The Role of Microfinance in Contemporary Rural Development Finance Policy and Practice: Imposing Neoliberalism as ‘Best Practice’

Abstract

Microcredit emerged in the 1970s as a mechanism whereby virtually all poor individuals could supposedly escape their poverty through self‐help and individual entrepreneurship. Crucially, neoliberal policy‐makers found the microcredit concept ideologically compelling, and the international development community soon began to provide massive support to establish and expand the microfinance movement. Today, however, even long‐standing microfinance advocates now reluctantly accept that microcredit has actually had no positive impact upon poverty or ‘bottom‐up’ rural development. In fact, those rural communities most exposed to microcredit have been severely damaged in a number of ways, especially through sub‐prime‐style ‘boom‐to‐bust’ episodes. Largely because of its supreme ideological usefulness, the microfinance movement nonetheless still retains some support in the major neoliberal‐oriented international development institutions, pro‐globalization think‐tanks, and in a number of Western governments.

The International Labour Organization and the ambivalent politics of financial inclusion in West Africa

“…The ILO has often been overlooked in relation to the role of the World Bank and the G20 with respect to promoting and governing financial inclusion (for example, Bateman 2012, Soederberg 2013, Henrikksen 2013, but it is not an 'outside' voice in the broader policy community dealing with microfinance and financial inclusion. The ILO does not dispose of the same resources as the World Bank, but is nonetheless a founding member of CGAP, the major international policy body on financial inclusion; has been engaged in microfinance projects 'on the ground' since the early 1990s (see ILO 1994) and draws on occasion on funding from the World Bank's International Finance Corporation (IFC).…”

Connotaciones y paradojas en torno a la participación de los actores locales en iniciativas de desarrollo rural

“…En diversos estudios se ha documentado la centralidad de las prácticas financieras vinculadas con el crédito en la economía familiar y comunitaria (González de la Rocha, 2006;Long, 2007;Villarreal 2004;Guérin, 2011). Sin embargo, en un creciente número de estudios se argumenta que el endeudamiento incrementa la vulnerabilidad de las familias pobres, 12 lo que se ha documentado con base en casos en los cuales el aumento de la oferta de microcrédito rural dirigido a pequeños productores ha creado nuevas "trampas de pobreza" y conflictos dentro de las comunidades (Guérin et al, 2009;Morvant-Roux, 2009;Bateman, 2012;Taylor, 2012;Marr, 2012).…”

“…Múltiples condiciones restringen la diversificación de actividades económicas y su rentabilidad, entre las que destacan la marginación geográfica, la falta de infraestructura y la discriminación social (Marr, 2012;Harper, 2012;Shaw, 2004). Además, las actividades agropecuarias enfrentan grandes riesgos que aumentan la vulnerabilidad de los deudores (Duvendack et al, 2011) y la presión de pago puede afectar la economía de los hogares (Marr, 2012;Korth et al, 2012;Bateman, 2012;Harper, 2012) e incrementar la desigualdad (Taylor, 2012).…”

Heroes, villains and victims: agricultural subsidies and their impacts on food security and poverty reduction

“…Interest then turned to microfinance approaches, emphasising institutional sustainability and investment in institutional development rather than subsidies on operations. However microfinance programmes have faced increasing criticism of lack of evidence of benefits to the poor (Bateman, 2012;Helmes and Lensink, 2011), alongside long standing concerns about limited engagement in agricultural finance (Meyer, 2011), with many of microfinance's features being unsuitable for supporting intensification of staple crop production in poor areas (Morduch, 1999;Poulton et al, 2010) despite the critical role this plays in food security and poverty reduction. With regard to Africa, agricultural subsidies were identified as a major element in inefficient and fiscally and economically unsustainable policies undermining private sector services growth, distorting market incentives, and blunting competitiveness and farmer incentives (World Bank, 1981): inherent subsidy inefficiencies, inefficient implementation and diversion led to very limited benefits to farmers and indeed net costs.…”