rani’s life. An impoverished yoghurt seller, Rani travels across her region in northern Bangladesh on a cycle rickshaw, selling her dairy produce. She is a beneficiary of microcredit, the much touted development scheme to help eradicate poverty.
Three months ago, Rani received a loan for 500 euros from the Grameen Bank to start her little dairy enterprise. Every week, a bank official carefully checks how her business is going.
The brainchild of Rani’s fellow countryman Mohammed Yunus, who won the 2006 Nobel Peace Prize, the Grameen Bank has been hailed for executing the microcredit mantra: giving the poor a helping hand, not a handout.
Called “the banker of the poor,” Grameen has been attracting big businesses such as Danone, the French food giant, who supplies the yoghurt to Rani and thousands of other women in the area involved in similar projects.
But the situation is far from rosy in Kalihati, one of the first Bangladeshi villages to benefit from Grameen’s low interest credit scheme. The villagers here who have taken a loan are unable to reimburse their credit, and claim to be harassed by Grameen Bank representatives. Korshed Alom, a former debt collector, was put into early retirement for having questioned the Grameen Bank’s methods: “Their technique is to scare borrowers and insult them. We tell them to sell their clothes, that they have no other choice. I’m not proud of myself, but several times, I had even been obliged to say ‘sell your children.’”
The Bank’s representatives choose not to respond to these accusations. It is impossible to obtain an interview with Mohammed Yunus, and the Grameen Bank headquarters are off-limits for journalists who are too curious.
The Grameen Bank counts more than 100 million clients in the world’s poorest countries. It targets 500 million clients in 2020.
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Comments (5)
Grameen Bank report
It is great to see that this issue is being addressed! Having done research on microfinance, I still believe in the positive side of it, but I am also a lot more skeptical. For sure, the extreme glorification needs to stop and also the layman needs to understand that being indebted is not the dream of every poor person. Similar tragedies as tallked about in the film can be seen in India - and the microfinance crisis in 2006 highlights the severity.
I would be very interested in whether the Grameen Bank at any point reacted to this report?
Bleak Portrayal
What a sad portrayal of Grameen Bank. Of course it has its flaws, but far from "crushing Bangladesh with debt," it had lifted 3 out of 4 people to whom loans have been extended out of poverty! This remarkable statistic was stated at the end of this video clip, which has sadly been distorted to misrepresent Grameen Bank. A false and fallen savior makes a much better news story than does a philanthropist with an idea that works and helps, however. What a sad distortion.
Grameen is no maffia
It's so sad to read such comments that only look at things in such a black and white way. What does the news above show? that all in microfinance is not perfect or beautiful. The presentation of this sad story and the bad behaviour of a handful of loan officers should not lead us all to conclude that the support and services that the Grameen brought to millions should be put to the trash. It's a pity Grameen did not want to react.
Plus I know Grameen from a distance because I work in an organisation that works with microfinance. From my experience I can only confirm microfinance is far from being perfect. For one thing it's growing too fast for that and also it has been initiated in such a way that all the expertise that is required is not always there.
Coming back to Grameen and Yunus, no one can deny the outreach Grameen has. Grameen is servicing millions of clients in Bangladesh and is not insulting of harassing them all. The article only shows that in their thousands of employees they are not only good but also bad people. Making sure all loan officers that check on clients are doing their job well is not easy, nor is it easy to be 100% that all clients have the capacity to manage the loan they receive.
In conclusion we should never forget that one of the important messages Yunus and other pioneers in Microfinance gave is that being poor does not mean you are not credit worthy and that to come out of the circle of poverty anyone should be entitled to access among other essential things such as a roof and food access to financial services on fair terms.
Grameen bank likes to talk to the media... not!
How eloquent to see the Grameen bank staff calling security guards! Obvioulsy, Grameen bank likes to be transparent about its activities and microcredit schemes
Grameen Bank : shame on you!
First of all, sorry for my poor written English.
I became interested in the way Grameen Bank works by seeing a video, distributed in Flanders, Belgium.
It is titled 'Bangladesh na de zondvloed', and is part of a collection made for pupils and students ('Biblio-video' by 'couleur locale', Algemeen Bestuur Ontwikkelingssamenwerking - BRTN - 1994).
In this video Grameen Bank is focused as a blessing for poor people in developping country's. Against very low intrest they provide lowns for 'getting out of the mud'. They especcially help women, because women think about how to use the money for the benefit of the family (and men think about themselves and friends...).
Although the video is 14 years old, it interessed me, because I've had the privilege of seeing how the poor people of Bangadesh struggle, with an astonishing everlasting smile, against a situation they will never be able to change by themselves : the power of nature, en the corruption of their leaders.
If Grameen Bank had done what they claim to do, indeed they schould be honoured.
But reading what I'm reading now, the only conclusion is that Grameen Bank is, once again, a maffia.
A maffia who's intentions are really, to suck out any power and energy that is left in those people, who can only survive by their human energy. Making profits out of the desperation of the poorest of the poorest, their is no excuse, none at all!
Very disappointed,
Patrick Teetaert