In closing the Centre for Poverty Analysis (CEPA)’s 52nd Open Forum, which sought to interrogate credit as a development intervention, moderator Vijay Nagaraj (CEPA) astutely borrowed a line from French philosopher, Michel Foucault: "Not everything is bad but everything is dangerous."
The preceding discussion had very much fallen in step with Foucault’s way of thinking, with the dominant comments from panelists and audience alike emphasising the need to understand microfinance in a more nuanced and critical way. As discussant Dr. Vagisha Gunasekara (CEPA) noted, empowerment and choice have become ubiquitous with microfinance programmes, and even if microfinance can be conducive to securing these two things, we must continue to be proactive in questioning such interventions, because of the numerous examples revealing that they can come at a great cost to beneficiaries.
Speaking from her experiences working in microfinance, discussant Samadanie Kiriwandeniya (SANASA Development Bank) pointed out that the important question to ask is not how we use microfinance, but rather why we use it. Microfinance is not a homogenous instrument that can be applied to any situation, as there are various categories and models, which reflect differing goals and interests. Also, it is incorrect to categorise microfinance as an instrument free of politicisation. One of the dangers in uncritically contextualising microfinance in participatory development is that such approaches often take for granted that they are naturally responsive to the interests of the poor. In succumbing to this belief, however, we risk ignoring the role of power in determining which interests are legitimised and which are not (Sarah C. White, 1996, "Depoliticizing Development: The Uses and Abuses of Participation").
Discussant Dulan de Silva (Berendina Group) commented that "demand-wise, microfinance is doing well," lamenting the new type of borrower in Sri Lanka who is no longer averse to taking credit, regardless of their ability to repay. While he acknowledged that multiple loans are not bad, insofar as they do not automatically lead to indebtedness, his comment speaks to a larger issue of ‘responsibilisation’ within the discourse on microfinance. In writing about how HIV-positive men in Cape Town have been affected by state interventions that emphasise entrepreneurship and participation, Colvin et al. (2010, "Grounding ‘Responsibilisation Talk’: Masculinities, Citizenship and HIV in Cape Town, South Africa") argue that sometimes interventions that aim at encouraging people to take responsibility for themselves fail to "contextualize the heterogeneity of responses to such programmes." In the case of microfinance, we must examine the context of people’s indebtedness, why they are borrowing, and for whom, before we attempt to categorise them as ‘responsible’ or ‘irresponsible.’
That is not to say that beneficiaries should be completely absolved of responsibility, but how do we conceive of responsibility in an era where microfinance is changing so rapidly? Researcher Mirak Raheem questioned what has brought about this shift where microfinance institutions that promote human development are seemingly losing out to profit-driven finance institutions. Dr. Gunasekara, presenting on the increasing indebtedness in post-war and post-disaster communities, spoke extensively about the financialisation of development and the negative impact this has on the empowerment and choice of beneficiaries. She argued that the shift is illustrative of the globalisation of the financial market, where "low income markets reflect an opportunity for finance companies to plant themselves and gain their fortunes." She then cited the ease at which people can access loans from finance institutions as providing an incentive for increased borrowing. Dr. Gunasekara also questioned whether this shift has been clearly demarcated in the eyes of people on the ground. As far as responsibility is concerned, even if finance institutions present greater dangers to beneficiaries, why should they see taking a loan from one as any different than borrowing from a microfinance institution?
Does the rhetoric of responsibility serve in some way to legitimise the practices of these profiteering financial institutions? More importantly, where is the onus on these institutions to be more responsible themselves? An audience member revealed that in his research on debt, he has found that lender behaviour and other external factors are often times more impactful than borrower behaviour on higher instances of borrowing and indebtedness. Dr. Ganga Tilakaratna (Institute of Policy Studies), who presented her research showing the increase in multiple borrowing in Sri Lanka, agreed with this assessment, and attributed it to the of rise of and easier access to financial institutions and aggressive marketing strategies. Why is it that borrowers are often taken to task regarding their default rates and encouraged to be more ‘responsible’ with how they handle their finances, but these organizations are not being held accountable for their questionable promotion of credit?
Microfinance as a development tool is emblematic of what Nagaraj was getting at when he quoted Foucault. Microfinance models are not inherently bad and, as Ms. Kiriwandeniya emphasised, can be sustainable and useful, provided they are situated in the correct context. However, this does not preclude a sharp critique of these types of development interventions, their goals and manipulation as a result of power politics. This is especially true given the changing nature of the global financial industry and, as Nagaraj noted, "a shift from an economy that has production at its center to an economy that has consumption at its center."