Microcredit is a mirage, says UK study
Tue, Aug 16th, 2011 7:13 pm BdST
Dhaka, Aug 16 (bdnews24.com)—A British government-funded international study says there is no credible evidence that microcredit has helped cut poverty and empower women.
The 'systematic review' dismissed well-known studies done so far claiming positive impacts on women.
The report says "unreliable impact estimates" based on "weak methodologies" and "inadequate data" have contributed to the creation of perception that micro-funding worked.
It also blames the myth of microcredit on "anecdotes" and "inspiring stories" propagated by the powerful microcredit industry.
The damning report, Evidence of the impact of microfinance: a systematic review, was supported by the UK's overseas development arm DfID, the University of London and the University of East Anglia.
bdnews24.com has obtained the full report, dated Aug 2011.
"Despite the apparent success and popularity of microfinance, no clear evidence yet exists that microfinance programmes have positive impacts," said the report, co-authored by by Maren Duvendack, Richard Palmer-Jones, James G Copestake, Lee Hooper, Yoon Loke and Nitya Rao.
This report seemingly pours cold water on the rigorous microcredit campaign especially in the West and lends further credence to the contention that is fast gaining ground that microfinance fails to pull the poor out of poverty.
Late last year, Danish director Tom Heinemann in an investigative TV documentary "Caught in Micro debt", which was aired on Norwegian television, questioned microcredit operations.
It uncovered documents revealing nearly US $100 million in aid funds to Grameen Bank were transferred out to a private entity, Grameen Kalyan, set up by its founder Muhammad Yunus, without the knowledge of the donor, Norway's NORAD.
The DfID review said the concept of microcredit was "first introduced in Bangladesh by Nobel Peace Prize winner Muhammad Yunus".
"Professor Yunus started Grameen Bank (GB) more than 30 years ago with the aim of reducing poverty by providing small loans to the country's rural poor (Yunus 1999)."
The Department for International Development, DfiD, is the UK government ministry that manages Britain's international aid and works to get rid of extreme poverty.
"There have been four major reviews examining impacts of microfinance (Sebstad and Chen, 1996; Gaile and Foster 1996, Goldberg 2005, Odell 2010, see also Orso 2011).
"These reviews concluded that, while anecdotes and other inspiring stories (such as Todd 1996) purported to show that microfinance can make a real difference in the lives of those served, rigorous quantitative evidence on the nature, magnitude and balance of microfinance impact is still scarce and inconclusive (Armendáriz de Aghion and Morduch 2005, 2010).
The review continued: "Overall, it is widely acknowledged that no well-known study robustly shows any strong impacts of microfinance (Armendáriz de Aghion and Morduch 2005, p199-230)."
Bangladesh's top microcredit operators include Association for Social Advancement (ASA), Grameen Bank, Brac, which together wield enormous power in the country's socio-political life.
Critics put the stunning loan recovery rate of nearly 98 percent down to the harassment of villagers from the debt collectors. Some argue that people can quickly sink into a cycle of debt, with many lenders charging exorbitant rates of interest.
In the Indian state of Andhra Pradesh, numerous reports of suicides amongst loan takers have spread around the world, calling into question the benefits from microcredit.
"Because of the growth of the microfinance industry and the attention the sector has received from policy makers, donors and private investors in recent years, existing microfinance impact evaluations need to be re-investigated.
"The robustness of claims that microfinance successfully alleviates poverty and empowers women must be scrutinised more carefully."
The study found "no robust evidence of positive impacts on women's status, or girl's enrolments".
"Our report shows that almost all impact evaluations of microfinance suffer from weak methodologies and inadequate data (as already argued by Adams and von Pischke 1992), thus the reliability of impact estimates are adversely affected.
"This can lead to misconceptions about the actual effects of a microfinance programme, thereby diverting attention from the search for perhaps more pro-poor interventions.
"Therefore, it is of interest to the development community to engage with evaluation techniques and to understand their limitations, so that more reliable evidence of impact can be provided in order to lead to better outcomes for the poor," the study concluded.
bdnews24.com/gna/bd/1900h
The 'systematic review' dismissed well-known studies done so far claiming positive impacts on women.
The report says "unreliable impact estimates" based on "weak methodologies" and "inadequate data" have contributed to the creation of perception that micro-funding worked.
It also blames the myth of microcredit on "anecdotes" and "inspiring stories" propagated by the powerful microcredit industry.
The damning report, Evidence of the impact of microfinance: a systematic review, was supported by the UK's overseas development arm DfID, the University of London and the University of East Anglia.
bdnews24.com has obtained the full report, dated Aug 2011.
"Despite the apparent success and popularity of microfinance, no clear evidence yet exists that microfinance programmes have positive impacts," said the report, co-authored by by Maren Duvendack, Richard Palmer-Jones, James G Copestake, Lee Hooper, Yoon Loke and Nitya Rao.
This report seemingly pours cold water on the rigorous microcredit campaign especially in the West and lends further credence to the contention that is fast gaining ground that microfinance fails to pull the poor out of poverty.
Late last year, Danish director Tom Heinemann in an investigative TV documentary "Caught in Micro debt", which was aired on Norwegian television, questioned microcredit operations.
It uncovered documents revealing nearly US $100 million in aid funds to Grameen Bank were transferred out to a private entity, Grameen Kalyan, set up by its founder Muhammad Yunus, without the knowledge of the donor, Norway's NORAD.
The DfID review said the concept of microcredit was "first introduced in Bangladesh by Nobel Peace Prize winner Muhammad Yunus".
"Professor Yunus started Grameen Bank (GB) more than 30 years ago with the aim of reducing poverty by providing small loans to the country's rural poor (Yunus 1999)."
The Department for International Development, DfiD, is the UK government ministry that manages Britain's international aid and works to get rid of extreme poverty.
"There have been four major reviews examining impacts of microfinance (Sebstad and Chen, 1996; Gaile and Foster 1996, Goldberg 2005, Odell 2010, see also Orso 2011).
"These reviews concluded that, while anecdotes and other inspiring stories (such as Todd 1996) purported to show that microfinance can make a real difference in the lives of those served, rigorous quantitative evidence on the nature, magnitude and balance of microfinance impact is still scarce and inconclusive (Armendáriz de Aghion and Morduch 2005, 2010).
The review continued: "Overall, it is widely acknowledged that no well-known study robustly shows any strong impacts of microfinance (Armendáriz de Aghion and Morduch 2005, p199-230)."
Bangladesh's top microcredit operators include Association for Social Advancement (ASA), Grameen Bank, Brac, which together wield enormous power in the country's socio-political life.
Critics put the stunning loan recovery rate of nearly 98 percent down to the harassment of villagers from the debt collectors. Some argue that people can quickly sink into a cycle of debt, with many lenders charging exorbitant rates of interest.
In the Indian state of Andhra Pradesh, numerous reports of suicides amongst loan takers have spread around the world, calling into question the benefits from microcredit.
"Because of the growth of the microfinance industry and the attention the sector has received from policy makers, donors and private investors in recent years, existing microfinance impact evaluations need to be re-investigated.
"The robustness of claims that microfinance successfully alleviates poverty and empowers women must be scrutinised more carefully."
The study found "no robust evidence of positive impacts on women's status, or girl's enrolments".
"Our report shows that almost all impact evaluations of microfinance suffer from weak methodologies and inadequate data (as already argued by Adams and von Pischke 1992), thus the reliability of impact estimates are adversely affected.
"This can lead to misconceptions about the actual effects of a microfinance programme, thereby diverting attention from the search for perhaps more pro-poor interventions.
"Therefore, it is of interest to the development community to engage with evaluation techniques and to understand their limitations, so that more reliable evidence of impact can be provided in order to lead to better outcomes for the poor," the study concluded.
bdnews24.com/gna/bd/1900h
Related old stories
• Flaws fetter micro-credit sector: expert
•Soft-term loan century old: Ashraful
• You'll get exposed, if deceive poor: PM
• Yunus removed as Grameen Bank MD
• SC puts seal on Yunus' ouster
• Yunus was warned of Grameen troubles
• Grameen fund transfer 'ultra vires': inquiry
• Committee raps 1996-2001 AL govt
• Panel points at 'family affair'
• Fund transfer draws 'distinguished' flak
• 'New bodies formed sans mandate'
• 'Yunus lied to review committee'
• Yunus worried at media 'vilification'
• Grameen Bank Review Panel Report
• Hasina was 'badly advised': Yunus
2011/5/24 M. Shahidul Islam <imonbd22@yahoo.com>
Well-said Mr Zakaria. Good resonse.
--- On Sun, 5/22/11, Mohammad Zakaria <goufbd@gmail.com> wrote:
From: Mohammad Zakaria <goufbd@gmail.com>To: khabor@yahoogroups.com
Subject: Re: [KHABOR] Nobel Laureate Dr. Muhammad Yunus exposed on tax cheating and ethics violation !!!!!
Cc: ovimot@yahoogroups.com, unitycouncilusa@gmail.com, guhasb@gmail.com, syed.aslam3@gmail.com, akhtergolam@gmail.com, muntasir@gmail.com
Date: Sunday, May 22, 2011, 5:56 AM
আমাদের বুদ্ধিজীবিরা বুদ্ধি ব্যবহার করে না পক্ষ অবলম্বন করে জীবিকা রোজগারে তা ব্যবহার করে! আমি নিজেও বিশ্বাস করিনা ক্ষুদ্র ঋণ দারিদ্র জয়ের একক হাতিয়ার। অন্যান্য ব্যাংক যেখানে শহর ও ধনী কেন্দিক ক্ষুদ্র ঋণ সেখানে গ্রাম ও গরিব কেন্দ্রিক। সমস্যা আছে।সমাধানের উপায় ও আছে।উত্তরনের পথ না খুঁজে আমরা কি নিয়ে তর্ক করছি? অধ্যাপক ইউনুছ না হয় ত্রুটিপূর্ণ কিছু করে দেখিয়েছেন। ত্রুটির যদি এত দাম হয় য়ত্রুটিহীন একটা করে দেখান। জাতি আপনাদের মাথায় নিয়ে নাচবে।সমালোচকরা আরো ভাল কিছু জাতিকে উপহার দিন।নিশ্চয়ই নোবেল কমিটি আপনাদের অবদানকেও বিবেচনায় আনবে।
On Sun, May 22, 2011 at 6:17 AM, Mohiuddin Anwar <mohiuddin@netzero.net> wrote:
Anti-Dr. Yunus propaganda has been initiated by Hasina administration with the purpose of assasination Dr. Yunus's achievemnts as well as his moral charecter.Awami Baksalis including Prime Minister became zealoiusaboiut his Noble prize. They expected like othger so called PhD's Hasina deserves Noble Prize.If Bangladseshi obidient Judges had the power to snatch the noble prize from Dr. Yunus and hand this prize to Dr. Hasina Wazes, they could have done it long before gto prove their loyalty to their Netri.Unfortunately the can't do this.---------- Original Message ----------
From: Mohammad Hossain <mhossain52@yahoo.com>
To: khabor@yahoogroups.com
Subject: Re: [KHABOR] Nobel Laureate Dr. Muhammad Yunus exposed on tax cheating and ethics violation !!!!!Date: Fri, 20 May 2011 22:49:28 -0700 (PDT)
PL donot forward to me this type of message to me as this type of writing is just to please the political wishes of some people which donot have any basis. These are all foolish talks. No one should compare a gold with a silver.
From: AbdurRahim Azad <Arahim.azad@gmail.com>
To: khabor@yahoogroups.com
Sent: Fri, May 20, 2011 11:27:16 AM
Subject: Re: [KHABOR] Nobel Laureate Dr. Muhammad Yunus exposed on tax cheating and ethics violation !!!!!
Why are you trying to divert the issue? Moot point here is Nobel Laureate Dr. Muhammad Yunus's Tax Cheating, Ethics Violation and Corrupt Business Practices .... In USA such offences are punishable with heavy fines and jail terms.It is not an isolated phenomenon that Dr. Muhammad Yunus and his familyis one of the richest in Bangladesh ...... Now, it is becoming clear thatas an uniquely smart and shrewd "enterpreneur" Dr. Yunus has build his(and his family's) fortunes while promiting "microfinance and proverty alleviation"to built his image:BTW, you have every right to open a new discussion thread to discuss your concerns in the proper context [not resorting to a short for argumentum ad hominem through innuendoes].2011/5/19 Mohammad Zakaria goufbd@gmail.com
ট্যাক্সের টাকা দিয়ে জনগণের ভাগ্য উন্নয়নে কি কি ভাল কাজ হয় সেটাও লিখুন।আর প্রথম আলোতে প্রকাশিত জলবায়ূ ফান্ডের টাকা বিলির দলীয় বিবেচনা সম্পর্কেও লিখুন।একজন মুক্তিযোদ্ধার বিশ্লেষণ শুনতে চাই।2011/5/19 Mohammad Zakaria <goufbd@gmail.com>শাহ রিয়ার কবিরের যুক্তি অকাট্য।তবে ছোট্ট একটি প্রশ্ন।কোন অবদানের জন্য দূর্নীতিপরায়ন সাংসদদের দামী গাড়ী আমদানীতে tax exemption দেয়া হয়।আপনার ও তাহলে একটি পক্ষ আছে। এমপি পক্ষ।অথবা সে ব্যাপারে ও লিখুন।আমাদের জ্ঞান দিন।
2011/5/18 AbdurRahim Azad <Arahim.azad@gmail.com>
Dr. Yunus, the Nobel Laureate:Exposed on tax cheating and ethics violation[from Shahrier Kabir's write-up ]Source:Related:
নোবেল বিজয়ী ড. ইউনূস এবং অপরাধ থেকে দায়মুক্তির সংস্কৃতিশাহরিয়ার কবির
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