When poverty-producers propose poverty-alleviation

There is a month dedicated to ‘saving’ when all banks run ad campaigns urging people to save money.  Banks need savings because banks need to sell all kinds of loan products.  A nation needs savings because a nation has to invest money in various spheres in order to create jobs, generate income etc.  People need to save money because people are fragile and frequently find themselves in cash-strapped situations.  We are told that it is good to save for a rainy day, but no one tells us that we are in a year-long monsoon when it comes to financial needs. 

Financial institutions will tell you that saving is good for you and they are not incorrect.  On the other hand this ‘it-is-for-your-own-good’ business is just that: business!  For examples, banks that have ‘discovered’ just the other day a thing called ‘microfinance’ are going around telling the poor that they are in this business purely out of altruistic reasons and specifically to help them out of poverty are basically tapping a huge reservoir of customers they had hitherto neglected.  So, ironically, even as the banking sector indulges in activities that generate poverty, we also see a concerted effort to do business with the poor.  Not for love. For profit. 

There is a lot of irony when institutions that are dedicated to profit-making and promoting profit-making in ways that necessarily impoverish people and perpetuate cycles of poverty suddenly want to ‘alleviate poverty’ through microfinance.  It would be understandable if Banks, like most other corporate entities, think of ‘microfinance’ as just another CSR (Corporate Social Responsibility) project, nothing more than a little feel-good, guilt-alleviating exercise.  What we are seeing today is however not something of that kind, not an add-on, a frill, a for-a-prize, image-building operation.  This is business ladies and gentlemen.

Microfinance is, as long-time practitioners would tell you, not coterminous with development. Resolving credit problems (i.e. access to sufficient amounts with minimal hassle, at the right time and at terms that are reasonable) is most certainly an important element in any initiative that seeks to enhance capacities of those sections of a population that truly require ‘development’.  Necessary, then, but certainly not sufficient. 

The problem with the dominant articulation of the microfinance discourse is that the above it the underlying logic.  The problem is articulated in purely financial terms. This is convenient.  Microfinance advocates from the corporate sector would not dare touch other related issues because it is not in their immediate interest and because delving into these would show them up for who they really are: business entities, doing business, seeking-profit and articulating the entire exercise as a humanitarian operation born in the depths of their bleeding hearts. 

If banks were really serious about poverty alleviation they would put a full stop to financing enterprises that create poverty.  Banks cannot be expected to be charitable outfits and we should not fool ourselves into believing that they would abandon their core operational thrust out of some professed love for all of humanity. 

Microfinance is not ‘new’ to most parts of the world. The world has known about thrift and credit for centuries.  A close reading of the Buddha’s thoughts on social engagement and his advocacy for the lay person and the household would show that thrift was a core element of his doctrine.  He advocated that a portion of one’s income should be saved and an equal portion invested.  He recommended that a third part should be used for consumption and the fourth gifted. 

In Sri Lanka, the household culture is replete with many clearly identified thrift-measures which are still practiced in all parts of the country and find considerable reference in folk literature.  Formal micro financing institutions have a history that goes back to the year 1906. 

Like most terms in the development dictionary, microfinance was appropriated, re-defined and re-marketed to the practitioners. The watershed event was the first Microcredit Summit in February 1997 in Washington DC, where there were some some 3000 people from 137 countries in attendance.  Thirteen years later, the ‘blueprint’ for all initiatives is downloadable from the CGAP (Consultative Group to Assist the Poor) website.  CGAP is ‘addressed’ at the World Bank and focuses on financial services.  No prizes for guessing the agenda of the lords of poverty (generation). Yes, the within-brackets part of it is erased in the literature. 

Today, ‘microfinance’ as it is used has been extracted from the social, cultural and political soil in which it was born.  Today, shed of frill and conference-glitter, microfinance is essentially a matter of exploring the exploitation potential of hitherto neglected sections of the market.  Today, corporate entities have suddenly realized that they could make a killing by extracting little amounts from a large population.   This is why the microfinance literature and the best-practices archives are thin on sustainability and largely silent on the parallel processes of exploitation and impoverishment.  The moment such things are brought into the discourse, the legitimacy of the vast majority of corporate entities engaged in microfinance is brought into question.  This they cannot risk. 

Impoverishment is an inevitable product of profit-seeking enterprises.  Microfinance is a win-win situation for microfinance corporate players. It is like a factory spewing pollutants in a canal and then volunteering to clean up the particular waterway. For a price!

The next time someone utters that word it would be good, I believe, to ask about what other business that person engages in and talk about the consequences of such activities, including poverty generation. 

This year has been dedicated to microfinance.  Maybe it would be good if it is also dedicated to the telling of home truths about microfinance.

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Thrift and credit are blue in colour

A few days ago I wrote about village ‘tanks’.  Some call these ‘ponds’. Considering that there are reservoirs of Parakrama Samudra dimensions there is a certain logic in naming most facilities holding water in villages as ‘ponds’.  Peter Wise believes that ‘wewa’ is not about water and that a fixation with dimensionalities can dilute meaning and de-value function.  I agree.

When I wrote about ‘wewas’ it was in a larger context of ‘developmentalism’.  Today I want to be more specific.  The other day I spoke of ‘wewa’ as symbol of thrift and credit.  I fear I did not elaborate enough.

Today whisper the term ‘microfinance’ and you will hear an echo: ‘Grameen’.  To those who are out of the loop ‘Grameen’ is a system pioneered in Bangladesh by Prof. Muhammad Yunus.  It is based on the assumption that people can save.  The model, crudely put, would be about giving small sums of money to poor people. Prof Yunus believed that people can repay manageable amounts and that in time, when they acquire the saving/repaying habit they can handle larger loans.  That’s one model. 

There is nothing ‘Grameen’ about our traditional ‘wewa’.  The focus is self-help.  There’s no dependency on ‘foreign aid’.  The village tank or weva is typically a larger irrigation facility and built through collective effort.  People pour their labour into the ‘earthwork’, construct the sluices, the spill and the canals.  They divide the dam-length by number and extent of cultivation plots downstream and apportion sections for maintenance to each household.  In times of emergency, the entire village gets together to do whatever is necessary to protect the weva.  There are times when flawed construction and/or unexpected volumes of rain cause rupture. Dams break. People weep. Villages are abandoned. Nature reclaims her traditional homelands. 

There are key elements here.  The first is thrift.  Labour is congealed in the construction.  There are no wages paid, not for construction and not for maintenance.  The entire collective, i.e. the village, benefits.  Apart from there being water for cultivation, the weva helps raise the water table. The wells around the wevas get filled.  There’s a swimming pool for the children and for the adults a place to immerse in liquid flavours that take away the day’s weariness.  There is water for the cattle.  There is fish.  There is aesthetic beauty.  The trees are greener. 

Embedded in the weva is the notion of credit.  One borrows water for the fields, and repays by doing everything possible to ensure that there’s water again the next season.  This includes keeping intact the watershed.  Tree is not seen as timber but a necessary player in an ecological system whose health one’s livelihood is inextricably linked to.  Trees are harvested for firewood. That’s dry branches and not mindless chopping. 

We are talking here about micro ecologies.  Microfinance.  Little things.  Disavowal of greed.  The recognition of the greater worth of the collective. 

We’ve done our little experiment with the lies and poisons of the Green Revolution. We’ve tried state-led and growth-led.  We’ve deferred to the private sector.  Failed.  We rubbished cooperatives. We have come a full circle.  We have come to Little Drops of Water. We are at Little Grains of Sand. We are at a gate called ‘Microfinance’. The way I see it, it is a buzz word and nothing else.  A stolen concept, twisted beyond recognition. 

We have spent our bucks and those of our children too, ecologically speaking. We have come to ‘thrift’ the hard way.  We cannot borrow any longer.  Let us save. Ourselves.  It boils down to water.  A weva.  That’s the microfinance, the thrift and credit if you will, that sustained our ancestors and built a civilization that we gave us some bragging rights. 

And if you think we’ve gone past all this, that this is too idealistic and a city man’s romantic flirtation nothing else, here’s a story that might inspire. 

I know of a man called Dissanayaka Mudiyanselage Punchi Banda (‘PB’ to all who knew him) living in a village called Alutwela situated about 6 kilometres off a place called Veherayaya, a bit north of Kuda Oya on the Thanamalvila-Wellawaya road.  PB’s property is swept by dry winds of the South East Dry Zone and also by a coolness that floats down from the central hills and through the waters of the Kuda Oya, the blending of the two producing a distinct ecology where literally anything can be grown.

PB after serving a prison sentence for involvement in the JVP insurrection of 1971 had been given a 2 acre plot in the area.  He was one of some 70 plus beneficiaries. The others had tried, tired of it and left. PB did not.  He found a small weva, repaired it, and started growing vegetables. He has since acquired more land and constructed two more wevas. 

He knows thift, PB does. He knows microfinance. He knows wevas. He knows that it is all blue in colour.

[First published in the Daily News, September 23, 2010]

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Banking for the Poor or Banking on the Poor?

There are people who still believe that the British built our roads and railways.  This is utter rubbish.  The labour was Sri Lankan.  The funds were obtained by taxing our people.  As for the roads and railways they were not designed to get Kusumawathi from Anuradhapura to Kataragama but to streamline resource and value extraction. 

This is how power imbalances play out.  The powerful are able to make the powerless inhabit a version of reality they (the powerless) have no say in authoring.  Bishop Desmond Tutu in his more progressive days, speaking on the colonial encounter in Africa and in particular the ‘priest’-accomplice of the sultans of destruction and resource extraction put it this way: ‘In the beginning we had the land and they had the book; they said ‘close your eyes, let us pray’ and when we opened our eyes, we had the book and they had the land.’ 

I have over the years found it safer to treat with suspicion those who wear benefactor-garb.  I am thinking here about a new buzz-term in the development discourse: microfinance.  It is not new, really.  ‘Banking with the Poor’ is a couple of decades old already, but it was buried in a heap of other buzz-words for years. 

Today microfinance is seen as the magic formula for poverty alleviation.  Sorry, it is SAID to be the magic formula for poverty alleviation.  The distinction is important and is indicative of my cynicism. 

Discussions on microfinance tend to be liberally laden with references to poverty alleviation and how it is important to rope the poor into formal banking systems.  It is the unsaid that makes the most interesting reading, though.

Those who talk about banking with the poor will not tell you that banks have always needed the poor.  First of all, money doesn’t fall from the sky.  Value has to be created.  Profits have to be EXTRACTED. It is called ‘exploitation’.  I don’t have to re-write Kark Marx’s Labour Theory of Value here. Someone gives and someone takes, to put it simply. There are TERMS of extraction and these can even be legal. 

Next we get to savings.  Who saves?  The poor!  The rich don’t save. They invest.  Take the People’s Bank, the Bank of Ceylon and the National Savings Bank.  They are made of poor people’s money. Salaries. Pensions. The little something put aside every month in numerous savings schemes.  Who gets the loans?  The rich! 

The rich have always banked ON the poor. They NEED the poor.  ‘Microfinance’ in its banking-only manifestation then is nothing else than the banks realizing that little drops of water can make big bucks at the end of the day.  The margins are obtained by volume.  They have figured out, these rich microfinance gurus dressed as do-gooding poor-lovers have, that the poor outnumber the rich by about 100 to 1 or more.  Any idiot with even an iota of business sense would see this as ‘potential’.  You can get the one rich guy to save 100 bucks or get the other 99 to save 10 bucks each.  That would make 990 rupees or an 890% difference.  It’s good business, ladies and gentlemen.  Now factor in the loans, the micro-credit and the profits from interest.  Astounding!

The problem with microfinance is that it is marketed as a delivering-all kind of tool. It is nothing of the kind.  Stripped of rhetoric and promise it remains just another banking product.  It has a sound-good feel to it, yes.  It is made to fatten CSR portfolios, yes.  At the end of the day, commercial bank are interested in profit and little else. 

Microfinance in its thrift-and-credit avatar was essentially a collective effort that was governed by cooperative principles.  Today, microfinance is a term that the ace defenders and approvers of shameless resource extraction and labour exploitation, the World Bank, has appropriated.  Today it is a concept that the World Bank has re-defined and is dishing out to each and every naïve and/or pernicious taker who does a google search, courtesy the CGAP (Consultative Group to Assist the Poor). CGAP is ‘addressed’ at the World Bank and focuses on financial services. 

The focus itself tells a story.  The assumption is that it is all about money.  Well, it is.  At least from the point of view of the banking outfits that micro-finance.  How about the poor, though? 

Where issues of comprehensive betterment of a given community are not addressed, when sustainability is not a concern, when culture is factored out, when national development frameworks are not referenced, when training and education so necessary for resource and potential identification are ignored, you don’t get poverty alleviation. You get PLAYED.  In your name.  That’s the beauty of banking on the poor.  You don’t say you need the poor, than you are literally banking on them, you say you are doing it with them.

To me, banking WITH the poor is like raping WITH the victim.  There is an element of ‘consent’ that gets scripted in.   You can say ‘We are doing it with you, brother,’ even as you do him in.

The British, they tell us, built our roads. Microfinance is a road, I think.  The poor are building it. With their money and labour.  Someone is using the road to take out cartloads of value away from the places that the poor inhabit. 

Roads are good though but only as long as those who build them decide what kind of road to build and from where to where and why.  Microfinance is not that kind of road, I am afraid; certainly not in its dominant articulation. 

It boils down to a simple matter: who owns the road.  Let’s think about it.  

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