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The spread of microcredit and the global South

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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.

A beneficiary of the microfinance programme in Bangladesh. Photo: IPS News / Naimul Haq

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.

Street vendors are the main beneficiaries of micro-loans in Colombia. Photo: IPS News / Helda Martínez

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.

A cattle cooperative in Cuba. Photo: IPS News / Jorge Luis Baños

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.

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Written by makanaka

August 29, 2011 at 23:34

Concerning the Bank of Upper India, Meerut, 1915

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Old banking stats from 1915 show financial crisis back then too.You can see the difference when there is a certain kind of central banking cadre which is proud of the work it does. Take the Reserve Bank of India’s banking statistics. Although immensely useful to those in the banking and finance industry, and just as useful to those who draw the links between how money is spent and development programmes, hundreds and hundreds of rows and columns filled with numbers to the third decimal are – let’s face it – hardly as exciting as a Twenty20 game.

Enter a dash of history. The conservatively titled regular publication, ‘Statistical Tables Relating to Banks in India 2008-09’, reminds us stolidly that it provides “information on major items such as liabilities and assets, income and expenses, non-performing assets, financial ratios, spatial distribution of offices, number of employees and details of priority sector advances. It also provides bank group-wise monthly data on some of the major items such as aggregate deposits, liabilities to the banking system, assets with the banking system, investments, bank credit, and, sector-wise and industry-wise gross bank credit”.

And then it smoothly brings in the historical view (see pic left). “This publication had started prior to the establishment of the Reserve Bank of India. The first issue was brought out by the then Department of Statistics, Government of India in 1915 which covered data for 1914 and was brought out under the guidance of Mr. G. Findlay Shirras, the then Director of Statistics, Government of India. It is worth mentioning that Late Professor P. R. Brahmananda dedicated his book ‘Money, Income, Prices in 19th Century India’, published in 2001, to Mr. G. Findlay Shirras, among others. In order to commemorate the origin of this publication, the cover page of the first issue brought out in 1915 is reproduced in this volume.”

Reserve Bank of India digs out banking stats from 1915What an evocative cover page it is (see pic right)! The foreword continues: “The work relating to the publication was transferred to the Reserve Bank of India in 1939. The last issue, which incidentally was also the 25th issue, of the publication brought out by the Government of India was in 1941, with data pertaining to 1938. The first issue under the aegis of the Reserve Bank of India was brought out in 1941, with data pertaining to 1939 and 1940. The cover page of the last issue brought out by the Government of India and ‘Prefatory Note’ in the first issue brought out by the Reserve Bank of India as reproduced in Statistical Tables Relating to Banks in India 2005-06 are also given in this volume.”

“This is the 64th volume of the publication by the Reserve Bank of India,” say this issue’s authors. “If we count volumes published by the then Department of Statistics, Government of India, then this could be the 89th volume, marking the long history of continuity of this publication. This publication has continued for nearly a century underscores its relevance. It is also a tribute to the efforts and dedication of concerned officials first in the Government of India and now in the Reserve Bank of India.” Hear, hear. This volume has been brought out under the guidance of Dr. A. M. Pedgaonkar, Principal Adviser, and Dr. Balwant Singh, Adviser, DSIM, and for their historically sensitive presentation alone they deserve to take a bow.