The Everyday Lives of Policies and People
Edited by Norman Long, Jingzhong Ye and Yihuan Wang
Chapter 4: Value, Gender and Capital: Frameworks of Calculation in Micro-Financial Practices
Magdalena Villarreal Microfinance has now acquired centre stage in world spotlights, not only as a mechanism of poverty reduction, but also an instrument of peace, as has been underlined in ceremonies surrounding the 2006 Nobel Peace Prize to Mohammad Yunus and the Grameen Bank. As development instruments, micro-financial schemes are expected to help people escape poverty by providing them collateral-free loans and other financial services. In most cases, beneficiaries are encouraged to use loans for the establishment of small enterprises. Women are preferred clients for micro-financial programmes, central as they are to the social and economic dynamics of households. The underlying assumption is that, with the provision of ‘seed’ capital, the poor –and women in particular – can be introduced into the market. Well nurtured, the enterprise will expand, capital will grow, and the poor will be able to pull themselves out of poverty. Capital is expected to multiply itself and produce profit. However, despite the fact that micro-financial schemes have readily been taken up by many women, both urban and rural inhabitants – particularly those with little or no access to formal banking institutions – these have not been as successful in alleviating poverty as is often hoped. Many small enterprises established under these programmes do not survive more than a couple of years and most fail to expand. The ‘seed’ resources that are injected are often diverted, disappear into everyday consumption, or are turned into what Hernando de Soto (2000) labels ‘dead capital’, which he claims is unable to do ‘economic...
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