All these months I have been telling you how microfinance kills the poor. But somehow I still find that many of the policy makers and planners are still sold to the flawed concept, and some genuinely believe that micro-credit actually helps the poorest of the poor. They (and this includes the Reserve Bank of India as well as the Finance Ministry) are reluctant to initiate any action that may pull down the shutter on something that I have always regarded as a crime.
What is however heartening to observe is that many concerned citizens across the globe have begun to see through the pernicious design, and have now started to question the very basis of the concept. An award-winning Danish documentary film maker, Tom Heinemann, has launched today his latest film "Caught in the micro-debt" (in Norwegian language). Premiered on the Norwegian State TV Channel NRK, the film is based on an investigation by Tom Heinemann who made 'several trips to Bangladesh, and talks with a number of international experts worldwide, shows that the Grameen Bank leads many poor women into a crippling debt spiral.'
You can watch the documentary at www.nrk.no/brennpunkt
The film also makes some serious allegations against Muhammad Yunus, founder of Grameen Bank, had transferred Tk 7 billion to Grameen Kalyan, which has nothing to do with micro-credit operations. More at: http://www.bdnews24.com/details.php?id=180277&cid=2
According to a media statement: "The women pay about 30 per cent interest on loans, as they already have to start paying back after a week. The documentary tells the poor to harsh collection methods from Grameen Bank, which has received the entire 400 million in aid from Norway."
This film shatters the claims that were made by the microfinance institutes worldwide. I only wonder how could distinguished economists, academicians and policy makers eulogise the MFIs without first ascertaining the truth behind the flawed claims. Why didn't academicians at least warn the world? How could the World Bank/IMF and even the donors sink millions of dollars in such dirty enterprises? Why was the truth kept hidden?
Well, not only microfinance, the sordid truth behind the hyper claims being made by the biotechnology industry (and backed by the mainline scientists) has been kept under wraps by a corrupt regulatory regime. Pharmaceutical as well as the food processing industry have also managed to keep the stark truth remain hidden from public glare.There is something terribly going wrong with the people/institutions who are supposed to regulate the system to protect us.
The Norwegian Development Agency Norad, according to the press statement, had supported the Grameen Bank from 1986 to 1997 with a total of 400 million. Focal Point (the NRK programme that has brought this film) has gone through the entire archive of Norad, which has the Grameen Bank to make. Here it emerged that employees of NORAD in the early 1990's was concerned that the poor were trapped in a debt spiral.
In a memo from Norad 20 December 1993 states the following:
"In fact, according to a survey done by David Gibbons and Helen Todd of the 40 women with 10 years of membership (of Grameen Bank), had almost all borrowed privately to pay installments."
And in another note from Norad 1 June 1994 states the following:
"One of the matters which the report points out is that the credit concept as it has evolved, created fertile ground for a practice in which new loans can be used to repay current loans. This may help to explain the impressive repayment statistics as Grameen Bank operates. "
This only goes on to show that even as far as 1993-94 it was known that microfinance was not working. The film then goes on to quote a small borrower, Hazera: "I have had loans from Grameen Bank for 15 years, and I paid my installments on time. At one point I got problems with your refund. The staff of Grameen Bank came and called me names. They threatened me with selling panels from the house. If I did not pay, they would throw me on the street. They said many nasty things to me. I was scared and sold everything I owned and paid installment. The house will collapse. There are holes in the roof. I have no one in the world."
This is nothing but Goonda Raj.