The spread of microcredit and the global South
Thousands of microfinance institutions serve tens of millions of the world’s poor, through massive operations in rural South Asia to fledgling enterprises in West African towns. In an excellent new series of reports, IPS News is following the spread of microcredit and its impact across the global South.
This small-scale loan movement aimed at alleviating poverty can offer life-changing potential for people who would otherwise find it difficult to obtain loans from the traditional banking sector. But microcredit is not a miracle solution to ending global poverty. If high interest rates prevail, putting recipients at risk of repeat borrowing and cycles of debt, microfinance can also have unintended consequences.
IPS reportage examines the spread of microcredit and the wider debate surrounding the small-scale loan movement aimed at alleviating poverty as it has matured over time. As the 2011 November 14-17 Global Microcredit Summit approaches, sponsored by the Spanish Agency for International Development Cooperation (AECID), these reports follow this unique banking system and its impact from Bangladesh to Benin, Haiti to Honduras, and across the global South.
COLOMBIA – Microcredit Growing Steadily at 15 Percent a Year. The more than 1.2 million microenterprises operating in Colombia are responsible for around 50 percent of all employment. And many of these small businesses owe their existence to the microfinance system, according to a report by Visión Económica, a local business research group.
GHANA – Guidelines for Unregulated Microfinance Sector. When Andrew Poku’s mother passed away he needed help to pay for her funeral. So the 35-year-old teacher from Accra turned to one of the country’s several loan companies for a 670-dollar loan.
CUBA – Dreams and Progress in a Rural Community. The day that electricity arrived in the Cuban village of Jova, there were shouts, laughter and tears of joy, even among the most incredulous, who had doubted it was possible. “I didn’t know what to do; it actually made me nervous,” Carmen Carvallosa confessed.
MEXICO – Microloans from Distant Lands a Mouse Click Away. Norma Isela from the city of Piedras Negras in the northern Mexican state of Coahuila needs 500 dollars to expand the merchandise inventory in her business selling shoes by catalogue and to broaden her offer of clothes and accessories. So far she has managed to raise 45 percent of that amount.
ARGENTINA – Worker Cooperatives Reduce “Hard-Core” Unemployment. During the social and economic collapse of 2002-2003, the Argentine state encouraged the formation of workers’ cooperatives, which helped mitigate the worst effects of the crisis, reduced hard-core unemployment, and now as independent, democratic, worker-controlled organisations are providing services to the public and private sectors.
BANGLADESH – Lessons in Microcredit Management. Phulo Rani Pal checks for loose dust around her open backyard kitchen. It’s time to prepare the sweets she supplies to vendors and it will not do for her products to be contaminated.
BANGLADESH – Women Raise Own Funds for Microfinance. Amidst despair and poverty, women in some remote villages of Bangladesh are raising money and lending it to each other through a unique microfinance programme launched by a local non-government organisation.